Cil Sap Mm Training V 4 0.pptx

Faculty Profile

Sachin Haibatti o Bachelor Of Engineering from University Of Mysore o Overall 16 + years of experience in Procurement and Inventory Management which includes 10+ years of experience in SAP Materials Management (MM) o Worked on BIG implementation, upgrade, and support projects for,      

SAIL (Steel Authority Of India), India General Motors Corp, China Nissan Motors Corp, Japan Coach, USA Ashok Leyland, India Client Trucks India Ltd, India

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1

SAP MM Overview Presented By, Sachin Haibatti

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2

Materials Management Overview Agenda

1

ERP Overview

2

Overview of Organization Structure

3

Procurement Cycle

4 5 6 7 8 Copyright © 2017 Tech Mahindra. All rights reserved.

Purchasing Master data Special Procurement Process Inventory Management / Valuation

Logistics Invoice Verification

Reporting & Analytics 3

SAP HISTORY

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4

Fundamental of ERP (1/2) Q) What does ERP stand for

Ans: ERP is the abbreviation of Enterprise Resource Planning, it's a standard procedure or program to optimize all processes (Sales, Logistics, Production, Quality, Finance) of enterprise management. Q) What does SAP stands for Ans: SAP the company was founded in Germany in 1972 by five ex-IBM engineers, SAP stands for Systeme, Andwendungen, Produkte in der Datenverarbeitung which - translated to English - means Systems, Applications, Products in Data Processing. Q) What are key portion of SAP system Ans: On broad level , it is divided into 1) Functional Side ( various modules for business functions 2) Technical side (Developer , system administrator ) Copyright © 2017 Tech Mahindra. All rights reserved.

5

Fundamental of ERP (2/2)

Q) What does SAP R/3 indicates Ans: The R/3 indicates Real time data processing , 3 tier client server architecture. It has three layers 1) Presentation Layer 2) Application Layer 3) Database layer Copyright © 2017 Tech Mahindra. All rights reserved.

6

Overview of SAP Modules in ECC 6.0 Project at HSL has following SAP Application modules in the scope for Implementation.        

Finance (FI) Controlling (CO) Materials Management (MM) Production Planning (PP) Plant Maintenance (PM) Quality Management (QM) Sales & Distribution (SD) Product Lifecycle Management (PLM)  Project System (PS)  Human Capital Management (OM /PA / Payroll ) Copyright © 2017 Tech Mahindra. All rights reserved.

7

SAP Client –Server Architecture

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8

ASAP Methodology Phases

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ASAP Methodology for Implementation • SAP delivers the Accelerated SAP (ASAP) Methodology, developed by SAP to optimize the success of implementing the ERP SAP. • It provides the templates, methods, accelerators that have been built on the success of thousands of previous SAP Implementation. • The ASAP methodology adheres to a specific road map that addresses the following five general phases.

Presently We are here

Project Preparation Key Task • Project Kick Off meeting • Project Infrastructure ramp • Project Charter Sign Off Copyright © 2017 Tech Mahindra. All rights reserved.

Business Blueprint • • • • • •

Realization

Final Preparation

Go live & Support

Key Task Project Team Training Business Work shop (As Is ) Scope Validation Detailed Design ( To Be ) Data Migration Workshop BBP Sign off 10

Manufacturing Industry

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11

Introduction Organizational StructureIntroduction

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12

Organization Levels 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. A plant is an operating unit for production and material requirements planning or simply a grouping of one or several storage locations with stocks of material that are geographically close to one another. A plant is assigned to one company code. Example: production facility, branch within a company Copyright © 2017 Tech Mahindra. All rights reserved.

Plant

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Organization Levels 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 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. But it is always Unique. Copyright © 2017 Tech Mahindra. All rights reserved.

14

Organization Levels Storage location Storage Location is the level at which materials are stored within a plant. There can be one or more storage locations Within a plant. These are always assigned to plant and can have many addresses.

Storage location Examples:

0001 0002 0003

Finished goods Semi finished products Raw materials

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15

Procurement Cycle

Purchase Order Purchase Order Purchase

Order Purchase Order

8. Payment

1. Requirements determination 2. Source determination

7. Invoice verification

Purchase Order Purchase Purchase Order

Order Purchase Order

6. Goods receipt and inventory management

5. Order follow-up Copyright © 2017 Tech Mahindra. All rights reserved.

3. Requisition assigned to a Vendor

4. Order processing 16

Overview Of Materials Management

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17

Introduction Introduction Introduction The Materials Management (MM) module integrates and supports the procurement and inventory functions occurring in day to day business operations such as purchasing, inventory management, reorder point processing, etc. SAP MM optimizes all purchasing process in the materials management sector. By effective stock-keeping and warehouse administration. SAP MM reduces the procurement and stocking expenditure, integrates auditing of accounts and also allows automatic assessment of suppliers.

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18

MM Organization Structure Company Code

0001

0003

0002

Plants

Storage Locations Purchase Org

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0001

0001

0002

0002

19

Procurement Cycle Procurement Environment Requisition

8 Vendor invoice

Payment

1

Requirements determination

Purchase order

? 10 20

30 Invoice Verification

7

6

2

Procurement

Goods receipt

3

Source determination

Vendor selection

Purchase order 10 20 30

5

Purchase order monitoring

4

10 20 30

Order processing

R

 SAP AG Copyright © 2017 Tech Mahindra. All rights reserved.

20

SAP Data Organizational Data

Company, Company Code, Plant, Purchase Organization, Plant, Sales Organization etc.

Master Data

Material Master, Vendor Master, Customer Master, Service Master etc.

Transactional Data

Purchase Requisition, Purchase Order, Request for Quotation, GR/GI and IR etc.

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21

Master Data

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Master Data Master data that supports Materials Management in SAP: Material Master Vendor Masters Purchasing Information Records

Pricing Conditions Source Lists

Quota Arrangements Service Master Copyright © 2017 Tech Mahindra. All rights reserved.

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Material Master  The Material Master contains all data required to define and manage 

material. It integrates data from engineering, manufacturing, sales and distribution, purchasing, accounting, and other departments. The material master is used as a source of data for purchase order processing throughout the procurement cycle. General Data Sales Data Purchasing Data Material Master

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Accounting Data

Manufacturing Data

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Material Master Number Range

o Internal Number Range o External Number Range o Maximum of 18 digits

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Material Master Views

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Material Master Record

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Material Master Record

Initial Screen Material Industry Sector Material Type

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Material Master Record Industry Sector

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Material Master Record Material Type Material Type

Raw materials Semi-finished products

Operating supplies Spare parts

Finished products

Empties

Trading goods

Other

R

 SAP AG

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Material Master Record Material Group; Old Material Number

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Material Master Record Hazardous Material

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Material master record o GR Processing Time o Post to Inspection Stock o Manufacturer Part Number

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Material Master Record Price Control

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Material Master Record Base Unit Of Measure Order Unit Purchasing Group

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35

Material Master Record Material Number Saved

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Vendor Master  The Vendor Master includes all data necessary for processing business transactions and corresponding with vendors.

 Information is shared between the accounting and purchasing departments.  Data is grouped into three categories: 

General data



Accounting data



Purchasing data

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37

Vendor Master Data Vendor Master Record Vendor master record General data

Purchasing data

Accounting data R

 SAP AG Copyright © 2017 Tech Mahindra. All rights reserved.

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Vendor Master Data

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Vendor Master Data Vendor Group/Vendor Account Group

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Vendor Master Data Partner Function

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Vendor Master Data o Order Currency o Terms Of Payment

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Vendor Master Data o Incoterms

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Vendor Master Data o Mode Of Transport Boarder o Office Of Entry

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Purchasing Information Record  Purchasing Information Records describe the supply relationship for a material and a vendor.

 Data includes: Material number Vendor number Vendor-specific data on deliveries, delivery tolerances, and pricing and text

 During purchase order entry, data can be proposed from the purchasing information record to the order.

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45

Purchasing Information Record

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Purchasing Pricing procedure

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. The system then applies the conditions in determining the price in purchase orders (POs).

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47

Purchasing Pricing procedure

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Source Lists A source list specifies the possible sources of supply for a material over a given period of time. It shows the time period in which a material may be ordered from a given vendor or under a certain long-term purchase agreement.

1.1.95 - 30.6.95 Source list Material M1 Plant 0001

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Vendor 1 allowed 1.7.95 - 31.12.95 Vendor 2 allowed Vendor 1 fixed Vendor 3 allowed

49

Source Lists

1.7.95 - 31.12.95 Vendor 1 fixed

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Quota Arrangements  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.

 If a quota arrangement exists for a material, it is taken into account in the source determination process.

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51

Quota Arrangements

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52

Service Master Data Every organization acquires goods to complete its business needs. Besides these goods procurement, an organization may require occasionally some kind of services.

1. 2. 3. 4.

Hiring Vehicles Plumbing Work House Keeping

Electrical Work Etc.

Note - Services are meant for direct consumption instead of keeping them in inventory. Copyright © 2017 Tech Mahindra. All rights reserved.

53

Service Master Data Types of Services

Planned Services In planned services at the time of procurement specifications like quantity and price are known in advance. It means nature and scope of service is clear before

procurement. Unplanned Services In unplanned services at the time of procurement specifications like quantity and

price are not known in advance. It means nature and scope of service is not clear before procurement. These services can be extended as per the requirement.

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54

Service Master Data

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55

Purchasing Documents

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56

Procurement Cycle

Purchase Order Purchase Order Purchase

Order Purchase Order

8. Payment

1. Requirements determination 2. Source determination

7. Invoice verification

Purchase Order Purchase Purchase Order

Order Purchase Order

6. Goods receipt and inventory management

5. Order follow-up Copyright © 2017 Tech Mahindra. All rights reserved.

3. Requisition assigned to a Vendor

4. Order processing 57

Purchasing documents Purchase requisition

RFQ

Purchase requisition

A

?

Quotation

Quotation

Quotation

RFQ

?

Purch.order

B

Purchase order

31.

1.

Contract

Contract

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Scheduling agreement

58

Questions 1. What is SAP? 2. Explain what is SAP MM? 3. What are the essential components in SAP MM?

4. Different types of Master Records 5. What is the difference between Source List and Purchasing Info Record 6. Explain 3 tier architecture of SAP R/3

7. Name few important modules of SAP ECC 6.0 8. Explain the activities that we carry out in realization phase 9. Explain CIL Organization Structure

10. Explain organization levels in a typical manufacturing industry

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59

Questions 11. Explain Procurement Cycle 12. List different type of SAP Data 13. Give examples for Material Type

14. Types of Number Ranges in Material Master? 15. Give examples for Material Group 16. What is the significance of Hazardous Material field in Material Master?

17. What is GR Processing Time 18. How price of the material is calculated (Price control)? 19. What is Purchase Group?

20. What is Account Group?

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60

Purchase Requisition (PR)

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61

Requirement Determination  Materials requirements are identified either in the user departments or via materials planning and control.

 Enter purchase Requisitions yourself, or they can be generated automatically by the materials planning and control system

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62

Purchase Requisition Purchase Requisition for Goods/ Services

Purchase Order

Goods Receipt

Invoice Processing Vendor invoice

Purchase Requisition

Purchase Order

10

10

20

20

30

30

Planning, Reporting, and Analysis

Purchase Requisitions:

 Request or instruction to the purchasing department to procure a  

certain quantity of a material or service on or by a certain date. Are created directly by a requesting department or automatically via material requirements planning (MRP/PM/SD) Are internal documents not used outside the company.

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63

Purchase Requisition Processing Purchase Requisition

MRP

Direct Entry Purchase Order

Purchase requisition

Release strategy

Determine source of supply Copyright © 2017 Tech Mahindra. All rights reserved.

64

Purchase Requisition

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65

Purchase Requisition Source Determination

 The Purchasing component helps to identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs). Quota Arrangement

Purchase Requisition

Source List

Outline Agreement

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Purchasing Info Record

66

Request For Quotation (RFQ)

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67

Request for quotation/ quotation Requirements known. Procure from which source?

RFQ 1

RFQ 2

? Vendor 1

Vendor 2

Quotation 1

Quotations entering

Quotation 2

Price comparison list

Quotation comparison Decision making Copyright © 2017 Tech Mahindra. All rights reserved.

&

Purchase order

Rejection

68

Request for quotation/ quotation

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69

Purchase Order (PO)

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70

Purchase Order Purchase Requisition for Goods/ Services

Purchase Order

Goods Receipt

Invoice Processing Vendor invoice

Purchase Requisition

Purchase Order

10

10

20

20

30

30

Planning, Reporting, and Analysis

Purchase orders:  Represent the formal approval of a purchasing transaction with a vendor.  Identify the following items such as:  Vendor  Material and quantity ordered  Price and terms  Delivery date and location Copyright © 2017 Tech Mahindra. All rights reserved.

71

Purchase Order Processing Purchase Order

• Standard

Statistics

Order History

Direct Entry or Purchase Requisition Purchase Requisition

Stock Material Consumable Material Service

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Account Assignment (cost center, asset, internal order)

72

Purchase Order

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73

Inventory Management (IM)

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Inventory Management Describes the basic business processes of Inventory Management in the SAP System:

 Goods Receipts

 Stock Transfers  Goods Issue  Transfer Posting

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75

Goods Receipt Purchase Requisition for Goods/ Services

Purchase Order

Goods Receipt

Invoice Processing Vendor invoice

Purchase Requisition

Purchase Order

10

10

20

20

30

30

Planning, Reporting, and Analysis

Goods receipt record the inward movement of goods or materials by:

    

Verifying the receipt against the order. Valuating material at purchase order price. Creating material and accounting documents to record the event. Updating the purchase order history. Providing basis for invoice verification (2nd part of 3-way match).

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76

Goods Receipt

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Goods Receipt for Stock Material Goods Receipt

Purchasing Documents

Goods Receipt

Items 1. 2. 3. RUHR RUHR TRUCKING TRUCKING

Vendor

Warehouse/Stores

Entering the goods receipt increases the inventory level of a material that is procured for stock

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78

Stock types for goods receipt Goods receipt receipt blocked blocked stock stock Goods

Unrestricted-use stock Unrestricted-use Unrestricted use Stock stock

Warehouse Stock inQuality quality inspection Stock in quality inspection Stock in Inspection Vendor Vendor

Blocked stock Blockedstock Stock Blocked

Account assignment assignment object object Account Cost center Cost center Cost Order Order Order

…... ...... ...... Copyright © 2017 Tech Mahindra. All rights reserved.

79

Result Of Good Movements  Movement types differentiate among the following stock transactions:    

Goods receipt Goods issue Stock transfer Transfer Posting

 Movement type determines which:   

Quantity is updated Stock types are updated General ledger stock or consumption accounts are updated

 A three-digit code identifies the particular movement to be performed (e.g., 101 = purchase order receipt).

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80

Documents for Goods Movement Warehouse Goods movement

Receipts

Issues

Material document

Accounting document

Records movements that affect inventory balances.

Records movements that affect valuation of inventory.

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Accounting document

81

Documents for Goods Movement

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82

GR Blocked Stock Purchase Order Qty. -100; Vendor - X Material – X; Price – 100 PC

Purchase Requisition Qty. -100 Material - X

Goods Receipt Qty. -100; Vendor - X Material – X

Plant Vendor GR Blocked Stock

Unrestricted Stock

Cost Center Inspection Stock

Blocked Stock

Warehouse/Storage Location Copyright © 2017 Tech Mahindra. All rights reserved.

83

Return Delivery Purchase Order Qty. -100; Vendor - X Material – X; Price – 100 PC

Purchase Requisition Qty. -100 Material - X

Goods Receipt Qty. -100; Vendor - X Material – X Subsequent Delivery Qty. -100; Vendor X Material – X

Plant Unrestricted Stock

Blocked Stock

Inspection Stock

Vendor

Warehouse/Storage Location Copyright © 2017 Tech Mahindra. All rights reserved.

84

Goods Issues

Goods Issues

What is 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

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85

Goods Issues

From Warehouse From Consignment Stores

Consumption

Issue

Asset Sales Order Cost center

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Sampling Scrapping Quality

86

Stock Transfer & Transfer Posting

Material/Goods Transfer

Stock transfer

From plant to plant

From storage location to storage location

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Transfer posting

From material to material

From QM to unrestricted use

From consignment stores to warehouse

87

General Concepts General Concepts  There are two types of goods transfers:  Stock transfers involve a physical movement of goods.

 Transfers can occur from:  Company to company  Plant to plant  Storage location to storage location  Transfer postings involve a change in stock type or material number. Generally, they are not connected with a physical movement.

 Material documents are created to record the activity.  Financial documents are created only when there is a valuation change (e.g., plant to plant).

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Transfer Posting oLogical transfer of material from one stock type to another stock type oFrom material to material oFrom special stock to our own stock

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89

Reservation  Reserving of material/goods in advance for future purpose either for cost center or production

From Warehouse From Consignment Stores

Consumption

Issue

Asset

Sales Order Cost center

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90

Reservation

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91

Physical Inventory Physical Inventory Verification of physically existing stock with book/system stock is known as physical inventory 1. Manual Physical Inventory 2. Cycle Counting 1

Unrestricted use 2 Quality inspection

3

Blocked stock

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92

Physical Inventory Process The Physical Inventory Process Create physical inventory document Set blocking indicator

Arrange for recount

Print physical inventory document Change count

Enter count results

List of differences

Post differences Copyright © 2017 Tech Mahindra. All rights reserved.

93

Outline Agreement

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94

Outline Agreements An outline purchase agreement is a longer-term agreement between a purchasing organization and a vendor regarding the supply of materials or the performance of services within a certain period according to predefined terms and conditions. (Outside SAP, such agreements may be referred to by a number of terms, including "blanket", "master", "framework" or "umbrella" agreements)

In the SAP System, such agreements are subdivided into:

 Contracts  Scheduling agreements

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95

Contracts What is a Contract ? Contract is a form of longer- term purchase agreement against which materials or services are released (ordered, or called off) according to need over a certain predefined period. Contracts can take the following forms: Quantity contracts Use this type of contract if the total quantity to be ordered during the validity period of the contract is known in advance. The contract is regarded as fulfilled when release orders totaling a given quantity have been issued. Value contracts Use this type of contract if the total value of all release orders issued against the contract is not to exceed a certain predefined value. The contract is regarded as fulfilled when release orders totaling a given value have been issued. Centrally Agreed Contract The price will be negotiated and agreed with Vendor by the central purchase organization Copyright © 2017 Tech Mahindra. All rights reserved.

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Value & Quantity Contract RFQ w.r.t PR Mat-X; 10000PC

Quotation from Vendor

Quotation Comparison

PR for Agreement Mat –X 10000PC

Contract w.r.t RFQ/PR st 1 Jan 18 to 31st Dec 18 Mat – X; Vendor – X Qty. 10000PC Rs. 100/PC PR for Purchasing Mat –X 100PC

Contract Release Order w.r.t PR (PO) Mat – X Vendor – X Qty. 100PC

Vendor Selection

Goods Receipt Mat – X Qty. 100PC

Invoice Receipt Mat – X Qty. 100PC Payment to Vendor Copyright © 2017 Tech Mahindra. All rights reserved.

97

Value Contract

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Quantity Contract

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99

PR w.r.t Contract

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100

Scheduling Agreements What is a scheduling agreement ? An outline agreement against which materials are procured at a series of predefined points in time over a certain period. Delivery Schedules : Delivery of the total quantity of material specified in a scheduling agreement item is spread over a certain period in a delivery schedule, consisting of lines indicating the individual quantities with their corresponding planned delivery dates. Scheduling agreement

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Delivery schedule

101

Scheduling Agreement Purchase Requisition Mat-x Qty. 1000 pc

Request for Quotation w.r.t PR

Scheduling Agreement w.r.t PR/RFQ Qty. 1000; Vendor –X Rs. 100/PC 1st Jan 19 to Dec 21

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Quotation from Vendor

Quotation Comparison

Delivery Schedule w.r.t SA Delivery Date Scheduled Qty. 10th Jan 19 100

10th GR 100 PC and IR 100 PC

29th Jan 19

100

29th GR 100 PC and IR 100 PC

10th Mar 19

50

10th GR 100 PC and IR 100 PC 102

Other Procurement Processes

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103

Import Procurement Process Local Bank

INDIA

Plant

Local Bank

SWITZERLAND

Goods Receipt

PO + Letter of Credit to Overseas Vendor

Customer Country Boarder Shipyard/ Airport

Plant

Airport/Shi pyard

Bill Of Lading

Bill Of Entry or Customs Duty Invoice from Vendor Payment to Vendor

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104

Asset Procurement Process What is Asset/Capital Goods?

They are purchased and used to help your company produce finished goods or provide services to the customer. They are reported as assets on a company's balance sheet and often can be depreciated over time. Examples of capital goods include, 1. 2. 3. 4. 5. 6.

Buildings Machines Equipment Furniture Fixtures Computer

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105

Asset Procurement Process Asset Master

Request For Quotation

Maintain Quotation

Purchase Requisition

Material Master

Quotation Comparison Purchase Order

Material Description

Vendor Selection Invoice Verification

Goods Receipt

Payment Run Copyright © 2017 Tech Mahindra. All rights reserved.

106

Asset Procurement Process

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107

Non Stock Material Procurement Process Request For Quotation

Maintain Quotation

Purchase Requisition

Material Master

Quotation Comparison Purchase Order

Invoice Verification

User Department

Vendor Selection

Payment Run Copyright © 2017 Tech Mahindra. All rights reserved.

108

Non Stock Material Procurement Process

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109

Non Valuated Material Procurement Process Request For Quotation

Maintain Quotation

Purchase Requisition

Material Master

Quotation Comparison Purchase Order Vendor Selection Invoice Verification

Goods Receipt Payment Run

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110

RTP Material Handling (Returnable Transport) Some ordered material will be delivered by the vendor by packing with non ordered material and whenever ordered material is totally consumed, the empty packaged items will be returned to the vendor and these returning empty packaging items are called as RTP materials

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111

RTP Material Handling (Returnable Transport) Request For Quotation Diesel with Barrel

Maintain Quotation

Purchase Requisition Quotation Comparison Purchase Order

Invoice Verification

Vendor Selection Goods Receipt Barrel Payment Run

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112

Non Stock Material Procurement Process

Non Ordered Items

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113

Special Procurement Process

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Special Procurement Processes  Pipeline Process  Consignments Process

 Sub contracting Process  Stock Transport Order Process  Third-party processing

 Blanket Purchase Order  External Services Process

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115

Pipeline Procurement Processes What is Pipeline stock?



In this process material flows continuously from vendor premises to

our plant premises through pipe/cable/wire/ Examples – Oil, Water Cane, Gas, Electricity Etc.

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116

Pipeline Procurement Processes Goods Issue From Pipeline to Cost Center or Prod Order Mat – X; Vendor – X Qty. 100 KG Plant -X

Pipeline Agreement Mat – X Vendor – X Plant – X P Org. – X Rs. 100/KG of Gas

Automatic Settlement (IR) (settle pipeline liabilities to vendor for consumed or GI qty.) Mat – X; Vendor – X; Plant – X Rs. 100/KG; Qty. 100KG

Print/Transmit GI document to Vendor

Send auto settlement document to Vendor

Payment Payment to vendor Copyright © 2017 Tech Mahindra. All rights reserved.

117

Consignment Processes What is Consignment stock ?



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.



The invoice is due at set periods of time, for example, monthly. In addition,

you can also arrange with the vendor that you take over ownership of the remaining consignment material after a certain period of time.

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Consignment Procurement Process Consignment Agreement Mat –X Vendor – X Plant – X Rs. 100/PC

Print/Transmit GI Document

Print/Transmit Settlement Document Copyright © 2017 Tech Mahindra. All rights reserved.

Purchase Order

Purchase Requisition

Goods Receipt as Special Stock Goods Issue Material – X Vendor – X Quantity 10PC

Automatic Settlement (IR) (settle consignment liabilities to vendor for consumed or GI qty.) Mat – X; Vendor – X Plant - X

Against Production Order

Against Sales Order

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Subcontracting Procurement Processes Process:

 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.

 The vendor charges for his or her service. The invoice is posted in Invoice Verification

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Subcontracting Procurement Process Prerequisites for MRP Purchase Order No: *Vendor : ***

Plant Plant

Activate MRP

Set PC up planning file 10 L Product A 100

Vendor (Sub contract)

Product A (Engine) Materials Materials

Components Products B

Maintain MRP data: valid MRP type 100 pc valid material status

A

Products C 200 PC

Material

Prerequisites for MRP R

 SAP AG

Plant Plant Activate MRP

Set up planning

Product C Product B Materials Finished Product A Materials

Maintain MRP d valid MRP valid mate A Material

 SAP AG

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Subcontracting Procurement Process Create BoM for Product A Comp B & C

Storage Location Component B & C

Info Record Product A Sub Cont. - X Purchase Order

Invoice Verification Goods Receipt Payment Run

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Third Party Procurement Process Third-Party Processing



In third-party processing, an enterprise forwards a sales order to an external supplier, who sends the goods directly to the customer. The sales order is not processed by your company, but by the vendor. Third-party items can be entered in purchase requisitions, purchase orders, and sales orders.



Third party processing is linked to the Sales and Distribution component (SD). If the sales order contains third-party items, the system creates a purchase requisition from the order.

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Third Party Procurement Process

Own Company

Order

PO

Delivery Vendor Customer Copyright © 2017 Tech Mahindra. All rights reserved.

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Stock Transport Process STO Process

 Stock transport Order can transfer the stock from one plant to another plant within the company code and one plant to another plant across the company code.

 Can process the STO with delivery and without delivery. If process with delivery we can obtain delivery cost for the particular

transportation.

 With delivery material cost will increase due to adding the delivery cost.

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Stock Transport Goods Issue

Stock Transport Order

Plant 2

Plant 1

Unrestricted Use Stock

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Goods Issue for Purchase Order

Stock In Transit

Goods Receipt for Purchase Order

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Intra Company Stock Transfer COMPANY

Plant A Supplying Plant

PR Received

Transfer Posting

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Plant B Receiving Plant

Purchase Request

Goods Received

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Inter Company Stock Transfer COMPANY Plant A Supplying Plant

PO Received

Goods Issue

Billing Document

COMPANY

Plant B Receiving Plant

Purchase Order

Goods Received

Invoice Received

Payment Received

Payment Run Copyright © 2017 Tech Mahindra. All rights reserved.

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External Services Process MM External Services Management offers two basic ways of specifying services:

 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.

 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.

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External Services Process PR for Agreement Service –X 1000 AU

RFQ w.r.t PR Service-X 1000 AU

Quotation from Vendor

Contract w.r.t RFQ/PR st 1 Jan 19 to 31st Dec 19 Service – X; Vendor – X Qty. 1000 AU Rs. 1000/AU PR for Purchasing Service –X 10 AU

Contract Release Order w.r.t PR (PO) Service – X Vendor – X Qty. 10 AU

Quotation Comparison

Vendor Selection

Service Entry Sheet Service – X Qty. 10 AU

Invoice Receipt Service – X Qty. 10 AU Payment to Vendor Copyright © 2017 Tech Mahindra. All rights reserved.

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External Services Process PO for Services

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External Services Process Service Entry Sheet

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Release Strategy/Procedure

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Release Procedure In the procurement process, there are many documents which are vendor facing/external document and are also treated as a legal documents which under go approval process as per the DoP (Delegation of Power) In SAP, the different levels of approval is handled using Release Strategy The below listed documents can under go approval process/release strategy, 1. Request for Quotation 2. Purchase Requisition 3. Purchase Order 4. External Service Entry Sheet

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Release Procedure Release Strategy for PR – Item Value >100000 INR Plant - 1000

Release Strategy for PO Total Net Order Value 10000 to <100000 INR > 100000 INR

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Release Code 10. Assist. Manager 20. Manager 30. Sr. Manager

Release Code X1. Sr. Officer X2. Manager X3. Sr. Manager X4. Associate VP X5. VP

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Release Strategy Release Strategy

Release Strategy

Maintain Quotation

Request For Quotation

Purchase Requisition

Purchase Order

Release Strategy

Quotation Comparison

Vendor Selection

Invoice Verification Goods Receipt

Payment Run Copyright © 2017 Tech Mahindra. All rights reserved.

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Release Procedure Purchase Requisition

Before Release

After Release

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Release Procedure Purchase Order

Before Release

After Release

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Output Determination

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Output Determination Physical Inventory Every purchasing document, material document and invoice documents can shared with the external vendor or internally via Fax/Mail/ALE/EDI Internal SAP R/3

Vendor Non SAP EDI, XLM

ALE and EDI are middle ware tools ALE – Application Link Enabling EDI – Electronic Data Interchange IDoc – Intermediate Document

SAP ECC 6.0

ALE, IDoc

ALE, IDoc

Vendor SAP R/3 Copyright © 2017 Tech Mahindra. All rights reserved.

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PO Document Physical Inventory

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Logistic Invoice Verification

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Objectives  Describe the basic business process of Invoice entry in Accounts payable for various kinds of Material and Service Purchase Orders in the SAP

System: 

Overview of the process



Various Approaches and Solutions



Posting/paying an invoice



Price Variance handling



Delivery costs

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Types of Invoice Transactions  Invoice or Debit Memo  Credit Memo  Subsequent Credit  Subsequent Debit

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Invoice Processing Purchase Requisition for Goods/ Services

Purchase Order

Goods Receipt

Invoice Processing Vendor invoice

Purchase Requisition

Purchase Order

10

10

20

20

30

30

Planning, Reporting, and Analysis

Invoice verification:     

Matches the vendor’s invoice to the purchase order and the goods received Matches price, and quantity. Updates the purchase order and its history. Updates accounting information.

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Invoice Environment InvoiceVerification Verification Environment Purchase Order

G/L accounts: G/L Accounts

Vendor Invoice

?

Invoice Verification

Assets Cost Centers

Vendor Invoice

Projects

Goods Receipt Orders

Material Master Vendor Master Conditions

Posting an invoice in the SAP System updates purchasing and accounting data

Invoice verification accesses data from purchasing, inventory management, material master, and vendor master files. Copyright © 2017 Tech Mahindra. All rights reserved.

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Information in an Invoice

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Invoice Verification

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Vendor Payment  Accounts payable reads the invoice file and pays all posted invoices due. (Payment runs can be automated to occur at specific times.)

Vendor

Financial Accounting

1000

Bank Payment Payment program program

1000

1449

Motor Sports International 1234 Main Street New York, NY 10181

Date _______________

Pay to: ________________________________________ ________________________________________________________ _______________

Released Invoice

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_________________ 12930 39040 2020 20202 10923 1449

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Credit Memo

 Collecting the excess amount from the vendor in case vendor fails to deliver the remaining quantity Purchase Requisition Qty. -100 Material - X

Quality Inspection Accepted Qty. – 80 Rejected Qty. - 20

Return Delivery Qty. 20 Vendor – X Material - X

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Purchase Order Qty. -100; Vendor - X Material – X; Price – 100 PC

Payment Run Qty. – 100 Vendor – X Material -X

Credit Memo Qty. 20; Amount-2000 Vendor – X Material - X

Goods Receipt Qty. -100; Vendor - X Material – X

Invoice Verification Qty. – 100 Vendor – X Material - X

Payment Amount 2000

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Subsequent Debit  If vendor ask for additional amount on already invoiced quantity Purchase Requisition Qty. -100 Material - X

Subsequent Debit Qty. 100; Price – 10/PC; Vendor – X Material - X

Purchase Order Qty. -100; Vendor - X Material – X; Price – 100 PC

Payment Run Qty. – 100 Vendor – X Material -X

Goods Receipt Qty. -100; Vendor - X Material – X

Invoice Verification Qty. – 100 Vendor – X Material - X

Payment Amount 1000

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Subsequent Credit  On already invoiced quantity, if price is reduced due to price fluctuations or low quality then vendor needs to pay the difference/negotiated amount to the customer Goods Receipt Purchase Requisition Qty. -100 Material - X Subsequent Debit Qty. 100; Price – 10/PC; Vendor – X Material - X

Purchase Order Qty. -100; Vendor - X Material – X; Price – 100 PC

Payment Run Qty. – 100 Vendor – X Material -X

Qty. -100; Vendor - X Material – X

Invoice Verification Qty. – 100 Vendor – X Material - X

Payment Amount 1000

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Material Requirement Planning (MRP)

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MRP - Process

MRP - Process

MRP: The main task of material requirement planning is to ensure material availability, that is, to procure the requirement quantities for in-house production and for sale on time. Dependent requirements are the quantity of components necessary for the production of a finished product or an assembly. ( Production orders and Reservations ) Independent requirements are received by sales department in the form of customer requirements from the market, and demand management plans sales using a sales forecast.

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Material Requirement Planning MRP - Process Consumption Based Planning (CBP)

Reorder Point Planning

Manual Reorder Point Planning

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Forecast Based Planning

Time Phased Planning

Automatic Reorder Point Planning

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MRP overview Independent Requirements

MRP Dependent Requirements Reservations

Planned Order Convert

Capacity Planning Purchase Requisition

Production Order

Schedule lines

Purchasing functions

Sales Order Processing

Invoice verification Purchase Order

Final costing Warehouse

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