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Contents

Topics

Overview and Org. Structure Invoice Verification/Valuation

Material Master Automatic Account Determination

Purchasing Master Data

Procurement

Inventory Management/
Valuation
Overview and Organizational Structure
Definition: Logistics

NCPDM (US National Committee on Physical


Distribution Management) :

"..physical distribution management .. is ..


the integration of one or more activities
for the purpose of planning, implementing and
controlling the efficient flow of raw
materials, in-process inventory and
finished goods from point of origin to
point of consumption..."
Resource Management in
Logistics
Capital Investment
long-term
Expense/costs Cash
short-term

Capital resources
Logistics chain
Procurement Production Sales
Purchase orders Ware- Distributions Ware- Sales orders
 materials house house  products
 services  services

Vendor
Material resources Customer

Capacity resources
Overview of MM
Material requirements
planning

External procurement Internal procurement


Purchasing Production

Invoice Master data


Goods Warehouse
verification Material
receipt management
Batch
Vendor
Invoice
Inventory G/L accounts
receipt
management Customer
A Storage bins
.
Goods Transfer B .
? issue posting
.

Sales and
Internal and external accounting distribution
Procurement Process
Order Invoice
MRP

?
7 Invoice verification 1 Requirement determination

MM
Materials
Goods receipt and management
6 Source
inventory management 2
determination

Order

Order follow-up 3 Vendor selection


5
4 Order processing
Organizational structures in
R/3
Organizational units
Company

Controlling areas

Sales organizations Purchasing organizations

Company codes

Valuation areas

Plants

Storage locations/batches/special stocks


Invent. mgmt w/o warehouse
mgmt
Company Code

Plants 0001 0002 0003

Storage locations 0001 0001 0002


Invent. mgmt with Warehouse
mgmt
Company Code

Plants 0001 0002

Storage 0001 0088 0088 0002


locations

Warehouse numbers 001

Storage types 001 005

Storage bins 05-04-03 05-04-04


Valuation

Client

Company codes 0001 0002

Plants 0001 0002 0003


Example for Valuation

Company codes RC

Mumbai Delhi
Plants
plant depot

VAL. AT CO.CODE 125/ BAG 125/ BAG

VAL. AT PLANT 125/ BAG 150/ BAG


Accounting
Client

Company codes 0001 0002 0003

Business area Business area


0001 0001

Business area
0002
Purchasing Organization

Company (Group) 0001

Company codes 0001 0002

Purchasing
0001 0002 0003
organizations

Plants 0001 0002 0003 0004


Organizational Entities in
Purchasing
Purchasing group 1

Purchasing group 2
Purchasing organization 1
Purchasing organization 2

Purchasing
organization

Plant 1 Plant 2 Plant 2 Plant 10


Material Master
Material master record
General data

Material number
Description
Units of measure
Technical data

Warehouse Manage- Sales-specific data


Plant-specific data Valuation ment system data

MRP/type Valuation price Unit of measure Delivering plant


Planned delivery time Valuation procedure Palletting instruction Sales texts
Purchasing group Valuated quantity
Batch indicator

Storage location-
specific data Forecast data

Storage time Consumption data


Stockfields
Units of measure

Base unit: Piece

4 16 72

Box Crate Pallet


(unit of issue) (order unit) (sales unit)
Material data maintenance:
accounting

Valuation class

MART Allowed values

ROH 3000
3010
HALB 7920
HIBE 3000
Maintenance of material
data
Price control

S V

Standard-
Moving average
price control:
price control:
Valuation of
Final delivered price
standard price
(such as purchase
from the material
order price) influences
master record
the valuation price
Purchasing Master Data
Purchasing Master Data
The Vendor
The vendor
Purchasing

Bank
purch
ase
order DEUTSCHE
MARK
DEUTSCHE
MARK

Payment DEUTSCHE
MARK

Vendor
Material Invoice

order account

?
=

Goods receipt Invoice verification


Organizational levels of
vendor master record
General data

Purchasing Company code


organization data data 001

Company code
Vendor master record
General data
Valid
Address for the whole group
Communication

Purchasing data
Valid
Order currency for one purchasing
Incoterms organization
Minimum order value

Accounting data
Valid
Bank data for the whole group or
Payment transactions for one company code
Account management
Account group

One-time
account

Account group

Type of number Interval for number


Field selection
assignment assignment
Control account
Invoice

You

Vendor
Invoice

Enter invoice

Accounts payable G/L accounting

Vendor A Payables Vendor


"Parallel"
Purchasing Master Data
Info Record
Purchasing info records
Piece
Piece
%
%
Conditions
Conditions
Material
USD
USD
Info record

Vendor A Info record Stock material M1

Info record
Consumable
material M2
Info record

Vendor B Info record Service S1


Data in the purchasing info
record
General data Texts

Vendor data
Origin data
Order unit

Control data Prices and


conditions
Delivery time Gross price
Minimum quantity Discounts
Tolerances Freight

Price history
Purchasing statistics
Changes
Pricing
11 Purchase order
Pricing procedure RM000 Vendor 123
Purchasing organization 2000

1.Price PB00 Item 10 120 pcs


2.Discount RA00
22 PB00 Price $99

Condition type: PB00


Access sequence: PB01
33
Access sequence: PB01
1. Outline agreement 55
2. Vendor/material/
organizational level
3. Vendor/material group/
organizational level
44 Scale
Records for condition type $100 for 1 pcs
No valid record exists $99 for 100 pcs
Valid record exists $98 for 200 pcs
Conditions
Pricing procedure
Condition type

Gross price PB00


Discount % RA01

Net price:
Fixed freight FRA1
charge + Calculation type
Scale basis
Effective price: Price/quantity
scale
Purchasing Master Data
Source List
Source list

1.1.95 - 30.6.95 1.7.95 - 31.12.95

Source list
Vendor 1 allowed Vendor 1 fixed
Vendor 2 allowed
Material M1 Vendor 3 allowed
Plant 0001
Procurement
Procurement
Procurement Environment
External procurement
Source list environment
Requirements
determination
RFQs

Purchase
Quotations
Quota requisition
arrangement

Source Piece
Piece
Outline determination %%
agreement Conditions
Vendor Conditions
selection USD
USD

Info record
Purchase
order
history
Purchase
Invoice
order
receipt

Goods receipt
Purchasing documents
Purchase
requisition
RFQ

Purchase requisition RFQ


?

Quotation Quotation
Purch.order

Quotation A ? B Purchase order

31. 1.
Contract
Scheduling
Release order agreement
Structure of a purchasing
Purchasing
document
document
ocument
Document header
ocument

General
General data
data
statistics
statistics
Messages
Messages
Conditions
Conditions
Additional
Item 1 data for item 1
General data Purchase
Conditions order history
Texts

...
Schedule line

Item 2 Additional
data for item 2

...

...
Item category
Purchasing
document A B C

Item Account assign.


category category
Account assignment type
Purchasing
document
A B C

Item Acct.assign.
type type
Procurement for stock
Purchasing
document(s)

Item:
no account Warehouse
assignment
Goods
category
receipt

Goods
issue

Material
Production

Vendor
Procurement for consumption
Purchasing
document(s)

Item:
with account
assignment
category

Goods
receipt Production

Vendor

Material
Procurement
Consumption-driven MRP
Consumption-driven MRP
Requirements
planning

Net requirements calc.

A
Forecasting Lot sizing Material

Scheduling Material master

Inventory
Purchasing management
Materials planning and
control procedures
Requirements
planning

Consumption-based Deterministic MRP

VM, VB VV
Reorder point
Stochastic
procedure
Stock level Consumption

Time Time
Reorder Point Procedure
Stock Lot size

Reorder level

Safety stock

Reorder point Delivery date Time

Replenishment
lead time
Net Requirements Calculation in
the Reorder Point Procedure
Shortage
Purchase order proposal
to the amount of
the lot size
Reorder level
Purchase order

Fixed planned
Comparison
Comparison
orders
Fixed purchase
requisition

Warehouse stock
Safety Stock and Reorder Level
Stock

Reorder
Daily level
x Replenishment
lead time
Safety stock

Replenishment
lead time

Time
Service level Replenishment
lead time
MAD
Net Requirements Calculation in
Forecast Based Plng.
Shortage
Lot size

Forecast requirements
Fixed inward movements
e.g. purchase orders

Purchase orders proposals Comparison


Comparison
Planned orders
Purchase requisitions

Warehouse stock Safety stock


Lotsizing procedures
Exact lot
size

Static Fixed lot


procedure size

Replenish to
maximum stock
level
Periodic
Lot sizing procedures
procedure

Optimum
procedure

Part period ... Groff procedure


balancing
Static Lot-sizing
Procedures
Exact lot size
Quantity
Inward
movements
Outward
movements

Time
Planned warehouse stock = 
Fixed lot size

Replenish to
maximum stock level
Periodic Lot-sizing Procedures
Quantity

Time
Period length Period length

Inward
movements
Outward
movements
Dynamic Planning
Calculation
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365

Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %

Requirement Req. Lot size Fixed costs Storage costs


date quantity
06.07.1994 1000 1000 100 0
13.07.1994 1000 2000 38.36
20.07.1994 1000 3000 76.71
27.07.1994 1000 4000 115.07

Optimum
Part Period Balancing
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365

Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %

Requirement Req. Lot size Fixed Storage Total storage


date quantity costs costs costs
06.07.1994 1000 1000 100 0 0
13.07.1994 1000 2000 38.36 38.36
20.07.1994 1000 3000 76.71 115.07
27.07.1994 1000 4000 115.07 198.78

Optimum
Least Unit Cost Procedure
Req. x Price x Storage costs x Time in storage
Storage costs =
100 x 365

Price : $ 20
Lot fixed costs : $ 100
Storage costs percentage : 10 %

Requirement Req. Lot size Fixed Storage Total Unit


date quantity costs costs costs costs
06.07.1994 1000 1000 100 0 100 0.10
13.07.1994 1000 2000 38.36 138.36 0.07
20.07.1994 1000 3000 76.71 215.07 0.11
27.07.1994 1000 4000 115.07 330.14 0.08

Optimum
Scheduling in the case of
external procurement
Forward scheduling
11 22
Replenishment lead time GR processing time

t
Today + 1 Purch. order MRP
delivery date delivery date

Backward scheduling
22 11
Replenishment lead time GR processing time

t
Start / Purch.order MRP
release date delivery date delivery date
The requirements planning
process
Planning mark-out

Process
relevant to 31. 1.
MRP
Order
Material requirements
planning
MRP
Planned order
Opening period of
materials planning/
control

Purchasing Purchase
requisition
Purpose of the forecast
A
Material

MRP type

VM VV

Forecast Forecast

Reorder level
Forecast requirements
Safety stock
Procurement
Processing Purchase Requisitions
Purchase requisition
Department

MRP

Requisition Requisition

Purchasing
Purchase requisition
processing
MRP Direct entry

Purchase requisition

Determine source of supply Release

Vendor
o.k.

Allocate and process

RFQ Purchase
order Release
Release
order
order
?
Procurement
Processing Vendor Inquiry / Quotations
Request for quotation/
quotation RFQ 1 RFQ 2
Requirements known.
Procure from which ?
source?

Vendor 1 Vendor 2

Quotation 1 Quotation 2

Price comparison list

Purchase Rejection
order
Entering an RFQ
11 22

Item list
Vendor 1 Inquiry 1

Vendor 2 Inquiry 2

?
Issuing output Purchasing
document

Output
Printer EDI Fax

Reminder Rejection
Reprint Order
acknowledge-
ment check
Processing Quotations:
11 Example
Enter price and pricing conditions
Vendor A Vendor B Vendor C
Quotation for Quotation for Quotation for
RFQ 1 RFQ 2 RFQ 3
Item 10 Item 10 Item 10
Gross price: 400/t Gross price: 400/t Gross price: 400/t
Discount: $50 Surcharge: 50% Fixed costs: $40
22
Compare quotations using price comparison list
Steel 2 t 350/t 480/t 520/t 450/t

Price

Quotation 1 Quotation 2 Quotation 3 Mean value


quotation
33
Create info record or reject quotation
Vendor A Vendor C, B
- Order - - Rejection-
Mat. Qty Price Thank you for your
offer. Unfortunately,
we cannot place an
Steel 2t 350/t order at this time .....
Procurement
Processing Purchase Orders
Processing Purchase Orders
Purchase RFQ Reference Contract
requisition document

Order history Pcs


Pcs
Vendor
Purchase %
%
order
Conditions
Conditions

One-time vendor $$
Info record
Contract

Contract Reference Reference Purchase


request RFQ contract requisition

Contract Release order

11 22

Vendor
Scheduling Agreements
Purchase RFQ Reference Purchase
scheduling
requisition agreement requisition

Scheduling Einstellungen
agreement Einstellungen
Schedule lines

11 22
Vendor
PROCUREMENT OF EXTERNAL SERVICES
Inventory Management/Valuation
Inventory Management
Goods Movements
Inventory management
Old system Vendor In-house
production

Goods receipt

Transfer posting
Warehouse 1 Warehouse 2

Goods issue

Consumption
Scrapping
Documents for goods
movements
Warehouse

A
Material

Goods movement

Material
document Accounting
document
Material Valuation Levels
Material valuation levels

0001

Company code Plant

Valuation area
Split Valuation: Structure
Valuation
Valuation area 0001
Plant 0001 Material 1
Material 1 Valuation category H
Plant
Quantity 100
Mvg. av. price 5.20

Valuation type Valuation type


Italy France
Quantity 40 Quantity 60
V - price 4.00 S - price 6.00
Stor. loc. 0001 Stor. loc. 0002
Storage Quantity 30 Quantity 70
location

Batch
Italy France Italy France
Quantity 10 Quantity 20 Quantity 30 Quantity 40
Updating the stock situation
Stock situation

On a quantity basis On a value basis

Material master G/L accounts


Special stocks

Stock fields per Debits and credits


plant, storage location per company code,
and special stock period and, possibly,
business area
Entering material
documents
Material document item

Account determination

Consumption update

Movement type Quantity update

Indicator for printout

Field selection
Analyses in inventory
management
Analyses

Stocks Material Inventory


overviews movement list control

ABC-Analyses
Stock per material

Plant stock availability Stock value

Reqs./stock list Range of coverage

Slow-moving items/
Warehouse stock list inventory turnover

Standard analyses
Inventory Management
Processing Goods Receipts with Purchase
Order Reference
Purchase Order Views in
Inventory Management
Purchase order
Header $ Conditions
Statistics Vendor Conditions
Texts Output
General
Items 01/01/95
Schedule
10/01/95
Purchase order lines
30/03/95
history

Changes Account assignment

Texts
Determining the purchase
order during GR

Goods receipt for


purchase order

Manual

Purchase Matchcode
Manuell
order
List of open purchase orders by
- vendor
- material
- delivery plant
Stock types for goods
receipt Goods receipt blocked stock

Unrestricted-use stock

Warehouse
Stock in quality inspection
Co
Vendor n su Blocked stock
mp
ti o
n

Account assignment object


Cost center
Order
......
Posting procedure for goods
receipt (example)
Stock account
Stock value GR/IR clearing

Price differences

( ) ( )

Update for goods receipt


Inventory Management
Processing Goods Receipt w/o Reference
GR w/o Reference to a Purch.
Order or Production Order

Preplanning
Goods receipt

Initial entry of stock balance


Without purchase order
without purchase order Without production order
Goods receipt of by-products
without production order Delivery free of charge
Returns from customer
Inventory Management
Processing Stock Transfer / Transfer Postings
Transfer posting
Transfer posting

Miscellaneous
Stock transfer
transfer postings

From storage From


From consignm.
From plant location to From QM to
material stores to
to plant storage unrestricted use
to material warehouse
location
Valuation in the Case of
Stock Transfer
Issuing plant 100 pcs Receiving plant

Standard- (a) Standard-


price 2.00 (a) price 3.00

Moving average (b) Any moving


price 2.00 (b) average price

Expense
Expense // revenue
revenue
Stock
Stock plant
plant 01
01 from
from stock
stock transfer
transfer Stock
Stock plant
plant 02
02

(( aa )) 200.00
200.00 100.00
100.00 300.00
300.00
(( bb )) 200.00
200.00 200.00
200.00
Inventory Management
Processing Goods Issues
Goods issues
From warehouse

Goods issue
From consignment
stores

Consumption Issue

Cost center Sampling

Asset Scrap

Sales

Order
Effects of goods issue
Material document Stock quantity
Consumption statistics
Accounting document ...

Point of consumption:
G/L account.
Cost center
Stock account
Order
Consumption account
...
...
Goods issue
Warehouse mgmt:
Reservation Transfer order

Order Quality management:


Inspection lot
Posting method for goods issue

Stock account
Stock value Consumption account

Update on goods issue


Special Stocks and Special
Procurement Types
❧ Consignment
❧ Subcontracting
❧ Stock Transfer with Stock Transport Order
❧ Third party processing
❧ Returnable Transport Packaging
❧ Pipeline handling
❧ Sales order stock
❧ Project Stock
Company’s Own
Special Stock
❧ Stock of material provided to Vendor
❧ Consignment stock at Customer
❧ Returnable packaging stock at Customer
Company’s Own Special
Stock
Managed at plant level Stock types
❧ Unrestricted use stock
❧ Quality inspection stock
Special Stocks
❧ Vendor Consignment
❧ Returnable Transport Packaging
❧ Sales order stock
❧ Project Stock
Special Stocks
Managed at Storage Stock Types
location level ❧ Unrestricted Use
stock
❧ Quality inspection
Stock
❧ Blocked stock
Inventory Management
Physical Inventory
Procedures
❧ Periodic inventory
❧ Continuous inventory
❧ Cycle counting
❧ Inventory sampling
Physical Inventory
❧ Can be carried out for Company’s own stock and Special Stock

❧ Inventory for Company’s own stock and Special stock must be


taken separately in different physical documents

❧ Physical inventory can be taken for


Unrestricted-use stock in the warehouse
Quality inspection stock
Blocked stock
Physical inventory
procedure
Create physical 1
inventory document Batch-Input

Set blocking 2 Batch-Input


indicator

3
Print physical
inventory
document

Physical 4
inventory document
Arrange 5a
5 recount
List of
differences Change 5b
count
6
Post differences
Invoice Verification / Valuation
Types of invoice
verification
Purchase
or or
order
Purchase Vendor
order invoice

Goods receipt

Invoice verification
?
Invoice verification
Purchase
environment
order

G/L accounts

Assets

Invoice Invoice
---- verification document
Cost centers
Goods receipt

Material master Purchase order

Vendor master
Material master

Conditions
Posting an invoice
Invoice
relating to
purchase
order GR/R account
Post
Vendor account
A B
XX XX

Doc. No. 51000123 Material master Purch. order history

Vendor 100- Moving average Goods receipts


GR/R 100+ price Down payments
Value Invoices
Variances
Invoice
WE 40 Quantity
Goods receipt 50 pieces

Purchase Invoice
order Price
$5 at $6

Invoice
10 pieces = 250 g
Goods receipt Order
10
10 pcs
pcs == 200g
200g price quantity

Purchase Invoice
order
= 2 kg 10 pieces = 2.5 kg
10 pieces at
$20/kg
Purchase Invoice
order
Planned Date
delivery date 04/12/95 26/11/95
Tax
Company Material value
Material value
KMT

+Tax on sales/
+ input tax Purchases A
A

Vendor Customer

Tax payable

Tax office
Invoice receipt postings
Vendor
GR/R clearing Input VAT (control acct.)

Stock account
Stock value Price differences

( ) ( ) ( ) ( )
Postings at Standard Price
Stock account GR / IR clearing account
(2) 200.00
(3) 240.00 240.00 (2)

Exp. / revenue Price difference Vendor / general ledger


(2) 40.00 20.00 (3) 220.00 ( 3)

Event Stock Total value Standard Moving av.


price price

(1) Initial situation 100 200.00 2.00 2.00


(2) GR for purch. order: 100 @ 2.40 200 400.00 2.00 2.20
(3) IR for purch. order: 100 @ 2.20 200 400.00 2.00 2.10

Purchase order price 2.40 / pc


Invoice price 2.20 / pc
Postings at Moving
Average Price
Stock account GR / IR clearing account
(2) 240.00 20.00 ( 3 ) (3) 240.00 240.00 ( 2 )
(4) 240.00 550.00 ( 5 ) 240.00 ( 4 ) Raw material consumption
10.00 ( 6 ) ( 6) 240.00
( 5 ) 550.00
Exp.. / revenue Price difference Vendor / general ledger
10.00 ( 6 ) 220.00 ( 3 )
220.00 ( 6 )

Event Stock Total value Moving av. price

(1) Initial situation 100 200.00 2.00


(2) GR for purch. order: 100 @ 2.40 200 440.00 2.20
(3) IR for purch. order: 100 @ 2.20 200 420.00 2.10
(4) GR for purch. order: 100 @ 2.40 300 660.00 2.20
(5) Goods issue: 250 @ 2.20 50 110.00 2.20
(6) IR for purch. order: 100 @ 2.20 50 100.00 2.00
INVOICING PLANS

Facility to schedule Invoicing dates for planned


procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan


Account Determination Procedures for
Automatic Postings in MM
Types of Account
Determinations
SD
SD FI
FI
MM
MM CO
CO
PP
PP R/3- AM
AM
Client/Server
QA
QA
PM
ABAP/4 WF PS
PS
PM WF
HR
HR IS
IS

MM SD

Movement Type based


Transactions Cond. Technique

Non-Movement Type
based Transactions
Grouping Organizational Levels
forCase:
Account Determination
valuation area = plant

Valuation
grouping Plant Company code Chart of accounts
code

0001 0001 0001

0002 0002 GKR

0002 0003 0003

0004

0003 0005 0004 IKR


Grouping of Material Type -
Valuation Class Account category Valuation
Material type
reference class

FERT
0001 7900
HALB
HAWA 0002 3000
. 3010
. 3020
. 3030
ROH1 0003 3040

ROH2 3100
0004
ROH3 3200
...
Grouping of Materials for
Account
Option 1:
Determination
Option 2 Option 3

ROH ROH ROH


Acct.
Acct. 11
Mat 1 Mat 1 Mat 1 Acct.
Acct. 11

Mat 2 Mat 2 Mat 2 Acct.


Acct. 22
Acct.
Acct. 11

HIBE HIBE
Acct.
Acct. 22
Mat 3 Mat 3

Mat 4 Mat 4

FERT FERT
Acct.
Acct. 33 Acct.
Acct. 33
Mat 5 Mat 5

Mat 6 Mat 6
Procedure Part 1: Value String
- Processing Keys
Inventory Management Invoice verification Invoice
verification
?
=
Material

Value String
Transaction
(Generalized
posting record)

BSX
BSX WRX
WRX KBS
KBS
Processing keys

300100
300100 191100
191100 425000
425000
G/L account number
Procedure Part 2: Processing
Key - Rules
1
Processing keys
Transaction
for debit/credit posting

2 Processing Key Rules


(Transaction) Parameters on which
account allocation
Chart of accounts depends
Procedure Part 3: Rules -
Account Allocation
Processing Key (Valuation grouping
(Selection of code)
transaction)
(Account grouping Account
code) number
Selection of
chart of accounts (Valuation class)

Rules specify
account determination
key
Account Determination
Procedure: Overview
Type of Material
Transaction Plant
Master

Movement Non-move-
"Type of
type based ment type based
Transaction Transaction
Material"

Material
Step 1 or 2
Type
Value Qty.
Posting String Posting String
Account
Company Code
Categ. Reference
Step 3

Rules
Processing
Key (GBB) Account Valuation Val. Grouping
modification Class Code

Processing
Key (AUF)
Chart of
Step 4
Account

Legend
Information derived from Transaction type G/L Account
Information derived from Material Master
Information derived from the organiz. Structure
Main Customizing area
Automatic Posting:
Maintenance of the Settings
1
Selection of the
valuation grouping code

2
Selection of the posting transaction

3
Allocation of the G/L account number(s)
per valuation class
(and account grouping code)