1 ENTERPRISE STRUCTURE

CLIENT Is a commercial Organizational Unit within R/3 system with its own data, Master records and set of tables. It is the highest level element of all Organizational unit Represented by 3 digit alphanumeric key

COMPANY CODE It is the smallest Organizational unit within R/3 system for which can have an independent accounting department within external accounting. Legal entity It is having balance sheets, Profit & Loss accounting required by the law Represented by 4 digit alphanumeric key.

PLANT Is an organizational logistic unit that structures the enterprise from the perspective of production, procurement, Plant maintenance, Material Planning It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant. Represented by 4 digit alphanumeric key

STORAGE LOCATION Is an Organizational unit that allows the differentiation of material stocks within the Plant Inventory management on quantity basis is carried out at storage location level. Physical Inventory is also carried out at storage location level.

VALUATION AREA Is an organizational level at which material is valuated. R/3 system recommends Plant level Valuation at Plant level is mandatory if you are using Production planning/ CO/ Retail system Valuation area selection is a fundamental setting in customization and very difficult to REVERSE

PURCHASE ORGANIZATION Is an organizational level that negotiates conditions of purchase with Vendors for 1 or more Plant. It is legally responsible for completing purchasing contracts

CENTRALISED PURCHASE ORGANIZATION Should be attached to Company Code or otherwise Plant specific (attached to Plants). We can have cross-company code OR Cross-plant Purchase Organizations PURCHASING GROUPS Is the key for buyer or group of buyers responsible for certain specific purchasing activities (eg. Mech/ Elect, etc.) Organizational Unit Organizational grouping of an enterprise. Transaction Application programs which executes business processes in R/3 system Document Data record generated through a transaction Material Master Central data object in SAP R/3 system. Configuring is the method of doing customizing CONFIGURE to CUSTOMIZE

2 BASIC PROCUREMENT PROCESS (GENERAL)

Flow 1. 2. 3. 4. 5. 6. 7. 8. Determination of requirements Source determination Vendor selection Purchase Order processing Purchase Order monitoring Goods Receipt Invoice Verification Payment processing (FI)

Purchase Order : A formal request to Vendor to supply certain goods / services under the stated conditions When we enter an invoice against a PO/ GR, the system checks the price, rate, payment terms with respect to Purchase Order and Quantity w.r.to GR While entering the GR, system checks whether the material is as per PO or not w.r.to Quantity, Shelf life, etc. Several GRs can be entered for a PO item in one operation The type of Invoice verification (PO Based / GR Based) is to be fixed in PO , Invoice Tab If MRP Procedure is set, PR will be generated automatically during MRP run. Purchasing value Key for auto-reminders and supply tolerances. It is fixed in the purchasing view of the material master. It is managed at CLIENT LEVEL. Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline Agreement (Item Tab) Item Category Defines whether an item requires or can have - A material number - An account assignment - Goods Receipt - Invoice Receipt Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing) - Standard Blank materials that are procured externally

Subcontracting L Finished product ordered from a Vendor (maintained at STORAGE LOCATION level) Consignment K Vendor makes the material available and manage a consignment stock (maintained at PLANT Level) Stock Transfer U Third Party S Text
MANDATORY REQUIREMENTS (GENERAL) Material Account Stock Goods Invoice Number Assignment Receipt Receipt BLANK K L U S B YES YES YES YES YES YES

ITEM CATEGORY Standard Consignment Subcontracting Stock Transfer Third Party Limit/ Blanket

YES YES YES YES YES

YES YES YES

YES

ZERO VALUE POs Generally used for samples. But generally used monitoring the delivery. FOC indicator is set in item level. Invoice receipt is cancelled because of this tick Variable Order unit can be specified in material master record and purchasing info record. In PO, Inco-terms are specified at Header level Shipping Instructions can be at Item and header level (As a Text in header level and Delivery tab at item level) Delivery instructions can be at Item and header level. (In texts tab) Changeability of PO 1. If PO is already sent to Vendor CAN change the PO and send a copy to the Vendor 2. If Vendor is delivered material against PO Only LIMITED changes like texts are possible (We can not change qty) 3. If Goods received and payment made NO changes possible.

Invoicing Plan System creates invoice automatically as per Plan and release them for payment For automatic settlement for periodic invoicing plan, ERS must be selected in Vendor Master

In partial invoicing plan, provision of down payment in the Billing or Invoicing plan rule date

3 MASTER DATA
VENDOR MASTER Vendor Master Data is maintained at - General - CLIENT LEVEL INFORMATIONS Addresses - Company code level COMPANY CODE LEVEL INFORMATIONS Accounting related - Payment terms, payees, - Purchasing Organization level Related to purchasing Currency, Inco-terms, VSR, etc We can BLOCK a Vendor Master Record (XK05) - Complete If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST ME01 Automatic PO generation is in purchasing data. ACCOUNT GROUP of a Vendor Control functions of Vendor account group are 1. Status of the Vendor ( One time Vendor or routine vendor) 2. Field selection in the Vendor Master Record 3. Partner schemas 4. Vendor Sub range 5. Type of number assignment (external or internal) Single Master Record is maintained for one time Vendor Account group is CPD Other routine vendors are generally in LIEF Vendor Reconciliation account Its a G/L account which maps Companys liability towards several vendors. Depending on account grouping selected, system assigns a number (can enter manually also). This Vendor number is used in sub-ledger number in Financial Accounting. When posting an invoice, system uses the reconciliation account automatically from Vendor master record. A vendor account code is created against Company code and Purchase Organization, so its account is unique in all Plants under the Company code.

Pre-requisite for Vendor Partner roles 1. Vendor master record for each partner separately 2. Specified in customizing Partner roles selected Controls of Document type - Screen sequence and screen layout (Screen variant) - Number ranges of document

MATERIAL MASTER Material Master is structured for various organizational levels. Data at CLIENT / COMPANY CODE LEVEL (table MARA) Data Valid for the total Company. Basic data Material No., Material group, Unit of measure, Conversion factors, Purchasing value key, etc Data at COMPANY CODE LEVEL Accounting Data, Costing data if valuation is at Company code Data at PLANT LEVEL (Table MARC) Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc. Data at STORAGE LOCATION LEVEL Storage bin, picking area, etc. MATERIAL NUMBER 18 character alpha numeric key Basic data is CLIENT SPECIFIC Some Purchasing data are PLANT Specific Pur group, GR processing time, etc. Purchasing Value key is maintained at CLIENT LEVEL If we are not specifying a Plant at Organizational level, only data at higher level (Client) will be displayed Language selection is additional data of Material Master.

The standard system uses a BUFFER when assigning numbers to the material master records The amount of numbers for the buffer is 10. Using this buffer and having the material number assigned before saving a new number, the master can be lead to a gaps in the number assignment. However if you reset the number level of an interval back to the initial value, R/3 system fills these gaps when you create the new materials

MATERIAL TYPE Materials with same characteristics are grouped together in Material types- Raw Material, Finished Goods, etc. Represented by 4 digit alphanumeric codes Material type is having following CONTROL functions 1. The type of number assignment (Internal or external) 2. The permitted number ranges 3. Screen layout and screen sequence 4. User specific views 5. Procurement type (Internal / external) 6. Up-dating of Quantity and Value in master records / FI 7. Account determination on goods movements 8. Price control Material type CANNOT be changed for materials whose Purchase Order is made. Special Material types available in std SAP Additionals (VKHM) - requirements like effective presentation to Customs Eg. Care labels Advertising media (WERB) presentation for advertising. Eg. leaflets/ catalogues Apparels (MODE) Empties (LEER) Type of RTP generally subject to deposit of money. Can have several components together in BOM. Eg. empty bottle/ empty crate, etc. (SD) Full Products (VOLL) counter part of empties. Operating supplies (HIBE) Procured externally and required for the manufacture of other products. Packing Materials (VERP) Transport with goods/ come with goods of FOC. It is managed at quantity and value in Material master even though it is free of cost. Used in HU management Material filed selection reference A reference control key defines which control string applies to the relevant influencing factor We can maintain reference key for 1. Material type 2. Plant 3. Industry sector in customizing Filed selection group Grouping of master records according to the filed option (Hide/ Display/ Optional/ reqrd. entry) Field selection against TRANSACTION is also to be defined for filed option Link rules of each transaction against the material type SAP defined link rules CAN NOT be changed Screen/ views can be customized as per Company code

INDUSTRY SECTOR Represented by 1 digit alphanumeric key The control functions of Industry sector are - Screen selection and its sequence - Industry specific fields If we assigned a material to an Industry sector, we CANNOT change it later. Unit of measure - Base unit of measure - Purchasing Unit, Sales Unit, Issue unit - Order Price Unit (OPU) Main fields in Purchasing View are - Purchasing Value key - Automatic PO Selection - Source list requirement - Quota Management Accounting View Valuation Class determines to which stock accounts are to be updated on goods movements Price Control Standard or Moving Average Price Valuation of material depends on the price control set in Material Master. Standard Price All stock postings will be at standard price and in case of any deviation posting the difference to Price difference account Moving Average Price (MAP or v) GR valuation will be at PO price and Goods Issue at Moving average price MAP updates on goods movements. In case of any difference with respect PO price, the difference amount will be posted to the stock account (on total stock at that moment). If sufficient stock is not available to distribute, system will post the difference to Price difference account. Extending/ adding a View to an existing material master MM50 Then select the required view, Select B Accounting D MRP E Purchasing K Basic Data C Classification G Costing A Work Scheduling

4 PROCUREMENT OF STOCK MATERIAL

PURCHASING GENERAL Centralized Purchasing With one Purchasing Orgn 1 Purchase Orgn responsible for a number of Company codes Distributed Purchasing Number of Purchase Orgn for different Plants 1 Purchase Orgn responsible for 1 Plant Company specific 1 Purchase Orgn responsible for 1 company code Reference Purchase Organization Pre-requisites for reference purchase organization: 1. Both the purchase organizations (reference and normal) are to be maintained in Organization structure 2. The reference purchase Orgn can be maintained WITH or WITHOUT Company code and Plant 3. Assign reference purchase Orgn as Reference purchase orgn in customizing Data in MM Purchasing Material Master 1. Client related data 2. Plant related data 3. Storage location related data Vendor Master 1. General data 2. Company code related data(accounting) 3. Purchasing related data Master records in Purchasing 1. Purchasing Info Record 2. Source List 3. Quota Management 4. Conditions 5. Vendor Evaluation The linking of document type made in customizing (in purchasing) are: Document type to allowed item categories Allowed item categories to Link PR document type

The conditions dependencies on time (TD & TID) are fixed at document type level at customizing. PURCHASE REQUISITION PR can be created Manual, or Auto from PP/ PS/ PM/ PPC Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in purchasing Purchase requisitions are processed by item-by-item PR can be created for material with master record and without master record also. But if it is without master record, it will be with Account assignment and Text & material group PR changeability Before changing PR, check 1. Already PO is issued or not If issued, NOT changeable 2. Already released or not (release procedure) If released limited changes possible. Depend on changeability indicator 3. Created by MRP NO Changes possible (Quantity can be changed while processing. But the left out will shown as open against the same PR) Flagging of PR items are CLOSED The item of a PR is regarded as closed, if the requested quantity is ordered in a PO If we are creating PR manually, the items will not be considered in MRP. RFQ / QUOTATIONS Single document for RFQ and Quotation Can be created with respect to: Manual Via reference document Reference to PR Reference to Outline Agreement RFQ/ Quotations are Created and maintained at purchasing Organization level. For RFQ NO COMPANY CODE / PLANT Collective Number: For linking a number of RFQs. It is in the header of RFQ. It is a 10 digit alphanumeric number. Creation of RFQ Initial screen Quotation deadline, Purchase Orgn & Purchase group are fixed Header details Collective number is assigned, Vendor addresses are maintained. Item overview Material, Qty & deadline for each item We cannot enter an account assignment in RFQ

Quotation processing Vendors price and price conditions We can enter the prices and conditions of each vendor in RFQ. Comparison list We can save the quotation data in purchasing info record by giving the tick in check box Info update We can set the rejection indicator for unsuccessful vendors. The mean value of all quotations can be saved as Market Price in the quotation comparison list. This market price will be used as the basis for valuating the price level of a vendor and is called up during Vendor Evaluation. Conditions in Purchasing Conditions can be maintained for Contract/ Sch. Agreements/ PO level. Conditions can be maintained in Info record. There are extended conditions also. PURCHASING INFO RECORD Info records are created for 1. Standard 2. Subcontracting 3. Pipeline 4. Consignment, Where the system copies the data in purchasing Certain concise information of a Vendor and material. If we are not maintaining Material in Info record, system will store this information against a material group. Info record contains : 1. Current and future price with pricing conditions for Plant/ Purchase organization 2. Delivery date and tolerance limits. Availability period During which, vendor can supply the material 3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a regular Vendor here. 4. Texts that can be maintained for Info record, which can be called up in PO 5. Number of last Purchasing document/ PO (In Purchasing data 2) We can fix the PO text in Info record 1. If only info record text is to be fixed in PO, set NO M text option 2. If you are not selecting the above option, system will display both the texts in PO Info update indicator WILL NOT update the info record. It will update the information. The updated details can be seen at Info list (ME1L/M/P)

These data will be displayed as default data while creating the purchasing documents. It can be edited at purchasing document level. Info record can be created manually automatically from Quotation / Outline agreements / Purchase orders, if info update indicator is selected while creation If you want to maintain conditions in Info record, you have to maintain it MANUALLY. Auto-updated info records will NOT BE HAVING the pricing conditions (ONLY final price will be retained)

Info update indicator If we are fixing this info update indicator, system will copy the data and conditions maintained. If we fix A System will update the data WITH or WITHOUT PLANT B System will update WITH PLANT C System will update WITHOUT PLANT For Quotations/ Contracts/ Scheduling Agreements and Conventional POs - If BLANK selected, Info record will not be updated o A If an info record exists at Plant level, it is updated. Otherwise, info record at Purchase Organization will be updated o B If Plant conditions are allowed for the Plant, an info record at Plant got updated o C - IF Plant conditions are not necessary, for the Plant, info record at Purchase Organization level will be updated. The info update Indicator can be set at PO If we fix BLANK No update TICK System will update the info record as per the settings in Customizing ( node Conditions > Define condition at Plant level) BLANK Conditions allowed WITH or WITHOUT PLANT + - Only PLANT BASED Conditions will be updated - - NO-PLANT BASED CONDITIONS are allowed. For Enjoy transactions (PO- ME21N) If just one (With or without Plant) exists, record will updated. If NO info record exists, PLANT Level info record will be CREATED If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info record will be updated Structure of Info Record 1. General Data Vendor data, Order unit, etc. 2. Purchasing Organization Data 1 Control data Delivery time, Minimum quantity, etc

Price & Conditions Gross price, discount, etc. Statistics PO History, PO statistics, etc. Text Texts are maintained here, can be called up in PO 3. Purchase Organization / Plant Data Control, Price, statistics, texts 4. Purchase Organization data 2 Here you will get the reference document number on which the info record is created/ updated. This option is available only if the record is created with reference to a purchasing document. In other words, if an info record is created manually, the last PO data will be updated in Info record at purchasing data 2 Purchasing Info Record is valid for PLANT / PURCHASE ORGANIZATION While creating a PO, system first search for info record with PLAN&PURCHASE ORGANIZATION combination for price, if it is not available in the system, it will search for data with PURCHASE ORGANIZATION only. Purchasing Info record is suggesting prices in 2 ways : a. Conditions conditions are included, if info record is prepared manually. b. If info record does not contain conditions, then the system will select the price of last Purchase Order. We can define the conditions of last PO by customizing a. Are always copied b. Not to be copied when prices are entered manually c. Never copied Info Record CANNOT be deleted by normal archiving program run. It can be deleted by the system administrator Data can be displayed from Info record screen through ENVIRONMENT are Material Vendor RFQ/ Quotation QM Info record Last Document Quotation price history Order price history We can have 4 different info record for a material & vendor for standard/ Consignment/ Subcontracting/ Pipeline TEXTS Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts Item Texts - Item Text (CAN copy from Info Record/ Material Master) - Delivery Text Inserting texts from material master record

\ CONDITIONS Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc.. We can create conditions in - Quotations - Info Records - Outline agreements - Purchase Orders Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT System will ask for VALIDITY for TIME DEPENDENT conditions. Time dependent Conditions 1. Info Record 2. Quotation 3. Sch. Agreement 4. Contract 5. Purchase Order YES Depends on Doc Type Depends on Doc Type YES NO Time Independent Conditions NO Depends on Doc Type Depends on Doc Type NO YES

We can specify both time dependent and Time Independent conditions at Header level and Item level EXCEPT Info Record. The setting is at Document level In Info record, conditions are stored at Info record level. For Time Dependent conditions, we can create 1. Supplementary conditions 2. Validity Periods 3. Scales 4. Upper and Lower Limits If we are creating a new condition type, should be assigned to an access sequence to link with Pricing Procedure If the conditions are on header level of the document, then it is applicable for items in that document, but if it is at item level, it is applicable for that particular item only. Conditions in Purchase Order DEPEND on DOCUMENT TYPE. Conditions are prepared in a PO are at the level of document type Conditions can be created for a Vendor/ for a Plant/ for Purchasing. Header conditions Applicable for all items as per % or Value Item conditions applicable for specific items - % or Value

Group conditions Applicable to all items but distributed proportionately as per the quantity/ value CONDITION TECHNIQUE Up to 3.1H version, Time independent conditions are referred as Document conditions and Time dependent conditions are referred as Master conditions. Condition Type and condition category - Example Condition category H- Base Value B- Delivery Cost N Non de-ductable input tax E Cash Discount G Moving average Price Assigned to condition type (Std system) PB00 (this must exist in all pricing procedure except stock transfer) FRA1 NAVS SKTO P101

Condition types used in standard system (examples) PB00 -Price - Gross Price (With access sequence-0002) RB00 - Discount/ Surcharge - Absolute discount ZB00 - Discount/ Surcharge Absolute Surcharge FRB1 - Discount/ Surcharge Absolute Freight ZOA1 - Discount/ Surcharge - % Duty amount Customs SKTO - Discount/ Surcharge Cash discount NAVS -Taxes - Non de-ductable input taxes Standard pricing procedure in SAP is RM000 used for Purchasing Purchase Requisition Prices If the material is WITH material master record, the price will be displayed for Purchase requisition from the material master, even if we are maintaining a separate price in Info record. But the vendor will be populated from the Info record. If the material is WITHOUT material master record, we have to maintain the price manually during the creation of PR, if required. While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can be referred for other plants also.

VENDOR CONFIRMATIONS Vendor confirmations can be of Order acknowledgements Loading or Transport confirmations Shipping Notifications

ASN Advanced Shipping Note

5 PROCUREMENT OF CONSUMABLE MATERIALS

Account assignment category determines which category of accounts is to be debited in G/L accounting. Categories are: A Asset K Cost centre P Project F Production Order C Sales Order U Unknown Consumable materials that are procured directly for consumption against an account assignment object It is NOT managed in value based in Inventory management System updates the consumption in material master, if master data is available. Examples are NLAG/ UNBW/ DIEN NALG Non Stock Material UNBW Non-valuated stock material DIEN Services procured externally If we select consumable material as material type in Material Master, it controls - Procurement type (Internal / External) - Account postings - Requirement in Inventory Management Consumption is directly posted to consumption account Inventory Management is NOT based on Value basis Stock Vs Consumable 1. Entry of Material Number 2. Account assignment 3. Account postings to 4. Mat. Master up-dation 5. MAP Stock Required not required Stock account Qty, Value& Consumption Adjusted Consumable Possible but not required Mandatory Consumption account Qty & Consumption are updated Not applicable

Purchase Requisition for Consumable Material Can be by manual or though automatic- through MRP run/ PM order/ Sales order Can use account assignment U (Unknown) in PR. But to be confirmed in PO

If material master is available, system will take the price from it otherwise we have to enter manually. Multiple account assignment is possible in PR BLANK No multiple account assignment 1 Distribution on Quantity basis 2 Distribution on Value basis. Goods Receipts are NON-VALUATED for consumable goods.

6 EXTERNAL SERVICES PROCUREMENT

Procurement cycle Flow 1. Determination of requirements 2. Creation of service specification 3. Source Determination 4. Vendor selection 5. RFQ (Bid evaluation) 6. Comparison of Quotations 7. Creation of service Order 8. Purchase Order monitoring 9. Service Entry 10. Service acceptance 11. Invoice verification 12. Release of Payments Service Master Master record creation- description of service, UoM, etc. Can attach price through conditions Conditions can be maintained at At Service level (Market price/ Estimate) At Service and Vendor level At service, Vendor and Plant level Service is procured for direct consumption. Account assignment U (Unknown) is accepted at PR level, not in PO Materials are procured at Item Level, but Service is procured BELOW item level. Item category D is used for Service POs Provision of unplanned expenses and total limit at item level Release procedure is possible for Service Entry Sheet Service Entry Sheet is made with respect to PO Invoice verification also done with respect to PO PO History is updated after Invoice verification Service Entry sheet updates FI/ CO. Complex service specification can format through outline levels Can assign any number of service lines to each item level AC03 Creation of Services, ML 81N Service Entry Sheet

Account assignment in services Specifying the account assignment for the services at the time of their initial procurement is optional. Account assignment category is at document item level. -U (Unknown is accepted - Multiple account assignment is accepted - Distribution is also possible Invoice verification of services (SES) In Vendor master we have to specify, GR based IV/ ERS/ Service based IV Global Percentage Bidding (GPB) It is a procedure of bidding used in procurement of external services ONLY. Pre-requisites are 1. Document type AB in RFQ 2. Calculation schema MS0002 (with condition types KR01 header discount & KZ01 Header Surcharges Process 1. Create RFQ with document type AB. Maintain price per service and send to Vendors 2. Vendors will not quote any price for each service, But they will indicate a % addition or Deletion with respect to the price shown in RFQ. This % can be at Per Outline level or for the uppermost outline level (total) INVOICING PLAN and BLANKET POs are possible with Services

OUTLINE AGREEMENTS Its a long term purchasing agreement with a Vendor concerning the supply of materials or the performance of services according to the pre-determined conditions. These are valid for a certain period of time and cover a pre-defined total purchase QUANTITY and VALUE Outline Agreements - 1. Contracts a. Value (WK) b. Quantity (MK) c. Centrally agreed Contracts d. Distributed Contracts 2. Scheduling Agreements

a. LA b. LPA c. LU Contracts are with Release Orders and Scheduling agreements are with Delivery schedule Release Order is a Purchase Order reference to a Contract

CONTRACTS NO DATES PR > RFQ > Contracts (manual) VALIDITY PERIOD is to be indicated in the Header In Quantity contract, the target quantity and purchasing conditions are to be maintained for EACH item Item category M & W are permitted in Contracts (M- Material Unknown & WMaterial group) Item category M Similar materials with SAME PRICE, but different material numbers. Material numbers are to be specified in release order. Item Category W Material belonging to the same material group, but with DIFFERENT PRICE. W can be used in VALUE CONTRACTS ONLY M & W are NOT ALLOWED in Release Orders Account assignment U (unknown) is permitted in contracts but NOT in release orders Release order documentation contains the statistics for an item. It is updated automatically and used for monitoring the contract Single and multiple account assignments are allowed in contracts Centrally agreed contracts For many Plants in a purchase organization. In this case DO NOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise against the contract. Partner functions are also possible. Using Plant conditions, we can specify separates prices and conditions for each receiving Plants. Distributed Contracts (DK) Contracts at different Plants operating on different (ERP) systems which are accessible through ALE SCHEDULING AGREEMENTS Long term agreement with a vendor to supply material as per pre-defined condition. Pre-defined PERIOD and QUANTIRY (NO VALUE) PR > RFQ > Scheduling Agreement. Centrally agreed S.As can be prepared.

M, W and U are not allowed in Scheduling Agreements Details of delivery date and quantity are maintained through Delivery schedules Schedule line can be created automatically through MRP run, but for this 1. Define Scheduling agreement as a Source of supply for the material. 2. Auto schedule line selection source list Select option 2 in MRP Column (in Me01) 3. Auto schedule line must be allowed in MRP system

Types of Scheduling Agreements: 1. Type LA Document type - LP Agreement + Delivery Schedule 2. Type LPA Document type LPA a) Agreement + Delivery Schedule + Forecast Schedule + Release documentation b) Agreement + Delivery schedule + Forecast schedule + Release documentation + JIT Schedule + Release documentation 3. Type LU Stock transfer scheduling agreement FRC (forecasting) Schedule gives a medium term overview of requirements JIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/ Hourly basis. Release documentation requirement is SET by fixing release documentation indicator in Customizing For JIT scheduling, JIT is Indicator to be set in Material Master record We can post a Goods receipt against a scheduling agreement directly in MIGO Creation Profile 1. Optional data from Vendor master record 2. Release creation profile is for each scheduling item 3. It is customized on a Plant specific basis 4. It determines the periodicity of SA release and aggregation of schedule line quantities 5. Tolerance limits are in release creation profile (RCP) and set it during customizing Aggregation schedule Total scenario in a specific time period Firm, Trade off & Planning Zones 1. FIRM ZONE Immediate Vendor can go ahead with manufacturing. The Purchaser is liable for total quantity 2. TRADE OFF ZONE Near future requirements. Vendor can go ahead with mobilization of requirements. But the liability is limited to the purchased raw materials/ semi finished goods 3. PLANNING ZONE No liability by the Purchaser Firm and trade off zones details are forwarded to the Vendor along with FRC and JIT Schedules for getting more clarity of Scheduling Agreement.

The procedure is A. At IMG level Maintain release creation profile against your Plant. Here you are going to maintain 1. General Parameters like Creation strategy for JIT & FRC Schedules 2. Aggregation Horizon Daily or monthly aggregation in Days for both JIT & FRC 3. Creation periodicity Daily/ Weekly/ Monthly for JIT & FRC 4. Tolerance profile, etc B. Transaction level 1) Create Scheduling Agreement ME31L. Attach the creation profile in the Scheduling Agreement at Item > More functions > Additional data Please see that the Material Master is having tick for JIT Schedule & 2) Maintain Delivery schedule ME 38 3) Create the release documentation ME84. Select FRC & JIT Schedule and process and see that FRC and JIT Schedules are created 4) If you want to see the schedules, go to ME9E

SOURCE DETERMINATION Source can be a Vendor or an Outline agreement. By Source list, we are defining preferred or allowed sources for a material. By Quota, we are specifying the share of total requirement over a specified PERIOD from each SOURCE. Source determination at PR level If the material is with master record, during creation of PR, Prices will be taken from the material Master, EVEN IF, we maintain a different price in Info record. But the vendor will be selected from Info record Case. Source list is maintained for Vendor A & Info record is for Vendor B While creation of PR, system will select A as the source, if the source list selection is opted in the material Master, otherwise, B will be selected. For fixing a Vendor in a source list, the info record for that Vendor is TO BE maintained. If we have maintained a source list for a material we have to select that Vendor for placement of PO. So check the requirement display before maintaining a Source list for a material. INFO RECORD is a MUST for automatic source determination at PR level. Source determination function is available ONLY for PR

SOURCE LIST Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for a PERIOD (Validity)

MRP Indicator in Source list considered while material Planning If source list requirement is defined at Plant level, then system will not allow creating a purchasing document without Source list. Source list can be for a Material (at Material Master) or Plant (at customizing) Source List analysis List out materials which are NOT having source list in the Plant ONLY ONE FIXED Source is allowed fro a material within a Validity period Source list can be maintained Manually/ From Outline Agreement / From Purchasing Info Record/ Automatic generation. Source list can be made referral (of another material) If the selection of source list is auto, we can have single or collective procedure. Can be from Out line agreement/ Info record We can create a Source list for a MATERIAL GROUP (for contract W) EXCLUSION INDICATOR Set for excluding a source in the source list

7 INVENTORY MANAGEMENT
MOVEMENT TYPE A 3 digit key used to differentiate between goods movements in R/3 system. It is having several control functions in Inventory Management 1. Plays a central role in automatic account determination 2. Determine which stock or consumption accounts are to be updated in FI. 3. Determines the format of the screen where we enter documents and how the quantity fields are updated.

Valuated Good Receipts Auto creation of storage location- If it is set in customizing for Plant & Movement type, the storage data is created automatically during the first goods movement. Auto creation of storage location happens if the given quantity is to be posted in to normal storage location. Auto storage location will NOT be created for goods movements in SPECIAL STOCKS Stock types 1. Unrestricted Available for MRP & Available for withdrawal 2. Quality Inspection Available for MRP but NOT available for withdrawals 3. Blocked NOT available for MRP & Withdrawal 4. Restricted stock. -As per the batch requirement in Batch Master Stock Indicators are the indicators for differentiate between stock types on goods receipt 1 Unrestricted stock 2 Quality Inspection stock

4 Blocked stock STOCKS During goods receipt, a material and accounting documents are generated and it updates the Purchase order history After GR is posted against a particular movement type, the Quantity, Material, Movement type and Organizational level CAN NOT BE CHNAGED. If any errors, reverse or cancel the document We can post withdrawals & Consumption ONLY from UNRESTRICTED Stock. If we want to withdraw material from QI/ blocked, we have to first transfer post it to Unrestricted and then withdraw it. Plant stock & Storage location stocks views will appear automatically in material master after booking material movements.

Stock Transfer Vs Transfer Posting Stock Transfer involves physical movement of goods but transfer posting need not be In transfer posting ONLY Material document is generated (NO Accounting document) Movement type is the key control factor in both the cases. Quality Inspection 350 349 Blocked 343 344 Document principle applies to Inventory management. A document is the proof of that transaction involving stock changes has taken place. Documents are stored in the system 321 UN Restricted 322

Material Document Vs Accounting Document A material document consists of Header (Posting date, created by, etc..) and item level details like quantity, material, storage location, etc Accounting document consists of Header (General data like posting date, posting period, currency, etc.) and item level details like G/L account number, amount, etc. Material document and accounting documents are INDEPENDENT documents We can identify the material document by the material document number and document year. The Accounting documents are identified by the accounting document number, company code and a Fiscal year.

In Accounting document, the number ranges are assigned to a Document type. But for material document, the number ranges are assigned to a TRANSACTION / EVENT TYPE Goods Movement Transaction/Even type Document type GR for PO WE WE or WN GR for others WF WE GI/ TP/ Others WA WA GI for deliveries WL WL We cannot change a document once it is posted. Some additional information like texts can be added. So we use reversal for correction

EFFECTS OF A GOODS RECEIPT 1. 2. 3. 4. 5. 6. Stock Value updated in the Material Master Material and Accounting documents are generated Creation of an Inspection lot, if the material is Quality activated Stock and consumption accounts are updated Transfer request is created, if Warehouse Management is activated Purchase Order and PO History is updated. RFQ, PR also updated

Stock Overview For each organizational level, Client/ Co code/ Plant/ Storage location / Batch/ Special stocks Its a STATIC display of stocks. Planned data are not available

VALUATION CLASS It is the grouping of materials to determine which stock accounts are to be updated upon goods movements For automatic account determination, R/3 system works with Valuation Class. It is fixed at Accounting view of material master Material Valuation is depends on Price Control (Standard or MAP) and goods movements (GR/GI/TP) GR/ IR clearing account depends on the PO price Changing of the price control from standard to MAP is always possible. Delivery costs Planned and unplanned Unplanned delivery costs are directly booked through MIRO, so the valuation done at GR is NOT Correct if the transaction is having an unplanned delivery cost Goods receipt can be for with reference to 1. Purchase Order 2. Order

3. Others The stock display will be as follows GR from Stock detail as per system Purchase Order Open PO quantity Order Open order quantity Reservation Planned receipts ENJOY Transaction MIGO MIGO transaction is combining following 7 transactions in single code 1. MB01 - GR for known PO 2. MB0A GR for Unknown PO 3. MBRL Return Delivery 4. MBSF Release of blocked stock 5. MBNL Subsequent delivery 6. MBST Cancel Material document for GR 7. MB02/ 03 Change & Display Material document GR of Blocked Stock (Movement type 103) It is the conditional acceptance of goods. While we post the material into GR blocked stock1. Quantity is posted to Stock 2. Material is NOT VALUATED 3. The transaction will be available in PO History 4. The material is NOT available for MRP GR STOCK Unrestricted use (101) Quality Inspection (101+X) Valuated Blocked (101+S) GR Blocked stock (103) When GR blocked stock is released (MBSF), then it is valuated automatically. It will have the same effects of an ordinary GR. While accepting the GR blocked stock to Plant unrestricted stock(105), you can refer the material document of earlier GR or Purchase Order

Goods Receipt in to QI stock (101 +X) Pre-requisites 1. Quality inspection indicator in material master 2. QI indicator in Additional data in PO (Header). It will automatically copied from material master

3. Set QI indicator in GR at item level Possible movements for QI stocks 1. Transfer to Unrestricted stock and its reversal 2. Transfer to GR blocked stock & its reversal 3. Transfer to Blocked stock and its reversal Transfer to Sampling and its reversal 5. Return delivery to Vendor and its re-receipt OTHER GOODS RECEIPTS 1. Initial entry of stock balances Movement type 561/ 563/ 565 2. External Good receipts without PO (Movement type 501) 3. Internal Goods receipts without production order (Movement type 521) 4. Good receipts for By-products (Movement type 544/542) 5. Good receipt for Free of Charge (FOC)- Movement type -511 6. Returns from customers (Movement type 451)

4.

DELIVERY COMPLETED INDICATOR The delivery completed indicators are fixed in PO & GR. After setting the delivery completed indicator at GR, the open order quantity becomes ZERO. But still we can post new GRs against it. But the open order quantity WILL NOT CHANGE. If we change the quantity of a delivery after posting the GR, the system DOES NOT CANCEL the delivery completed indicator automatically. But it issues a warning message. If an order quantity/ return delivery quantity reduces the delivered quantity below the tolerance limit, the system cancels the delivery completed indicator. But issues a message Delivery completed indicator has been reset. Thereafter we have to manage it manually. Standard R/3 system does not accept Over deliveries For accept over deliveries, you have to select unlimited delivery in PO or properly set the over delivery tolerance GRs valuated on the basis of the incoming quantities in the Order price unit Invoice verification is also based on the GR qty in the order price unit. If you want to restrict a GR upto a certain date, enter that date in Latest GR date in Delivery tab of item

RETURN DELIVERY Return delivery can be created with reference to a material document or Purchase Order Return Substitute Delivery by Delivery 101 122 123 103 124 125 105 122 123 If you receive a substitute delivery, after you have returned the goods to a Vendor, it is ADVISABLE to reference the associated return delivery by using a reverse posting when you post a new receipt 122- Return delivery from Warehouse It results into 1. Material document created 2. Stock accounts updated 3. Purchase Order update 124 Return delivery from GR Blocked stock It results ONLY in creation of a material document as a proof of return Return delivery in GR based Invoice verification Uses the material document to reverse If invoices are settled and then you are returning, please ensure that Invoices should be cancelled In customizing, for each MOVEMENT TYPE, you can specify Reversal and return delivery movement type and transactions in case of GR based IV Difference between Reversal & Return delivery Reason for movement is optional in the case of reversal, but mandatory in return delivery. Return delivery slip is not required for reversal but mandatory for return delivery. Both operate on different movement types. Receipt by

Movement type 161 It is used to assign in a PO so that while posting the GR, the qty in the GR will be automatically removed from the stock. It is generally used for exchange of materials. Quantity Distribution facility at GR We can distribute the incoming quantity in GR to 1. To several storage locations 2. To several Movement types 3. To several stock types 4. To several Batches Note Batch selection list DOES NOT work with SPECIAL STOCKS

Goods Receipt of Non-valuated goods The receipt of goods to unrestricted stock. We can directly issue it for consumption Automatic PO generation at GR We can configure the system in such a way that system creates PO in background during the receipt of Goods which is not having any PO. We can do the invoice verification afterwards. In Customizing for organizational structure, the plant must be assigned a purchasing organization in the step Standard purchasing organization - assign plant so that the system can determine the purchasing info records. Automatic POs are allowed only for movement type 101 & 161 in standard system. The customization for these movement types are to be there for automatic PO creation System valuates the GR with the price defined in purchasing info record. MIGO transaction is supporting automatic PO. It is available in MB01 In Vendor Master the purchase group default data for material to be maintained Automatic PO is only possible for valuated goods Pre-requisites for automatic PO are; 1. Selection in Material Master 2. Selection in Vendor master 3. Info record should be available 4. Valuated good receipt 5. Automatic PO selection for Plant & Movement types (101& 161) If a PO is generated in the background for the return item (movement type 161). This PO is required if you want to carry out invoice verification for the credit memos, issued by the Vendor for this return

GOODS ISSUE TO FROM Ware House Consignment Pipe Line GOODS ISSUE GOODS ISSUE To Cost Center To Asset To Sales To Order To Sampling To scrapping

Sampling Materials are treated as scrapped. But the value of sampling material posted from the material stock account to the Quality Inspection stock account.

But while scrapping material, the material will be posted to Scrap account and it debits to the cost center. Issue to sampling and scrapping are different. We can change the movement type while goods issue. Goods can be issued to reservation and BOM While goods issue, we can have collective entry with different account assignment also. System WILL NOT update the consumption statistics in Material Master, if you post goods movements using special stock types Sales Order Stock and Project Stock We can set final issue indicator while issuing against a reservation Stock determination is a function that can be used on a cross-application basis. We CAN issue goods from Quality inspection and Blocked stock ONLY for SCRAPPING or SAMPLING Reversing a planned goods issue Can be reversed with reference to a Material Document OR to a reservation A Material document (Reversal) will be created An accounting document will be created Stock will be updated (increased) Consumption will be reduced While issuing a material for scrapping, - Relevant stock reduced - Value posted from stock account to scrap account - Price is taken from material master o Movement type 201 221 231 241 251 261 281 291 Consumption for Cost center Project Sales Order Assets Sales Production order Network All account assignments

GR/ GI SLIP numbering We can have GR/GI slip number in addition to the Material and accounting document numbers It is a statutory requirement for some countries like Italy It can be assigned Internally/ externally by each Plant or Storage Location or Movement type Options 1) Include the filed for the GR/GI slip number in the SAP script form

2) Call up form MB-XAB using transaction MBXA Then customize it Print report SAPLMBXA in print control Serial numbers should be active for the Plant In stock transfer (Plant to Plant) of material with serial number is only possible if the same profile is assigned to the material in both the Plants

Returns to Vendor Movement type 102 122 124 161 Functionality Reversal of GR due to any clerical mistake Returns to Vendor due to any reason like damage Returns to Vendor from GR blocked stock Returns to vendor For the exchange of another material

NOTE : To carryout stock transfer from Plant to Plant for a material that is subject to SPLIT VALUATION, you HAVE TO USE 1STEP or STO

SPECIAL STOCKS Special stocks that are managed separately becoz they are not belonging to your company. The special stocks and special procurement types are of 2 types 1. Company owned special stocks 2. Externally owned special stocks. 1. Company owned special stocks The special stocks that are owned by the Company stored with Vendor or customer. Stock material provided to Vendor/ subcontractor Consignment stock at Customer Returnable packaging at Customer These Materials are managed at PLANT LEVEL. NOT at Storage location level. Only 2 types of stocks are possible. Unrestricted / Quality Inspection 2. Externally owned special stocks Stocks owned by Vendor/ Customer and stocked at your place. 1. Vendor Consignment 2. RTP (returnable Transport Packaging 3. Sales Order Stock 4. Project Stock These materials are managed at STORAGE LOCATION LEVEL All the 3 stock types, UR/ Blocked/ QI are allowed

1. 2. 3.

8 SPECIAL PROCUREMENT TYPES

1. 2. 3. 4. 5. 6. Consignment (K) Sub Contracting (L) Stock Transfer using Stock Transport Order (U) Third Party Processing (S) RTP (R) Pipeline Handling (P)

CONSIGNMENT PROCESS When buying goods as a Consignment, the ordered goods still belong to Vendor, even after delivery. The goods become your property ONLY after they are consumed. The quantities consumed are periodically settled. The Ownership of the material is with Vendor but storing at clients premises The stocks are NOT VALUATED, but available for MRP The ownership of the material transfers to the client ONLY after issuing/ transferring it from the consignment stock Consignment liabilities are settled periodically (thru MRKO) based on the consumption statement by the vendor The prices of consignment stocks are defined in Info record and maintained periodically We can use the conditions in Purchasing CAN maintain ANY unit of measure with proper definition of conversion factor in material master Physical Inventory of Consignment stock is possible Consignment stocks are managed at STORAGE LOCATION level There will NOT be ANY VALUE in consignment purchase orders In PO, No Price, No conditions, No Invoice receipt requirement but GR requirement Stock movements are possible. Consignment stocks can be displayed by Tcode MB54 We can issue the consignment material from Consignment stock using movement type 201+K Item category K is used for consignments We can post GRs for consignment WITH or WITHOUT reference of a PO. But the consignment prices are to be maintained before GR Consignment stocks can be managed at Unrestricted/ QI/ blocked and we can do the transfer posting between them. But we can withdraw the consignment from UNRESTRICTED ONLY Goods Issue from consignment unrestricted stock results in a liability to the consignment vendor

We can enter the invoice for consignment WITHOUT reference to a PO. Debits are posted to the Liabilities from consignment stores G/L account to which the credits were posted upon Goods issue from consignment G/L account Consignment info record- The info record of consignment with different Plants (different prices at each plant) is having a SINGLE INFO RECORD number Info record should be created BEFORE creating a PO/ GR. Process of Consignment Procurement & Settlement 1. Creation of Info record ME11 2. Create Purchase Order ME21N Standard procedure. Item category K GR to consignment store Invoice Receipt is NOT required No Price in PO 3. Goods Receipt MIGO Receipt of Material to consignment store The movement type 101+K Please note that the GR can be with or without GR. Item will be in special stock while posting the GR 3. Transfer Posting MB1B. Transferring the material to own stock The movement type 411K (the step is Not Mandatory) 4. Goods Issue MIGO Goods Issue from consignment store to movement types 201/231/ 241/ 251/ 261 Note We can directly issue the material from consignment stock using movement type 201+K, without transferring to companys stock. Process of Physical Inventory of Consignment 1. Creation of Physical Inventory document In the create screen enter K in special stock field 2. Enter Physical Inventory document 3. Post the differences If you want to include QI/ blocked stock, enter a new material number and enter the relevant stock type in the filed of STY and post the difference as per your settings SUBCONTRACTING PROCESS The vendor receives the components from which he produces the finished product mentioned in the PO. The components are listed in the PO and can also be determined by the system via BOM You order an end product from a vendor and specify in the PO with components, you will send to vendor to manufacture the end product Issue of components to the vendor and good receipt of finished product with consumption detail of components

Vendor invoice is posted against the purchase order A subsequent adjustment for excess/ under consumed components can be made. Item category L is used in the PO, and several components can be attached to the Po We can enter the components by manual or thru BOM explosion System automatically creates reservation for the MRP relevant components The purchase order price will be the price of subcontracting services Conditions of subcontracting can be stored in Purchasing info record for subcontracting We can link services specification with subcontracting items The components with subcontractor (after issuing it) are managed as a special stock to the vendor. This stock is VALUATED and AVAILABLE for MRP as the components are your property. It is not allocated to a specific storage location becoz its still your property We can monitor subcontracting stock by evaluations Goods issues are made, 1. With respect to a Subcontracting PO 2. From the list of all the material of a subcontracting vendor We can do the process of subcontracting thru SD. Through delivery and shipping Good receipts are posted with respect to Subcontracting order item Consumption of components posted at GR and subsequent settlement is possible with respect to PO Invoice verification is same that of standard process. The account postings at subcontracting at GR & invoice verification are;

SUBCONTRACTING SCENARIO
Order - SF Material Component - Raw Material A. At Goods Receipt 1. Stock account of SF Product - Debited @ (Order price + Valuation price of SF product) 2. Cost of Goods Manufactured - Credited @ (Order price + Valuation price of SF product) 3. Stock account of Raw Material - Credited @ Valuation price of Raw material 4. Consumption Account - Debited @ Valuation Price of Raw Material 5. GR/ IR Clearing Account - Credited @ Order Price 6. External Labor Account - Debited @ Order price B. At Invoice Receipt 1) If there is NO deviation Price in Vendor invoice Invoice Value = Order price 1. GR/ IR Clearing Account - Debited @ Order Price 2. Vendor account - Credited @ Invoice Price (Order price) 2) Invoice Value = Order price + deviation price from PO 1. Stock account of SF Product - Debited @ deviation amount in invoice 2. Cost of Goods Manufactured - Credited @ deviation amount in invoice 3. GR/ IR Clearing Account - Debited @ Order Price 4. External Labor Account - Debited @ deviation amount in invoice 5. Vendor account - Credited @ Invoice Price (Order price + deviation amount from PO)

i. Stock account fro Finished goods ii. Stock account of raw material iii. GR/ IR clearing account iv. Vendor account v. Cost of goods manufactured vi. Consumption account (for components) vii. External labor account We can enter the material that is to be produced as a subcontract item in the scheduling agreement By the issue of components (thru transfer posting), the stock of components WILL NOT reduce from your stock. The stock will be produced at the time of receipt of Goods receipt of finished product CS01 is used for creating BOM/ components 1. The order of the end product in PO. The components are attached to the item n PO 2. In Inventory management, components are posted to the stock of material provided to the vendor 3. Vendor supplies the end product with consumption details of components and it will posted to the system while GR 4. Any balance (+ or -) of components are done at subsequent adjustment transaction 5. Vendor submit his invoice for the services rendered and invoice will be posted in MIRO Process of Subcontracting Process 1. Creation of Info Record ME11. Service with price of service 2. Creation of Purchase Order ME21N Creation of PO with Item category L. Attach components to the item in PO 3. Transfer Posting MB1B Transfer the components from your store to the subcontractor using the movement type 541 4. Goods Receipt MIGO receive the end product (and components) to Stock by using the movement type 101 for main material and 543 for components 5. Subsequent Settlement MB04 Subsequent adjustment of components, if any (other than the entry happened during GR). Movement type 544 for components and 545 for by product 6. Invoice verification MIRO Normal process for invoice verification of vendor services The Master record of end product and components are to be made available before the creation of PO The components with subcontractor / Subcontractor stock is your stock. It is available for MRP and it is valuated, it is managed at PLANT LEVEL. BLOCKED STOCKS are not allowed for subcontracting (Components). But we can transfer the stocks between these 2 (UR&QI) stocks Subcontracting in Inventory Management (Facilities) 1. Provision of components

2. Goods receipt of final product with consumption details of components. We can adjust the components at Goods receipt 3. Subsequent adjustment of components 4. Allowed transfer postings a) Plant to Plant 1step (301) b) Material to Material (309) c) Between Unrestricted and QI ( 321 & 322) Provision of components Posting from Unrestricted stock Can be with respect to a PO or Without PO The components can be delivered by another vendor Issue PO to a Vendor for supplying the components, the delivery address should be the address of subcontracting vendor. Enter the check box provision at PO. When you are getting the information that the Vendor is supplied the components to your Subcontracting vendor. Make a Goods receipt (STATISTICAL GOODS RECEIPT) in the system so that the stock position will be updated The Goods receipt for a Subcontracting Order is VALUATE the material at Subcontracting Price PLUS the value of the components consumed Subsequent adjustment In this transaction the consumption account is already posted is available / displayed as a second line for each item Use + or - sign to adjust the components. The movement type is 544. Subsequent adjustment is possible ONLY for subcontracting orders (L) Receipt of a BY PRODUCT generated during subcontracting The by products are entered in the subcontracting Purchase Order as components with NEGATIVE quantity While receiving the good at GR, system automatically posts the receipt of byproducts 1. In the material document you can identify the by product by the movement type 545 2. By products are posted to the Stock of material provided to the Vendor Due to the receipt of byproduct, the value of end product will be REDUCED. To transfer the byproduct quantities from the Stock of material provided to Vendor to Unrestricted stock, make a transfer posting using the movement type 542 Subcontracting for Sales Order stock and Project stock An account will be assigned to a sales order or a WBS element STOCK TRANSFER USING STOCK TRANSFER ORDER Advantages of stock transfer with STO w.r.to transfer posting 1. Good receipt can be planned in receiving plant 2. Can include an additional vendors (freight, etc) in Stock Transport Order 3. Delivery costs can be entered in STO

4. 5. 6. 7.

Its a part of MRP PR created via MRP can be converted to STO Goods Issue can be done through Shipping delivery GR can be posted directly to consumption Total process can be monitored through PO history

PLANT to PLANT 1 Step ORDER TYPE Area - MM-PUR MOVEMENT TYPE301 (Transfer Area -MM-IM Posting) DELIVERY TYPE Area - SD BILLING TYPE Area - SD DOCUMENT TYPE Area - MM-IV PRICE Valuation Price PLANNING Via Reservation STOCK after GI DELIVERY COSTS CROSS-Company Company code Code Via clearing account

2 Step

STOCK TRANSPORT ORDER Without SD With SD UB UB 641 & 101 NL

With Billing UB 643 & 101 645 for 1 step NLCC IV

303 & 305

351 & 101

Valuation Price Valuation Price Purchase Order Stock in Transfer Stock-in-Transit Possible

RE Valuation Price Pricing in SD & MM Purchase Order Purchase Order Stock-in-Transit Stock-in-Transit Company code Possible Possible

Company code Revenue account & Company code Company code clearing GR/IR Clearing clearing account clearing account account account

STOCK TRANSFER PLANT to PLANT 1 Step Carried out ONLY in Inventory Management Entered as a transfer posting MB1B Can be planned by reservation The quantity of unrestricted stock entering in sending plant posts IMMEDIATELY to unrestricted stock of receiving Plant Postings are valuated at the price of sending plant If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue STOCK TRANSFER PLANT to PLANT 2 Step Carried out ONLY in inventory management Transfer posting CAN NOT be planned through a reservation Goods issue sending plant > Stock-in-transit of receiving Plant > Goods Receipt of receiving Plant. Transfer posting (Goods issue-1step) is valuated at the price of sending plant

If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue. If any offset, will post to Company code clearing account We can request and monitor stock transfer in purchasing through a PR, STO & Scheduling Agreement For stock transfer scheduling agreement use document type LU and item category -U STOCK TRANPORT ORDER WITHOUT SD DELIVERY Goods Issue Sending Plant > Stock-in-transit of receiving plant > Goods receipt of receiving Plant Delivery costs CAN BE entered in ST Order Transfer posting (Goods issue-1step) is valuated at the price of sending plant If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue. If any offset, will post to Company code clearing account Process Flow 1. Creation of ST order in receiving Plant for sending plant with a document type UB in ME21N 2. Posting a goods issue through transfer posting MB1B at sending plant with a movement type 351 3. Posting a goods receipt MIGO at receiving plant with movement type 101 4. Invoice verification at receiving plant Normal MIRO

STOCK TRANSPORT ORDER WITH DELIVERY Carried out in Purchasing (entering the STO), Shipping (delivery at sending Plant) and Inventory management (GR at receiving Plant) Other characteristics are same as that of STO without delivery Process Flow Creation of STO at sending Plant ii. Post goods issue through delivery (VL 10B or 10F) at sending plant with movement type 641 iii. Goods receipt (MIGO) at receiving plant with movement type -101 STOCK TRANSPORT ORDER WITH DELIVERY & BILLING The transfer posting in NOT VALUATED at the valuation price of the material of sending Plant. But defined in both the sending and receiving plant using conditions Possible ONLY between plants at DIFFERENT COMPANY CODES The areas are Purchasing (STO), Shipping (sending Plant delivery and goods issue), Billing Plant (Creation of Invoice at sending Plant), Inventory management (Receiving Plant goods receipt) and Invoice verification (MIRO at receiving plant) Goods Issue through Delivery > Stock-in-transit Company code at receiving Plant > Goods receipt at receiving plant

 Prices in purchasing as per the conditions maintained in Info record and inter company pricing procedure Goods movements are valuated as per the accounting documents generated. 4 Accounting documents are generated a. Goods Issue at sending Plant b. Goods receipt at receiving Plant c. Billing at sending Plant d. Invoice verification at receiving plant Process Flow a. Creation of STO in receiving Plant for sending Plant. Document type UB and item category -U b. Post delivery in sending Plant (Movement type 643) c. Creation of billing document in sending plant d. Post GR at receiving Plant e. Post invoice at receiving Plant GENERAL INFORMATIONS ON STO Pre-requisites for Goods Issue in Shipping b. In customizing in Purchasing, a delivery type (NL for STO with delivery and NLCC for delivery & billing) must be assigned to the PURCHASING DOCUMENT TYPE (UB) c. Customer number for receiving plant to be created and that MUST be maintained in customizing in STO d. In SD customizing, shipping point determination MUST be maintained e. In material master, shipping data MUST be maintained To display the stock-in-transit, we can use MMBE and MB53 Posting of GR for STO to a blocked stock is NOT POSSIBLE because the stock-in-transit is already valuated No accounting document will be generated for a GR of STO CROSS COMPANY STOCK TRANFER We can do a cross company stock transfer in 3 ways a. Stock transfer between 2 plants by 1 step or 2 step b. An STO without delivery via shipping c. STO with delivery via shipping (possible for plants in different company codes) In all cases the value of transportation is posted to a company code clearing account in both the plants. The stock transfer is valuated at the valuation price of the material in sending plant

Valuation of stock transport with billing- INTERCOMAPNY EXAMPLE Plant P1 orders 10Kg of material from Plant P2 Value of the material at P1 10 Price for inter company billing at P1 12 STO order price 11 Plant P1 P1 P2 P2 Transaction Goods Issue Billing Goods Receipt Invoice verify. Value Account Remarks 100(-) - Stock Account (at price of P1) 100(+) Change inventory stocks (at price of P1) 120(-) Sales revenue (Price Inter Co billing) 120(+) Customer clearing (Price Inter Co billing) 110(-) GR/IR clearing ( P2 -STO Price) 110(+) Stock account ( P2 -STO Price) 120(-) - Vendor account (Billing Price) 110(+) GR/IR clearing (STO Price) 10(+) PDA or Stock A/c (Difference)

THIRD PARTY PROCESSING

Company Order Billing Customer Material Customer places an order on your company You are placing/ passing the same order to a Vendor Vendor supplies the material to customer directly Vendor submits his invoice to you You are submitting your invoice to the customer Invoice Vendor Pur. Order

Process Flow (with SD component) 1. Entering a Sales Order While entering a sales order with Item category S and account assignment X, system will automatically creates a PR for each item in the third party sales order. 2. Entering a Purchase Order Process the PR generated above, assign a Vendor and convert it to a Purchase Order The delivery address in the Purchase Order will be as that of the customer

3.

4.

5.

Delivering goods to Customer Vendor supplies the material directly to the Customer Can create a STATISTICAL GOODS RECEIPT in the system, but NOT mandatory. Enter the Invoice of Vendor Invoice verification of the Vendor invoice. This CAN be a mandatory requirement as per the customized settings (If customized for creation of billing document after the posting of Vendor invoice) Creating Billing document for the Customer Billing document is created in SD. Depending on the BILLING RELEVANT INDICATOR set for this item category in SD The path in customizing for this is SPRO > SD > Sales > Sales Documents > Sales Document Item > Define Item Category > Check the details of TAS. Billing Document cab be Quantity based on Order OR Quantity specified in Vendor Invoice If the customer is billed on the basis of quantity, we CAN create billing document, IMMEDIATELY after the sales order is entered If it is based on Vendor invoice, we CAN NOT create the billing document TILL the vendor invoice is entered/ posted in the system

Implications of Third Party Processing in SALES By creating a Sales order for Third party, the resulting activities in Purchasing are 1. A Purchase Requisition will be created with one or more delivery schedule 2. Purchase Requisition numbers are updated in the sales order (Item details) 3. Item is scheduled automatically after considering the delivery time and purchasing processing time from material master

Implications of Third Party processing in PURCHASING A PR is created automatically. We can do LIMITED changes in this automatically created PR, like purchasing group Order quantity / Scheduled Delivery date CAN NOT be changed manually. It can be changed through sales order ONLY. We can create a PR for third party processing manually using Item category S & account assignment X We can create the PO with respect to PR or manually GR Indicator- For account assignment category X, GR can be posted as per the customizing. If the Purchase Order is with respect to a Purchase Requisition, the VENDOR ADDRESS CAN NOT be changed. If the delivery address is same for all items, the delivery address will be printed on Header, other-wise it will be item-wise

Implications of Third Party processing in Inventory Management We can enter the Goods receipt, if the GR indicator is set in PO Goods receipt for third party processing will be similar that of a GR for a PO with account assignment

RETURNABLE PACKING (RTP) VENDOR PROCESSING Its a multi-trip packaging medium Property of your Vendor came along with material, stored at your place It is NOT VALUATED It is managed as a SPECIAL STOCK. So special stock data is required in addition to material master data. Special stock Indicator is M The special stock data is defined for EVERY vendor at storage location level. It is created automatically 1st receipt is posted to RTP stock. This RTP stock can not be maintained manually, but updated automatically upon goods movements. RTP is an UNRESTRICTED STOCK ALWAYS Allows a Negative stock We CAN NOT transfer RTP stock to your own stock At Goods receipt, the movement type for RTP 501+M is selected automatically by the system. For returns, 502+M. Can use Goods Issue Others for returning to Vendor with 502+M If we want to transfer these RTP material between storage locations, system selects the movement type 311+M RTP stocks are available in stock displays MMBE / MB53

PIPLINE MATERIAL PROCESSING Material is ALWAYS available. It can be withdrawn any quantity at any time These PIPE materials are NEITHER PRODUCED/ PROCURED Nor STORED Pipeline movements are mandatory in all Valuation areas For each material type, you can specify in the valuation area whether pipeline movements are Mandatory/ Allowed. Info record is mandatory for movements Pipeline withdrawals are to be for a Order/ Cost center Considered as a special stock The special stock indicator is P Withdrawals are valuated at Info record price. Withdrawals leads to a payment liability to the Vendor and its Consumption history is updated.

In standard system, the same account is assigned for consignment and pipeline. But it can be separated by settings in customizing Process Flow 1. Creation of PIPE material. Maintain purchasing and accounting views. Price control can be S or V 2. Creation of Info record 3. Maintain the source list (Not mandatory) 4. Posting of Goods Issue Movement type can be 201+P, 261+P, 281+P/ 291+P 5. Settlement of Pipeline Liabilities (MRKO)

SALES ORDER STOCK Stocks maintained for sales order Special stock Indicator E It can be Valuated / non valuated If it is NOT valuated, it is managed via a Cost Center Can be transferred to own stock using movement type 411+E

PROJECT STOCK The stocks stored for a Project till the completion of the project It can be valuated / non valuated It is allocated to a WBS element (Work Breakdown Structure) Components from this stock can be issued for a WBS element The stock is available for MRP Managed with a special stock Indicator Q It can be transferred to own stock using the movement type 411 +Q

9 VALUATION AND ACCOUNT DETERMINATION General Postings in MM

At Goods Receipt Stock Account GR/IR clearing At Invoice Verification GR/IR clearing Vendor At Payment - Debited (+) - Credited (-) - Debited (+) - Credited (-)

Vendor Bank cash At Goods Issue Consumption Stock Account

- Debited (+) - Credited (-) - Debited(+) - Credited (-)

Valuation Area Can be at Company code level or Plant level. SAP recommends the valuation at Plant Level. Valuation at Plant level is MANDATORY if we want to use Production Planning (PP) or Product costing accounting components or retail system. Once the valuation area is defined In the customizing, it is very DIFFICULT to reverse it. If you want to have a storage location for storing materials non-valuated, you can have it through another Plant(Valuation area) where only quantity updation will take place The transactions in inventory management that affects accounting are Goods Receipt, Goods Issue and Transfer Posting These transactions can change the valuation price of the material depending on the price control of the material The posting of invoice verification (MIRO) also can affect the material valuation Material Valuation during : 1. RECEIPTS are valuated at current material price in the material master 2. a) GR for PO GR before IR Materials are valuated at PO Price b) GR for PO GR after IR Materials are valuated at Invoice price 3. GOODS ISSUE Goods Issues are valuated at the current price of the material in material Master. 4. Free Delivery Zero Value Materials that are to be valuated should have accounting data with valuation Class Material Price Control 1. In standard pricing (S), Material is valuated at material master price and in case any difference, will be posted to Price Difference Account (PDA) Exact value available for cost accounting/ Controlling purposes In accounting view, the difference can be displayed. The changing of this standard price in material master is possible 2. In moving average pricing (V), GR at PO price and GI at material master price. Receipts are valuated at actual price (PO or IV)

 In case of any difference, the difference is posted to Stock account, if sufficient stock available (in such case, the MAP will be changed)or it will be posted to a PDA. System modifies the price in material master according to the delivered price If the data is used for cost accounting, will have fluctuations If the material is managed at Standard price, the moving average price will be recorded in the material master by the system Changing of Material master price (MR21) from Standard to Moving average price is ALWAYS possible Changing of Material master price from Moving average price to Standard is NOT POSSIBLE in 2 cases 1. If the material is valuated in SPLIT VALUATION 2. If the standard price is coming from COSTING and is NOT equal to the moving average price 3. Changing fro S to V & V to S are Possible, if POs are Not created or Stocks are not existing Periodic Unit Price (PUP) Price that changes periodically as a result of goods movements and invoice postings PUP = Value of material / Quantity of material PUP is used in single level or multi level price determination to valuate the material for closing period. PUP can carryout in 3 currencies and 3 valuation areas The valuation in current period, system uses standard pricing. VALUATION AND ACCOUNT ASSIGNMENT For automatic account determination The system will automatically determine the relevant G/L accounts for each transaction in MM. There are several accounting transactions are linking to a single MM Transaction We can configure the automatic account determination facility to occur within the areas of Inventory management, Invoice verification and material valuation Valuation area to be set before creating a material Company code chart is assigned in FI module Levels of valuation in automatic account determination 1. Chart of Accounts/ Company Code 2. Valuation area 3. Material Type/ Valuation class 4. Transactions (Movement type) 1. Chart of Accounts Influencing Factors Chart of account is assigned to company code

 Used as a key factor for account determination to enable a differentiation for the purpose of G/L account assignment Configure separately for automatic account determination Financial accounting, Cost & Revenue accounting uses the optional chart of accounting 2. Valuation Area- Valuation Grouping code Influencing factors Key for account determination that enables a differentiation for G/L account assignment WITHIN Chart of accounts By Valuation grouping code, dependency of accounts on Valuation area If a valuation grouping code is there assign a code for each valuation area Valuation Area is the level at which the materials are valuated If the valuation is at company code, G/L account CAN NOT be assigned according to Plant We can assign a totally different G/L accounts to Plant if it is having a separate Valuation grouping code CHART OF ACCOUNTS COMPANY CODE PLANT VALUATION GROUPING CODE 3. Material Type Material Influencing Factors Its a key in account determination that enables a differentiation for G/L Account assignment depends on Material Material is assigned to a Valuation class, which depends on a Material type More than 1 material type is allowed for a valuation class MATERIAL TYPE A/C ASSIGNMENT VALUATION CLASS CATEGORY Raw Material ROH Finished Goods FERT 0001 3000 3001

Oper.Supplies HIBE 3002 4. Transaction Influencing Factors Its a key for account determination that symbolizes the transaction Posting transactions will define the relevant accounting Posting records are assigned to each Movement type to each invoice verification

a. Account grouping Depending on Movement type and special stock indicators, we can assign an account grouping for individual transactions. We can use the rules to define its configuration of automatic postings for a posting transaction depends on 1. Valuation Grouping code 2. Account grouping 3. Valuation class COMPANY CODE Chart of Accounts

Valuation Area

Valuation Grouping Code

Material

Material Type 1 2 Account Category Reference General Ledger ACCOUN T 4 5

3 Valuation Class

Business Transaction (Movement Type)

Value String

Transaction Event Key

Account Modifier

ACCOUNT DETERMINATION Specific Information Account determination is required if the system is to fulfill its integration promise and post financial transactions at the same time as the relevant operational transaction. Accounts are determined differently, depending on which functional area you are using: MM: The process of account determination varies depending on whether the transaction involved has a movement type such as inventory management or whether there is no movement type such as invoice verification and valuation. Account determination in SD uses the condition technique. This chapter looks at the account determination of MM transactions w. and w/o movement type only. You can do most of the settings relevant for the account assignments for MM transactions either in the configuration menu for "valuation/account assignment" (settings for MM transactions w. movement type) or in the configuration menu for "invoice verification" (settings for MM transactions w/o movement type). You will get to the same tables but there are different simulation functions. It is also possible to access these tables via the configuration menu for accounting. The valuation area is the level at which material valuations are carried out. In the MM application transactions, the valuation area is hidden. In customizing, you can choose whether the valuation area equals the company code or the plant. This setting must be carried out before creating materials and before entering transactions in MM inventory management. If PP is active the valuation area must be on plant level ! Grouping of organizational entities The allocation of a company code to a chart of accounts is carried out in the FI customizing. The chart of accounts to be used is determined for each company code. The valuation grouping code facilitates the allocation of G/L accounts with as little effort as possible. Valuation areas to be treated equally in terms of account assignment must be defined with the same valuation grouping code. Valuation grouping codes either serve as a means of fine differentiation within a chart of accounts or they correspond to a chart of accounts. When making the basic settings for valuation, you can specify whether the valuation grouping code is active. Grouping of material master entities Account category reference is the grouping term for account determination depending on the material type. Several valuation classes can be allocated to one account category reference. Each material type is allocated to one account category reference. When maintaining the accounting data of a material of this material type, you can select one of the valuation classes that are defined for the corresponding account category reference. The G/L account determination for a material is carried out according to the settings for this valuation class. Via the Account category reference

You can define the same G/L account determination for all materials of one or even several material types. But you can also specify that different G/L accounts are determined for different materials of a material type.

INVOICE VERIFICATION
Invoice verification process the invoice in FI. By posting an invoice the data in MM & FI are updated. UPDATION IN MATERIALS MGT. 1. PO Update 2. PO History updates 3. Delivery cost updates 4. Mat Master update 5. Vendor master update UPDATION IN ACCOUNTING 1. G/L accounts update 2. Assets update 3. Cost center update 4. Projects update 5. Orders update

Invoice verification works in conjunction with Purchasing and Inventory management We can post an Invoice with respect to 1. A Purchase Order 2. A Service Order 3. A Goods Receipt While posting an Invoice in the system, system will 1. Vendor account and GR/IR clearing accounts are updated 2. MAP and Value will be updated in Material Master 3. PO History updated with GR, Down payment, Invoice GR/IR clearing account is debited and Vendor is credited In MAP price control, if the PO Price and Invoice prices are varying from the material master price, then the difference is distributed to the stock (If sufficient stock available or it will post to price difference account). So the price in material master is fluctuating with respect to invoice posting In Standard price control, the difference is booked in price difference account and the material master price is CONSTANT. GR based Invoice verification is set at PO, Vendor master record Conventional Invoice Verification Logistics Invoice verification 1. Material is directly posted to 1. Its a distributed system material & G/L account 2. ONLY FI document is created 2. Unlimited multiple selection 3. Unplanned delivery cost postings 3. Option of IV in background

is NOT possible

4. Invoice reduction facility 5. FI & MM Documents on posting

BASIC INVOICE VERIFICATION PROCESS Structure of Invoice verification screen 1. Transaction Area Defines the entry for Invoice/ Credit memo 2. Header Area 3. Allocation area Assign reference (PO or delivery note, etc.) 4. Invoice Items 5. Vendor data 6. Balance area 7. PO Structure area Basic Invoice structure 1. While referring the PO number, the following information are copied by the system from the PO - Vendor detail - Payment - Currency - Bank information - Invoice items, etc. 2. From PO History, the following information are derived - Quantity - Amount 3. System proposes -RATE OF TAX as per the settings 4. We have to ENTER - Document date - Purchase order number - Invoice amount - Tax amount - Terms of payment (default) - The terms of payment can be changed at MIRO level

A. Selection of Invoice for

B. Payment Block for C. Posting type selection for

D. Allocation -Invoice posted against E. Reference F. Display Variant selection

A. Invoice selection for - OPTIONS 1. Invoice 2. Credit Memo 3. Subsequent credit 4. Subsequent Debit B. Payment Block for (In Payment tab of Header) 1. Blocked for payment 2. FREE for payment 3. Invoice verification 4. Payment clearing C. Posting Type selection for (Details tab in Header) 1. Asset posting 2. Accounting document posting 3. Net asset posting 4. Customer Invoice/ Payment 5. G/L account posting 6. Vendor account document/ Invoice/ Payment 7. Vendor credit memo 8. Subsequent credit settlement 9. Gross Invoice receipt 10. Net Invoice receipt D. Allocation Invoice can be against a 1. Purchase Order/ Scheduling agreement 2. Delivery Note 3. Bill of lading (Delivery costs) 4. Service Entry Sheet (SES) 5. Vendor 6. Transportation/ Service Agent

E. Reference of 1. Goods/ Service items 2. Planned delivery costs 3. Goods/ Service items + Planned delivery costs F. Display variant selection 1. Accounting assignment ( Cost center/ Asset/ Order) 2. All information 3. Invoice reduction 4. Purchase Order - Order price quantity 5. Purchase Order History 6. Purchase Order delivery note 7. Purchase Order entry sheet 8. Purchase order Jurisdiction code 9. Services 10. Shipments 11. Aggregation Configurable material Delivery note Material Plant Purchase Order Unplanned delivery cost will be posted as DEBIT MEMO in invoice entry sheet, if the invoice is separately for unplanned delivery cost In the payment block option in Payment tab of the header data, we can block the invoice MANUALLY If we want to post an invoice of Free for payment, use the option free for payment We can define new display variant in customizing Payment terms are defined in PO. While entering an invoice, the system displays the terms as per PO, but can be changed

2. INVOICE BLOCK TOLERANCE LIMITS Path LIV > Invoice block > Set tolerance limits These tolerance limits are at COMPANY CODE LEVEL and ITEM-WISE INVOICE VALUE Most popular types of invoice blocks are: 1. Amount of item WITHOUT Order reference (AN) Upper Limit - Absolute Do not check (Radio button)

- Check Limit (radio button) Value ------2. Amount of Item WITH order reference (AP) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------3. From small difference automatically (BD) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------4. Percentage Order price unit variance (IR before GR) - BR Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------% 5. Percentage Order price unit variance (GR before IR) - BW Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------% 6. Exceed amount quantity variance (DQ) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% 7. Variation from Condition Value (KW) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage

 Do not check (Radio button) - Check Limit (radio button) Percentage ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% 8. Price Variance (PP) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% 9. Price variance ESTIMATED PRICE (PS) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Value ------ Percentage Do not check (Radio button) - Check Limit (radio button) Percentage ------% 10. Date Variance Value x days (ST) Upper Limit - Do not check (Radio button) - Check Limit Value -----

11. Moving Average Price Variances (VP) Upper Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------% Lower Limit - Absolute Do not check (Radio button) - Check Limit (radio button) Tolerance limit ------%

4. AT GOODS RECEIPT If the variances are within the tolerance limit, the system displays message as per the customizing If the payment is automatically blocked due to the (settings) exceeded the units, payment block is filled in the Vendor line item of the FI document Payment block is filled in MM document when an invoice is blocked MANUALLY (at header level of MIRO)- Not in item level Manual block of an invoice done at tab Payment in header ( Payment block ) of MIRO screen. In this case in Vendor line item (after posting the invoice) the reason for block will be displayed as A (payment Block) In other cases, payment block due to variance by system and manual block made in item level (during MIRO), the reason for block (after the invoice posting) in the vendor line item is R (Invoice verification) If once the invoice is blocked, we have to clear it separately Header Manual Block A In MM & FI Other blocks R In FI only

BLOCKING VARIANCES 1. 2. 3. 4. 5. 6. 7. Quantity Price PO Price Quantity Date Stochastic Quality manual

1. Quantity Variances (Q)

If the Invoice qty > GR quantity, the difference posted to GR/IR clearing account. Total payment will be released to the Vendor. System expects another GR. At that time this additional amount in GR/IR clearing account will be cleared. 2. Price Variance (P) In this case the account movements depend on the Price control (S or MAP) set in material master. a) If IR is after GR If the price control is S The difference will be posted to Price difference Account If Price control is V The difference will be posted to the stock account, if sufficient stock available (it will lead to the change in price of the material), otherwise to Price difference account b) IR before GR System posts the variance to GR/IR clearing account. The segregation of this amount depending on S or V, will be done at the time of GR posting 3. PO price quantity 4. Date (D) 5. Stochastically Blocking It is at COMPANY CODE Level Invoices do not contain a blocking reason, can be blocked stochastically (at random) It will be as per the customizing done for the threshold value. An invoice blocked stochastically, system sets a payment block in vendor line item in the FI document. Individual item WILL NOT contain a blocking reason. 6. Blocking due to QUALITY Material is subject to Quality Management fixed in Material Master. While posting GR, system will create an inspection lot System will block in this case, if there in NO user decision on inspection lot/ rejected in Inspection. (To be entered in the system) 7. Manual Blocking a) Manual blocking can be made at HEADER Level. In payments tab in MIRO screen b) At ITEM LEVEL In column Ma put the tick If the invoice is blocked at Header level, the blocking is for total items in the invoice If the block is at item level, it is applicable for only that item If the manual blocking is at Header level, the reason of the invoice blocking will appear as A in MM and FI document after posting the invoice

If the blocking is at Item level OR automatic blocking by the system on any reason, the reason of blocking will appear as R and will appear only in FI document

INVOICE REDUCTION It is an option available at MIRO to reduce the invoice and accept it. For example, At PO 100Nos x Price 10 (1000) At GR 70Nos x Price 10 (700) At IV 100Nos x Price 10 (1000) and if we are opting Invoice reduction, System will generate 2 accounting documents 1. 100Nos x Price 10 Invoice (as per the invoice) 2. 30Nos x Price 10 A CREDIT MEMO (for the difference value) The invoice reduction option is available at Display variant option in MIRO screen The payment to Vendor will be the difference of Invoice and the credit memo created While posting the invoice, system will issue a message and the same can be used to generate a letter of complaint to the Vendor

Procedure of Invoice reduction - Select the option Invoice reduction in MIRO screen - The fields in Item detail - In Correction ID column, select the reason for invoice reduction like Vendor error/ reduce invoice, etc. - In Invoice quantity at Item detail, enter the Invoice quantity as per the Vendor. - In Invoice amount at Item level, enter the value as per the Vendor - In Header, in amount filed, enter the amount to be paid to the vendor after reducing. In simulation, we can see the credit memo detail and Vendor payment detail (reduced amount)

Account Movements
Purchase Order - 100Nos x Price 10 Goods Receipt - 70 Nos Invoice receipt - 100Nos x Price 12 + 10% Tax = 1200 + 120 =1320

Stock Account GR/IR clearing Account Vendor Account Input Tax Clearing account for Invoice reduction

At Goods Receipt +700 -700

At Invoice Verification Credit memo +140 +700 -1320 +396 +120 -36 +360 -360

At Invoice verification, Vendor account 1320, GR/IR clearing 700, the difference = 1320-700 =620 Out of 620, Clearing account = 30Nos x 12 = 360 Input tax = 10% of 1200 = 120 So the amount will go to stock account = 620 (360+120) = 140 As the invoice is accepted, the GR/IR clearing account will be cleared and the balance amount (140) will go to Stock account After posting the invoice reduction, we CAN NOT see the higher amount invoiced by the Vendor in PO History. It will show the actual amount paid to the Vendor after the invoice reduction 2 accounting documents are generated One for Invoice and the other for Credit memo

VARIANCE WITHOUT REFERENCE TO AN ITEM The options are 1. Total based Invoice reduction 2. Total based acceptance 3. Vendor specific tolerances 1. TOTAL BASED INVOICE REDUCTION In this type of invoice verification, 2 accounting documents are generated 1. Suggested Quantity and Value 2. Credit memo for difference quantity and Value (Offsetting entry) It is not reducing the invoice, but posting a credit memo for the difference In customizing, we can allocate each Vendor to a tolerance group of LIV. For each tolerance group, set the limits up to which invoices can be automatically reduced without reference to a particular item. All these settings are at company code level.

(Vendor specific tolerance Automatic invoice reduction case 3 explained earlier) 2. TOTAL BASED ACCEPTANCE In this case, system accept a difference (positive or Negative) between the item total it expects and it posts the difference to aNon operating expense or revenue account. In customizing, we can set this tolerance limits at Company code level. (Vendor specific tolerance limits Automatic acceptance of Negative differences, Automatic acceptance of Positive differences- explained in case 1 & 2 explained earlier) 3. VENDOR SPECIFIC TOLERANCE LIMITS

EXPECTED INVOICE VALUE SETTINGS FOR SMALL DIFFERENCES INVOICE CANNOT BE POSTED INVOICE CANNOT BE POSTED

SETTING FOR NEGATIVE TOLERANCE

SETTING FOR POSITIVE TOLERANCES

(-)

(+)

SETTING FOR INVOICE REDUCTION

MANUAL ACCEPTANCE We can accept the differences manually only, if the invoice is verified in the background and containing errors Accept the difference on header data and reprocess the invoice While posting these invoices system will post the difference amount to the same account.

INVOICE VERIFICATION OF CONSUMPTION MATERIALS These invoices will not have any GR/IR clearing account as there is not any GR

INVOICES of PO WITH ACCOUNT ASSIGNMENT The topics are

1. Enter invoice for Pos with account assignment 2. Posting Logic for invoices for Pos with Account assignment 3. Invoice posting for Blanket Pos 1. Invoices for Pos with Account Assignment
While posting the invoice, system proposes the individual current account assignment as per the PO In case of multiple account assignment, and partial invoice, the system will distribute - on a progressive fill-up basis - Proportionately Account assignment categories are Asset (A), Cost Centre (K), Sales Order (C), Order (F), etc. Account assignment category is fixed in PO per item which is having the control of a) you can post a GR b) you can post an invoice. The controls are fixed in Customizing The account assignment fixed in PO can be changed in cases (a) Defined (changes) in customizing (b) Non-valuated GRs are defined in PO The account assignment categories are available in SPRO at Purchasing > Account assignment > Maintain account assignment category The detailed settings for each account assignment categories are

i. ii. iii. iv. v. vi. vii. viii. ix. x.

Changeability of account assignment IR changeable Define account assignment Delivery cost separate Goods receipt GR non-valuated Invoice receipt GR indicator biding GR non-valuated biding IR indicator biding

Account movements for Pos with account assignment

PO - 100Nos x Price 10 GR - 50Nos IR - 50Nos x Price 11 CASE -1 - VALUATED GR Consumption Account GR/IR clearing Account Vendor Account At GR +500 -500 At IV +50 +500 -550

CASE -2 - NON-VALUATED GR At GR Consumption Account GR/IR clearing Account Vendor Account

At IV +550 -550

If the valuated GR defined in PO, the price difference is posted to the Consumption account

INVOICE VERIFICATION OF BLANKET PURCHASE ORDERS It will directly post the invoice for the material / service System will check the Value & Quantity along with the Validity period at the time of Invoice verification If it crosses the limits, system will block the invoice We can enter an invoice for Blanket PO with many account assignments and relevant amounts

DELIVRY COSTS
Planned and unplanned delivery costs Planned delivery costs are entered at item level of the PO Unplanned delivery costs are entered during Invoice verification o Planned delivery Costs

Freight

Customs

Fixed amount Quantity dependent

% of Value

In account movements, Freight clearing account and Customs clearing account at GR. At Invoice verification, these clearing accounts are cleared If there is any difference in these planned delivery costs at Invoice verification, system will treat it as a normal price/ quantity variance and postings will be accordingly. Unplanned delivery costs

As per the settings in Customizing, the unplanned delivery costs can be (1) Distributed to invoice items (2) Posting to a separate G/L account If it is distributed to items, it WILL NOT list them separately in PO History, will be included in the invoice amount If it is posted to a separate G/L account, they also WILL NOT appear in PO History Unplanned delivery costs are posted to item in PROPORTION to the total value in the current invoice We can post an invoice of unplanned delivery costs alone for an invoice already posted. It will be treated as a Debit memo. If the unplanned delivery costs are distributed among PO items, the offsetting entry (in case of Price difference) is post to the respective stock account or a price difference account as per the price control for that material The setting made at customizing for unplanned delivery costs are at COMPANY CODE level We CAN NOT have an unplanned delivery cost option for a Planned delivery cost with distribute the value among the items in MIRO transaction. To tackle the situation of unplanned delivery cost of a planned delivery cost in MIRO, got to the item level populated value, edit there itself and put the total at header level. Another option is to activate direct posating to G/L accounts. So it is suggested to enter the planned delivery cost accurately to the extent possible way.

SUBSEQUENT DEBITS/ CREDITS

This option is used for the changes due to TOTAL invoice value (NOT QUANTITY) These postings are done AFTER a posting of an invoice When you enter to subsequent debit/ credit system suggests full quantity, but NO value Subsequent debit/ Credits are flagged in PO History Account movements in subsequent credit/ debit are stock account and Vendor account Case1 If GR is posted System makes the offsetting entry to stock account or price difference account depending on the price control of the material and the stock position

Case 2 If GR is NOT posted System posts the offsetting entry to GR/IR clearing account. When the GR is posted and this GR/IR clearing account will be cleared and posted to stock or Price difference account as per the price control of the material and stock position In subsequent debit/ credit, there is no material movement

o We can enter a subsequent debit/ credit memo for a PO item only if an invoice has been already posted

CREDIT MEMO/ REVERSALS

Credit Memo received from Vendor if we are overcharged It can be entered with respect to a PO It should be posted as subsequent Credit/ debit The value only will change/ reduce Account movements are SAME as that of an invoice (+) and (-) signs are available for posting the value Reversing Invoice Transaction code MR8M When you reverse an invoice, all the items in the invoice document will be reversed We can reverse a PART of an invoice ONLY by entering a CREDIT MEMO manually. When we reverse a Credit memo, system creates an Invoice We CAN NOT reverse a reversed document Calculation of GR/IR account

=Quantity X ( Clearing Value (Total) - GR Value (1st)) (Invoice quantity - GR Quantity)

INVOICE VERIFICATION IN BACKGROUND Transaction code MIRA Used for larger invoice with hundreds of line items Enter the general data like Gross value, Taxes, Payment terms, etc DO NOT enter item-wise details. Save in an invoice document (without any item) By the settlement program (RMBABG00) by system administrator in the background, creates the items for this invoice document. Based on quantity and value, R/3 system checks(if the total of the items and amounts already saved results in a ZERO balance) and system posts the invoice. Main Disadvantage is we can have cases of price differences cancel each other without being noticed If the invoice is processed in background and given status as errors are to be cleared manually only

The invoices processed by MIRA will appear in parked invoice till the settlement program runs

EVALUATED RECEIPT SETTLEMENT (ERS) Transaction Code - MRRS GRs are settled directly without the vendor invoice The system uses the information of PO and GR ERS to be defined in Material Master Vendor Master data and Info record should have the selection of ERS GR based IV should be there in PO We CANNOT use ERS for settling Delivery costs Tax code should be SAME in PO and info record Customizing setting for ERS for the company code mandatory

INVOICING PLAN
2 types of Invoicing plans are used 1. Periodic 2. Partial 1. PERIODIC INVOICING PLAN Generally used for automatic settlement of invoices which is periodic in nature Recurrent procurement transactions Examples are Rentals, lease amounts which are fixed in nature TOTAL VALUE of the PO item is invoiced on EACH due date. These due dates can be suggested by R/3 system as per your plan Invoicing plan types are defined in customizing and is assigned to the PO item, while creating a PO Vendor should have the ERS tick if you want to work with ERS 2. PARTIAL INVOICING PALN Invoicing in different stages Example is % invoicing in a construction project In this type the total value of the item is SPREAD among the individual due dates as per the invoicing Plan ONLY a PART of the total item is due on a payable date The total value of the total items is SPLIT on the dates and the values are specified in Invoicing Plan 1. 2. PRE-REQUISITES for INVOICING PLANS Account assignment for the item No GR or Non-valuated GR

3. 4. 5. 6.

Document type FO for the Purchase Order Validity period should be entered in PO Invoicing Plan settings are to be defined in customizing For ERS, settings of ERS CUSTOMIZING FOR INVOICING PLANS 1. Invoicing Plan type for Periodic and Partial 2. Maintain Date IDs 3. Define and maintain Date category 4. Maintain date proposal for the Invoicing Plan type 5. Define rules for Date determination 6. Define Invoice blocks Periodic 1. Validity period 2. Periodicity of Invoicing date 3. Maintenance Partial 1. Starting date 2. Reference invoicing Plan number 3. Maintenance

RELEASE OF BLOCKED INVOICES Transaction Code MRBR Invoices can be released manual and automatic While releasing a blocked invoice, we can change the baseline date for the payment Basic invoice blocking reasons are Q- Quantity, D- date, P- Price, T Quality Automatic release of blocked invoice done in background by running the program RM08RELEASE Procedure of manual release 1. Select that particular invoice in MRBR transaction 2. Keep the cursor on the reason (X) and click on the flag icon for deleing that particular blocking reason. Then it will change to green in color 3. Click on Save change icon. The invoice blocking is removed. The particular invoice will disappear from the list

GR/IR ACCOUNT MAINTENANCE The GR/IR clearing account is cleared only if the invoiced quantity and delivered quantity are equal. If it is NOT equal the system expects invoice/ material. And if the material is not coming, we have to clear this account manually. List of GR/IR balances are available in transaction code MB5S

GENERAL CUSTOMIZING SETTINGS OF INVOICE VERIFICATION

1. Messages Path LIV > Define attributes of system messages Warning & error messages User defined messages 2. Automatic Postings OBYC transaction and Group RMK for MM accounts 3. Document type & Number ranges Path LIV > Incoming Invoice > Number assignment There are 2 types of transactions 1. Manual Invoice entry RD 2. Automatic by ERS/ EDI/ reversal RS Accounting Document types 1. Gross Posting RE 2. Net Posting RN Number ranges are defined per document type and for a fiscal year

4. Taxes & Currencies Path Fin. Accounting > FA Global setting > Taxes in sale & Purchase > Basic settings 1. Tax code For each company code

2. Set unplanned delivery cost distribution 3. Set postings of exchange rate differences 5. PO Text types general messages 6. ITEM LIST VARIANTS 7. Duplicate Invoice check If we have selected duplicate invoice check in Vendor master record and while entering the invoice, there is an entry in the field REFERENCE, by which R/3 system always checks for an invoice entry already made for this vendor with same data. The data checked by the system are : 1. Company Code 2. Vendor 3. reference 4. Document date 5. Amount and currency In customizing, we can decide if the system has to take care of Company code/ the reference and dates as check criteria 8. Invoice Blocks 9. Message determination in LIV (standard condition technique)

10 GENERAL INFORMATIONS on LIV

Most of the data related to LIV are stored in Tables EKBE, RBKP & RSEG Data for LIV are 1. Master data Material master, Vendor Master & Accounting data of G/l Account 2. Transactional data Purchasing documents, Material document & Accounting documents If you post an invoice without checking the invoice items, variances in individual documents can cancel each other without your notice Invoice can be posted directly to a G/L account OR material account by activating direct posting to G/l account and Material account in Customizing If Vendor is NOT CREATED, system will post the amount to ONE TIME VENDOR Account Automatic settlements facility is available for 1. Consignment & Pipeline 2. ERS 3. Invoicing Plan 4. Revaluation -

ALLOCATION FEATURE in Invoice verification (MIRO)

MORE CRITERIA 1Multiple allocation TYPE OF INVOICE ITEMS 1Goods & Services Only 2Planned Delivery costs only Goods &services + Planned 3delivery costs 1Goods & Services Only 1Planned Delivery costs only

ALLOCATION TO Purchase Order/ Sch. 1Agreement

Delivery Note (GR based 2IV) 1Multiple allocation 2Selection Vendor 3Bill of Lading 1Multiple allocation 2Selection Vendor Service Entry Sheet 4(SES) 1Multiple allocation 5Vendor 1Plants 2Deliveries 3Returns 4Time Periods 1means of transport 2Partner 3Freight Cost number

1Services Only 1Goods & Services Only 2Planned Delivery costs only Goods &services + Planned 3delivery costs 1Services Only

6Transport Agent

Invoice verification of ONE time Vendor Same as that of LIV but, the system proposes the address data for the invoicing party and OTV button for Vendor data screen area. Collective accounts are set up for One time vendors. These accounts are used for more than 1 vendor so the master record does not contain any vendor specific data. SO the details are to be entered in Purchasing OR Invoice verification. The procedure of Invoice verification of ONE TIME Vendor is 1. In the Vendor data of MIRO screen, choose OTV (One Time Vendor) and enter address, Bank data, etc. 2. Enter the relevant invoice data 3. Post the invoice If you are having 2 types of operations Domestic and Foreign, you have to have 2 one time vendor master record While posting an invoice verification of FREE GOODS, (511) Qty, MAP, total value will be changed/ updated in material master If there is different payee, the option to enter this are (1) At the time of Invoice verification (2) AT the time of Payment program run Work List is used in the application of (1) enter invoice (2) Park the invoice GR based IV can be used for invoice against PO and invoice against Delivery note

Automatic amount correction When quantity changes occur, you can perform automatic correction of an ITEM AMOUNT using the USER PARAMETER RBB. For enter invoice and park invoice set the user profile RBB in SAP easy menu in Parameter tab and in value column put 12 Blanks and X for the 13th and then save. In easy Menu Go to SYSTEM > Maintain User Profile, > Set Data, will get parameter Tab Invoice reduction Correcting quantities or Values Tax We can configure whether we want to take into account tax postings (a) Only in Invoice document (b) Invoice document + Credit memo While SIMULATING, following POSTING LINES are NOT DISAPLYED because they are NOT determined while simulating the document 1. Posting for withholding Tax 2. Multiple Vendor line items due to SPLIT TERMS of Payment 3. Multiple documents due to cross-company code postings In simulation we can switchover currencies, if there are more than one currency involved Duplicate Invoice Check System checks only FI document created in LIV. ONLY for INVOICES It will NOT check the Credit memos/ Subsequent Credit or debit Checking will be done in FI document for Company code, Vendor, Currency, Document date & reference document number Duplicate invoice check can be fixed for 1. Reference document number 2. Company code 3. Invoice document date It will check here for i. Invoice date ii. Gross amount iii. Currency iv. Vendor You CAN NOT REDUCE the invoice while in PARKING Invoice verification in background is used for 1. Invoice with mass amount of data for which ITEM CHECK is NOT mandatory 2. Invoicing referring to transactions NOT YET ENTERED Program RMBABG00 ACCOUNT DETERMINATION in LIV DEPENDS ON 1. Information from entries a) Vendor account b) Amount 2. Material Master record a) Valuation class b) Price control c) Material account

d) Stock details 3. Posted Document a) Purchase Order Price b) GR is posted or not 4. System settings a) Gross/ Net posting b) G/L account details If One invoice refers MORE THAN 1 PO, then the system suggests the TERMS of PAYMENT of the FIRST PO If Quality management is active, SAP recommends GR based Invoice verification Invoice blocks indicators 1. Q Quantity Variance 2. P - Price variance 3. D Scheduled date 4. G Order price quantity variance 5. I Quality 6. O Others (item amount check) If an invoice for a Blanket PO is blocked due to DATE variance CANNOT be released automatically. If an invoice is blocked (a) Blocking manually at header AND (b) item having block due to variances, the system will display this invoice block as DUE to VARIANCES Planned delivery costs are on ITEM basis We CAN NOT differentiate between UNPLANNED DISTRIBUTED DELIVERY COSTS and PRICE VARIANCES at PO History Even system will not display the unplanned delivery cost that posted to a separate G/l account in PO History System WILL NOT CHECK the maximum amount of the prices for unplanned delivery cost Subsequent Debit/ Credit System records every subsequent credit/ debit in PO history Subsequent credit/ debit are VALUE basis Total based Differences Vendor specific tolerances 1. Total based invoice reduction Posting to Invoice reduction clearing account 2. total based acceptance Posting the difference to Expense/ revenue account 3. Manual acceptance as per customizing Credit memos can be created using ERS Planned delivery costs CANNOT be processed with ERS Program used for ERS RMMR1MRS Revaluation To determine the difference values on the basis of price changes that retro-actively valid and to create settlement documents for them Pre-requisites

1. It should be with respect to a PO/ Sch. Agreement item 2. The item should not be deleted or blocked 3. GR based IV 4. Flagging for revaluation in Vendor Master 5. Customization PO History History category of revaluation NeuB CHECKS before posting of a CREDIT MEMO 1. Maximum Value It should be less than earlier invoice value 2. Maximum Quantity - It should be less than earlier invoice Quantity 3. EQUAL It will leads to a FULL REVERSAL (It will not create credit memo) Advance payments/ Down payments (F-58) are NOT updated in PO History If an item out many item in an invoice is cleared for payment and other items are in blocked for other reasons, the ITEM-WISE RELEASE is NOT possible Automatic Payment Program (APP) Credit Master Basic Parameters Online parameters Invoice document

PROPOSAL RUN PAYMENT RUN PRINT RUN

MESSAGE DETERMINATION PROCESS

Message Determination SCHEMA PO - RMBEFO

PURCHASE ORDER Vendor - VVVVV Pur. Orn - XXXX

MESSAGE TYPES 2 1. New Printout - NEU 2. Reminder - MAHN MESSAGE TPYE

ACCESS SEQUENCE 4 ACCESS SEQUENCE 1. Doc Type/ Pur Orgn./ Vendor 2. Document type 3

RECORDS OF MESSAGE TYPES 1. NO valid record exists 2. Valid Record exists

MESSAGE HEADER Message Type Printer NEU 1DRUCKLF 123 5

PRINTER 1. Output immediately 2. Number of copies -2

CUSTOMIZING of MESSAGES in PURCHASING 1. Texts for messages. We can maintain any text if required. Separate options for a. Document header b. Document Item c. Document Supplement d. Change Texts e. Headings For 1. RFQ 2. Purchase Order 3. Contract 4. Scheduling Agreement

5. Purchase Organization 2. Forms (Layout sets) for Messages Adjust forms separately for 1. Purchase Organization 2. RFQ 3. Purchase Order 4. Contract 5. Scheduling Agreement Delivery schedule 3. EDI 1. Set-up partner profiles 1. Bank B 2. Benefits Provider BP 3. Customer KU 4. Vendor LI 5. Logical system LS 6. Partner type US 2. Profiles for sending Stocks/ Sales data 4. Output Control 1) Condition Tables for RFQ, PO, Outline Agreement/ Sch. Agreement release Select the Tables 1. Purchase Order Type 2. Purchase Organization 3. Vendor Condition Tables General) 025 Document type/ Purchase Organization/ Vendor 026 Document type only 027 Purchase Organization / Vendor EDI 987 Purchase Organization Variants available for selection of condition tables are: 1. Company Code 2. Purchase Organization 3. Inter company 4. Ordering address 5. Purchase document type 6. Purchase group 7. Supplying Plant 8. Vendor 2) Access Sequence it is CROSS CLIENT Define access sequence for RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery 0001 - Document type/ Purchase Organization/ Vendor (025) Access for inbound delivery should be delivery type 3) Message (Output Type) Type

Define message types for RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery. Standard message types are 1. NEU New PO printout 2. AUFB Dunning Order confirmation 3. ERIN reminder 4. MAHN Dunning For each message (output type) type, Processing routines like a. Print b. Fax c. EDI d. ALE are to be fixed For each processing routines, the partner functions like a. Ordering address b. Vendor c. Delivering Plant, etc are to be assigned 4) Requirement of Output control Keep the tick for make it active 5) Message determination Schema Schema (Procedure) to be attached for each of RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery 6) Partner roles per message type Define partner role for RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery 5) Assign output device to Purchasing group Attach printer/ output device to each purchasing group 6) Field relevant Purchasing document changes Detailed selection of filed names in the documents

11 RELEASE PROCEDURE
Key terms in release procedure 1. Release strategy It controls entire release procedure/ approval process. It contains release conditions, release codes and release pre-requisites 2. Release Condition It determines which release strategy applies for a situation 3. Release Codes Represents an individual/ Deptt. That must give their approval. Its a 2 character key. These release code should be attached to a release object (2 for Purchasing documents)

4. Release pre-requisites It will tell the system the order in which approval process will take place. 5. Release Status/ Indicator The code represents the release status of a document Release procedure can be WITH and WITHOUT Classification ONLY PURCHASE REQUISITION is having the facility of release procedure WITH and WITHOUT classification. All other can have ONLY WITH CLASSIFICATION Release can be applied to TOTAL items (HEADER LEVEL)and also can be by ITEM-by-ITEM (ITEM LEVEL). It is determined by the DOCUMENT TYPE Purchase requisition is the ONLY purchasing document that having the facility of ITEM LEVEL release strategy. All others are at HEADER LEVEL only We can cancel a previously affected release and reset the former release status. A Release strategy can include up to EIGHT Release points A release condition must be defined as classification characteristic (Eg. Plant/ Gross Amount). The part of the characteristic definition is a link to a FIELD of the COMMUNICATION STRUCTURE (CEBAN for PR or CEKKO for external purchasing documents). The classification characteristic should have the attribute Multiple Value so that you can not only maintain the characteristic value but can enter several values, if necessary Group together all characteristic that we wish to use in release strategy for PRs or external purchasing documents in a class. The class must be assigned to class type 032. This release class is assigned to the release object in customizing Pre-requisites for release strategy customizing 1. Release class type 032 2. Release characteristics (WERKS Plant, GNETW Net PO value, etc) Process flow of Release Strategy 1. Create/ Edit characteristics Create characteristics for the release strategy control objects like Plant/ Total PO Value/ Invoice value, etc. Table EBAN for PR & CEKKO for purchasing documents 2. Create/ Edit class Name a class, create it in class type 032 In basic data tab, you can enter the validity of this class. In characteristics tab, enter the characteristics created in step 1 along with Data type, Number of character, decimal points, unit of measurement, etc. 3. Set-up Procedure with classification (Do it in a sequence) 1. Create release group/ Code Its a 2 digit key and is to be assigned to a release object2. Provide the overall release tick Enter the class created in step2 2. Release codes In each group/ code, enter the release codes. Workflow is also can be attached here

3. Release Indicator Define the release indicator here, like released, under process, blocked Changeability options are available here You can assign the % value change against each release indicator Changeability Indicators available in standard system are: 1. BLANK Changeable, new release in case of new strategy 2. 1 Cannot be changed 3. 2 Changeable, No new determination of strategy 4. 3 Changeable, New release in case of new strategy 5. 4 Changeable, new release in case of new strategy OR value change 4. Release strategy Different strategies are to be created for each release groups/ Codes 1. Release pre-requisite Select the appropriate check boxes for each strategy 2. Release statuses Attach the release indicator for each step in each strategy 3. Classification Enter the specific values for the characteristics created ion step1 for each strategy 4. Release Simulation Simulate and see for errors by the system

12 PRICING PROCEDURE
Time dependent conditions We can specify in customizing via Document type whether time dependent (TD) or Time Independent (TID) conditions can be maintained for Outline Agreements Conditions in Purchase Order are Time independent TD conditions can be maintained for 1. Plant specific 2. Purchase Organization specific 3. Reference Purchase Organization specific 4. Info Record 5. Outline agreements 6. General conditions TD conditions can be limited to a VALIDITY PERIOD Price/ quantity scaling We can specify the limits for TD conditions TD conditions from info record or Outline agreements are accepted as default values in Pos

Maintaining TD Conditions Conditions can be maintained using master data menu in purchasing. But SAP does not recommend it. But maintain them in the relevant documents or in the info records 1. Using Master data menu for maintaining TD conditions a) Master data > Conditions > Prices b) Master data > Conditions > Discounts/ surcharges - per Vendor - per Condition group - per material type - per invoicing party Condition types Vendor discount RL01 - Group discount RGRO - Miscellaneous MAR1 - Accounting discount REST c) Master data > Conditions > Other Condition types GAU2, NAVS and you can create your own here No Access sequences for supplementary conditions. Eg. Material specific discounts & surcharges No Separate price determination for PB00. They are found using condition record for the gross price. PB00 is NOT having any access sequence

CONDITION TYPES. Each condition type is defined with 1. Condition class 2. Calculation Type 3. Condition category 4. Access sequence Individual conditions are described by condition types Examples like Gross Price, Freight, etc Condition types are defined together with their CONTROL PARAMETERS in customizing. Condition types are differentiated broadly by their Condition class and finely by Condition Category Condition type stipulates how the R/3 system calculate the condition value + or - sign determination whether a condition is treated as + or -ve amounts are Discounts +ve amounts are Surcharges Scale basis foe scales depend on condition type. Scale can be on quantity or value Access Sequence is assigned to a condition type (Not mandatory) Access sequence is a search strategy that enables you to specify the order in which condition tables are to be searched for relevant entries for a condition type In standard SAP R/3 system No access sequence is attached for Discounts and surcharges (RA00, RA01..) because they DO NOT HAVE ANY SEPARTE VALIDITY PERIODS. They are maintained at the same time as the Gross Price (PB00) and their validity period is always the same as the validity period of Gross Price Some of the condition types and its control parameters are; Goss Price PB00 Condition Class Prices Calculation type Quantity dependent Condition Category Basic Price Access Sequence Gross Price Freight FRB1 Condition Class Discount / Surcharges Calculation type Fixed amount Condition Category Delivery Costs Access Sequence Not applicable CASH DICOUNT - SKTO Condition Class Discount/ Surcharges Calculation type % Condition Category Cash Discount Access Sequence Not applicable

The CONTROL FUNCTIONS of condition types are 1. Condition Class (Price or Discount, etc. ) 2. Condition Type ( Quantity or Value or % or fixed, etc. ) 3. Condition Category (Gross or delivery cost, Etc) 4. Access Sequence (Gross Price, etc) CUSTOMIZING CONDITION TYPES Condition types defines the properties and characteristics of a Pricing element Condition types are defined in customizing We should not change the standard condition type available in the standard system If a new condition type with a validity period is created, it must have an access sequence assigned to it A condition class and a calculation type must be assigned to a Condition type along with a Condition category Condition types can be defined as a HEADER CONDITION or ITEM CONDITION or GROUP CONDITION Condition amounts/ Values CAN be changed or deleted by change option by manual entry A CALCULATION SCHEMS (PRICING PROCEDURE) for supplementary conditions must be assigned to the Condition type for the Gross Price Scaling facility and upper & Lower limits are available for condition types Options in Condition type (General)
2. GROUP CONDITION A B C D E Discount/ Surcharge Prices Expenses Taxes Extra Pay Percentage Fixed amount Quantity Gross Weight Net weight Volume 1Group condition 2Group condition routine 3Rounding difference comparison

1. CONTROL DATA 1Condition Class

2Calculation Type A B C D E F 3Condition Category A B C D E F G 4Rounding Rule Commercial Packaging Delivery cost Insurance Taxes Cash Discount Freight Cost

3. CHANGES WHICH CAN BE MADE 1Manual Entries A B C D No Limitation Free Auto entry priority Manual entry priority No manual entry priority

A B 5Structure condition A B 6+' or '-' sign

Round up Round down Condition to be duplicated Cumulation of condition

ACCESS SEQUENCE Its a search strategy that enables you to specify the order in which Condition tables are to be searched for relevant entries for a condition type. It is assigned to a condition type The order of access is determined by the order of the condition table in the access sequence. The EXLUSIVE INDICATOR determines that the search for further entries in condition tables is interrupted if an access was successful and a relevant entry was found Condition types WITH VALIDITY period SHOULD HAVE an access sequence We CAN NOT assign an access sequence to a HEADER CONDITION

EXCLUSION OF CONDITIONS Define Condition Exclusion In this step, you define the condition exclusion process. If several condition records are valid in the price determination process, you must define rules stipulating which conditions are selected and which are disregarded. To do this, use the condition exclusion mechanism. The exclusion of condition records is controlled via exclusion groups. An exclusion group is a list of condition types that are compared with each other during the price determination process. The result may be the exclusion of a whole group of conditions or the exclusion of individual conditions within a group. The result of the price determination process can thus be influenced with regard to a desired criterion (for example, the lowest price) by the exclusion of certain condition types, whereas others are taken into account in this process. Example

You can define a condition exclusion process that determines the most favorable price and excludes less favorable but fundamentally possible pricing results. The lowest price then overrides the condition type priorities that would have been dictated by the access sequence. In the calculation schema you define the procedure by which selection within or between the condition exclusion groups takes place. The following possibilities are available:

Selection of the most favorable condition type within a condition exclusion group. Selection of the most favorable condition record of a condition type if more valid condition records exist (for example, selection from different condition records of condition type PR00) Selection of the most favorable of two condition exclusion groups (in this case, all condition types of the two groups are cumulated and the totals compared with each other)

The tables for the exclusion of conditions are supplied empty. You must therefore work through the following points if you wish to use the condition exclusion facility:

Define condition exclusion groups Assign condition types to condition exclusion groups Enter condition exclusion groups in the calculation schema and define a procedure for the determination of the condition types to be excluded.

Activities 1. Create a condition exclusion group by entering an alphanumeric key that is max. four characters long, together with a description. 2. Assign the condition types to a condition exclusion group. A condition exclusion group can contain any number of condition types. 3. Enter the condition exclusion group in the calculation schema that you will be using for price (or cost) determination purposes. 4. In the process, note the sequence (consecutive numbers) in which the exclusion groups are to be processed. You can use two exclusion groups for condition exclusion purposes. In this case, you must choose procedure "C", which determines the lowest price between two exclusion groups.

Condition records in Condition Tables Conditions are stored in the system in a condition record Condition tables enables you to vary the key structure of condition records Key fields of condition tables are (generally) 1. Vendor / Material / Purchase Organization / Info record category 2. Vendor / Material / Purchase Organization/ Plant / Info record category 3. Vendor / Material / Purchase Organization / Info record category/ Order Unit

4. Purchase Document / Item / Plant The entries in Condition tables are Key part or DATA part Data part contains the number of condition record Conditions are stored in following tables 1. KONP Time dependent conditions Item 2. KONH Header Conditions 3. KONM Quantity scales 4. KNOW Value scales We can creates new condition tables. The numbering should be between 501 to 999. We can select the required filed from Field catalogue We can include the fields of Communication structures like KOMK, KOMP & KOMG

PRICING PROCEDURE (Calculation SCHEMA) It is the frame work for determining the purchase or valuation price, which groups together all the condition types that are relevant to this particular process The Pricing procedure defines 1. Permissible condition types 2. Condition type for which conditions are to be adopted automatically (Manual indicator) 3. Condition types for which the Net price calculation is applied (Statistical Indicator) 4. Order in which the condition types are taken into account in the calculation of Net or effective price 5. Condition types for which subtotals are calculated 6. Requirements that must be satisfied before a certain condition type is taken in to account Sequence of conditions The step numbers of the condition type in the pricing procedure determines the sequence in which condition types are to be taken in to account in the calculation of net or effective price. This sequence CAN NOT be changed in the document, even if Condition types are entered manually Condition type assigned to the same step in the procedure are sorted by means of a counter With these condition types, the order of manual entry decides the point at which the condition type is taken in to account in the procedure for effective price You can limit the value of condition by fixing the lower and upper limits of a particular condition in customizing (Define Limits) If any condition in the schema is not having an access sequence, then the manual tick is a mandatory requirement. If we are not giving the manual tick, this condition type will automatically populated in your document

SCHEMA DETERMINATION The system will pick-up the pricing procedure as per the settings made in customizing for schema determination. Schema Purchasing Organization, Schema group vendor (Attached in Vendor master) and the assignment of pricing procedure for this combination The schema group of Stock transport order depends on o Purchasing Organization o Document type o Supplying Plant Schema assignment for the calculation of MARKET price in Vendor evaluation depends on Purchase Organization The pricing procedure for external service management depends on the DOCUMENT TYPE A uniform pricing procedure per document type

INFO RECORD and ORDER PRICE HISTORY Info record can be created manually or auto thru documents If Info record is created manually, the GROSS PRICE and supplementary conditions (Discounts & Surcharges) CAN BE maintained for a certain validity period If an info record is generated from a Contract, the gross price and supplementary conditions are adopted in the info record If an info record is generated from a PO or Scheduling Agreement, the conditions ARE NOT ADOPTED in to the info record. But adopted to ORDER PRICE HISTORY If an info record conditions exists and valid, they are suggested when a new PO is created R/3 system uses the PO History data, if the valid info record is NOT available In info record list, displays a distinction is made between Info record conditions Head word CONDITION The conditions in Last PO Head word Purchase Order

HEADER, GROUP & ITEM CONDITIONS Item Condition Conditions relating to a single item of document Header condition - % or Fixed amount Conditions applicable to all the items in the document No automatic price determination process carried out for Hearse condition. So there is No access sequence for header conditions Group condition is a condition relating to several items of a document. The condition values (price/ Order quantity/ Weight/ Volume) of the relevant items are added and the total used as the condition basis

Assigning of condition type to header or group condition is defined in customizing of condition type If a header condition is Fixed amount, the value will be distributed to all the items proportionately If the header condition is in %, the value will be distributed to all the items by the same % The group condition value will be proportionately distributed to all items in the document The scale value of group conditions are applicable to the basis of cumulated item values

Logistics Information System You can create a filed catalog in MC18 and pull it during MC21 or directly MC21 There will be 2 different application areas in MM 02 for PURCHIS and 03 for INVCO Path in Easy Menu Tools > ABAP workbench > Development > Work flow > Reporting > Workflow information system > Environment > info structures (MC 21/22/23) & Updating (MC24/25/26) 1. Create Info structure MC21 Initial screen

The info structure number should be in between S500 to S999 Attributes taken as standard and planning possible selected Next screen

See the status as not saved a) Now we have to select the characteristics and key figures of characteristics 3 Characteristics selected Plant, Vendor & material b) Now we have to select key figures for these characteristics 1 Key figure total valuated stock selected

c) Save the Info structure (save as a local object) d) Check the info structure See that there should not be any error message e) Now generate the info structure by clicking the icon See that there should not be any error message f) Save the info structure 2. Create Update the Info structure MC24 Initial screen

Now we have to mention rules for key figures & characteristics a) Rules for key figures Clicking on rules for key figures, a pop-up comes. You can click on suggest rules so that system will suggest the entries or you can enter directly

Select copy b) Rules for characteristics System automatically suggests the table name & filed names

Copy it

c) Generate Click on generate icon. See that there should not be any error message d) Update Click on update icon System will show all info structures.

Select the respective one and look for details In the pop-up enter the parameters for updation

Now save the updation Again generate and check for any errors. Save and go back Now the info structure is ready. You can view it through transaction code MCSK for inventory) and MCSJ for Purchasing

Select MCSK in our case, system will call the above info structure and field will be populated as per your requirement

Early Warning System 1. Create an exception in MC/1 transaction Select an area and give a Name. The structure Name should be SXXX (below200) Choose characteristics Choose Key figures Give the requirements for early warning Give the detail of follow-on processing Mail ID , etc Select each characteristic and give the Value (Plant 0001, etc) 2. Create the exception through a transaction- System will send a message as per the configuration