Chapter I

Implementation Guide
Chapter
SAP is configured to use ERP software package. It is configured by SAP consultants in their respective
domains materials management, production planning, sales and distribution etc. Consultant use implementation guide to configure software as per the business need. In this chapter configuration of materials
management module is being explained in detail. Configurations of modules are interdependent. There
are precedence dependencies on many configurations of different modules. Configuration of the package
starts with organisation structure in finance module, materials management module and other modules,
respectively. Company and company codes are configured in finance module, further to which organisation structure of materials management is configured. Configuration details are explained as below.
Execute transaction SPRO and click on
to go to IMG (Implementation Guide).
Figure i.1 Customizing initial screen. T-code SPRO
SAP Materials Management

Click on
to go to IMG (Implementation Guide).
Figure i.2 Implementation guide (IMG). T-code SPRO
IMG consist of various nodes and sub nodes

. At every node we have help text, explaining
the configuration activity which can be done at that node. Help text can be read by clicking on icon .
i.1 Configuring Enterprise Structure

I.1.1 Company
IMG Path: SPRO Enterprise Structure Definition Financial Accounting Define Company
Figure i.3 Define company
Figure i.4 Define company

Select a company and click on icon
all the data.
to copy and create a new company. Press enter after putting
Figure i.5 Defining company, inputting company details
Click on save button

customizing request.
to save newly created company, system would pop up a screen to create
Figure i.6 Prompt for customizing transport request, to save the changes in configuration
Click on
to create a new request or click on
to select any previous request. if new
request is being generated system ask for the description of the request.
Figure i.7 Creation of customizing request
System generates a customizing request number as shown in the pop-up. Press enter to accept the
number save the changes.
Figure i.8 Specifying customizing request in prompt
I.1.2 Company Code

IMG Path: SPRO Enterprise Structure Definition Financial Accounting Edit, Copy, Delete,
Check Company Code
Figure i.9 Defining company code
Figure i.10 Prompt for defining company code

Figure i.11: Defining company code by copying standard company code
Click on icon
to copy and create a new company code. Enter standard company code in from field
and company code to be created in to field.
Figure i.12 Copying company code
Figure i.13 Specifying standard company code for copying
Click on icon
to copy the company code settings of standard company to company code to be created. Systems create a new company code with all the information from standard company code.
Figure i.14 Edit newly created company code data
Click on Edit company code data to change the data of the created company code.
Figure i.15 Edit newly created company code

Click on icon
to view and change the details of the company code. Click on icon
change the address of the company code.
to view and
Figure i.16 Edit newly created company
I.1.3 Plant
IMG Path: SPRO Enterprise Structure Definition Logistics General Edit, Copy, Delete,
Check Plant
Figure i.17 Create plant
Figure i.18 Prompt for creating plant
Click on Copy, delete, check site to create a new plant.
Figure i.19 Icons for copying/change and delete plant
Click on icon
in To field.
to copy and create a plant. Enter standard plant in From field and plant to be created
Figure i.20 Specifying plant for copying and creating new plant
Click on Define Plant to change the data of the newly created plant.
Figure i.21 Prompt to create/change new plant
I.1.4 Storage Locations

IMG Path: SPRO Enterprise Structure Definition Materials Management Maintain storage
location
10 SAP Materials Management
Figure i.22 Maintaining storage location for a specific plant
Figure i.23 Specifying work area (Plant) for maintaining storage locations
Implementation Guide 11
Enter plant code as a work area for which storage location is to be defined and press enter.
Figure i.24 Storage location maintenance
Select any storage location and click on icon
to copy and create a storage location and enter a new entry.
Figure i.25 Creating new storage location
I.1.5 Purchasing Organisation

IMG Path: SPRO Enterprise Structure Definition Materials Management Maintain
purchasing organisation
Figure i.26 Maintaining purchasing organisation
Figure i.27 Creating purchasing organisation by copying standard purchasing organisation
Select a purchasing organisation and click on icon

enter a new entry.
to copy and create a purchasing organisation and
Figure i.28 Creating purchasing organisation by copying and changing standard purchasing organisation
We have created basic elements of organisation structure and now we will do the assignment of elements of organisation structure.
Figure i.29 Assignment of organisational activities
I.2 Assignment
I.2.1 Assign Company Code to Company
IMG Path: SPRO Enterprise structure Assignment Financial Accounting Assign Company
code to company
Figure i.30 Assignment of company to company code
I.2.2 Assign Plant to Company Code

IMG Path: SPRO Enterprise structure Assignment Logistics General Assign plant to
company code
Figure i.31 Assignment of plant code to company code
Keep the cursor on the company code to which plant is to be assigned and then click on icon
,
system would pop up another screen to display unassigned plants. Select the check box of the plant to be
assigned and click on
, to make the assignment and save.
I.2.3 Assign Purchasing Organisation to Company Code

IMG Path: SPRO Enterprise structure Assignment Materials Management Assign purchasing organisation to company code
Figure i.32 Assignment of company code and purchasing organisation
Keep the cursor on the company code to which purchasing organisation is to be assigned and then
click on icon
, system would pop up another screen to display unassigned purchasing organisation.
Select the check box of the purchasing organisation to be assigned and click on
ment and save.
, to make the assign-
I.2.4 Assign Purchasing Organisation to Plant

IMG Path: SPRO Enterprise structure Assignment Materials Management Assign purchasing organisation to plant
Figure i.33 Assignment of purchasing organisation and plant

Keep the cursor on the purchasing organisation to which plant is to be assigned and then click on icon
, system would pop up another screen to display unassigned plants. Select the check box of the
plant to be assigned and click on
, to make the assignment and save.
I.2.5 Assign Purchasing Organisation to Reference Purchasing Organisation

IMG Path: SPRO Enterprise structure Assignment Materials Management Assign purchasing organisation to reference purchasing organisation
Reference purchasing organisation is that purchasing organisation which can procure for all the plant of
all the purchasing organisations. Reference purchasing organisation is used in the case of global contract
preparation which can be referenced by any local purchasing organisation.
Figure i.34 Assignment of reference purchasing organisation to purchasing organisation
Click on
and make desired assignment.
Figure i.35 Assignment of reference purchasing organisation to purchasing organisation
Release order against contract specifies that release orders issued against contracts set up by the reference purchasing organisation are allowed. Conditions allowed check allows the conditions of the reference purchasing organisation to be accessed. In all access sequences in price determination, a field assignment
must additionally be made.
I.3Tax Procedure
Tax procedure is configured with the consultation of FI, MM and SD module consultants as per the business need. SAP has given tax procedure for many countries in standard package but changes and modification may be required as per the business need.
I.3.1 Define Procedures

IMG Path: SPRO Financial Accounting Global Settings (New) Tax on Sales/Purchases Basic
Settings Check Calculation Procedure Define Procedures
Figure i.36 Configuring tax calculation procedure
Prompt appears as soon as we click on icon
Figure i.37 Prompt appear for configuration of tax procedure
Figure i.38 Tax procedure for various countries
Figure i.39 Standard tax procedure for country India (For full view Click Here)
I.3.2 Define Condition Types

Figure i.40 Configure condition type for tax procedure
Click on
to display detail of condition type.
Figure i.41 Attributes of condition types (For full view Click Here)

Click on icon
to copy to create new condition type. Change the necessary control and parameters
of the new condition type.
Figure i.42 Creating new condition type by copying standard condition type
I.3.3 Access Sequences

Figure i.43 Configuring access sequence for tax condition type
Figure i.44 Access table in Access sequence
Figure i.45 Fields in a given access table
I.3.4 Assign Country to Calculation Procedure

Figure i.46 Assignment of tax procedure to country (For full view click here)
I.3.5 Check and Change Settings for Tax Processing

T-code OBCN
Figure i.47 Accounting keys for tax procedure condition type
Figure i.48 Configuration of accounting key MWN for tax procedure condition type
Figure i.49 Configuration of accounting key NAV
I.3.6 Define Tax Codes for Sales and Purchases

T-code FTXP (Maintenance), FTXA (Display)
Figure i.50 Creation of tax codes
Figure i.50 Creation of tax codes
Figure i.51 Specifying country code for tax code creation
Figure i.52 Specifying tax code to be maintained
Figure i.53 Tax code rate maintenance (for full view click here)
I.3.7 Define Tax Accounts

T-code OB40
Figure i.54 Tax account maintenance
Figure i.55 Accounting keys for tax account maintenance

Put the cursor on transaction Key (e.g. MWS) and click on icon
pany to display the detail of the GL account assignment.
and enter chart of account of com-
Figure i.56 Specifying chart of accounts with reference to which account assignment is being made

(Click here for full view)
To change the rules of account determination click on icon

. Different tax codes can have different GL account. For example, VAT for different plant may have different GL account.
Figure i.57 Setting up rules for account determination for account key MWS
Figure i.58 Setting up posting keys for account keys MWS
Figure i.59 General account ledger is being maintained for account key MWS
I.4 Configuring Master Data

I.4.1 Vendor Account Group
IMG Path: SPRO Financial Accounting Global Settings (New) Accounts Receivable and Accounts Payable Vendor Accounts Master Data Preparations for Creating Vendor Master Data
Define Account Groups with Screen Layout (Vendors)
Figure i.60 IMG path to define vendor account group
Figure i.61 Configuring vendor account group

Select a vendor group and click on icon
vendor account group.
to see details and click on icon
to copy and create new
Figure i.62 Configuring vendor account group for screen layout
Put cursor on field status (e.g.

layout.
) and click on
to make changes in the screen
Figure i.63 Configuring vendor account group for screen layout of vendor master
Double click on any of the group to make further charges. Type of control we have is to suppress the
field, making it required (mandatory), or optional or just to display the information if any that field has.
Figure i.64 Configuring vendor account group for field status of vendor master
User can choose any option out of four options: suppress required entry, optional entry and display. In
suppress option filed shall not display in vendor master screen, in display option, field shall be visible but
not editable, in optional option, field shall be visible and editable, and in required entry, field is mandatory
to be filled in, otherwise vendor master cannot be saved.
I.4.2 Material Master

IMG Path: SPRO Logistics General Material Master Basic Settings Material Types
Define attributes of Material Types
Figure i.65 IMG path to configure material type
Here we define the various types of material types as per the classification defined by the business
needs. Standard SAP provides some material type in standard package. If the need arises to create a new
material type we should copy the standard one and do the modifications to suit the business need.
Figure i.66 Choosing a material type to create a customize material type
Select a standard material type to copy, click on icon
Figure i.67 Creating a customized material type and changing its attribute (for full view click here)
Customized material type should start with Z or Y alphabets as per the SAP AG guidelines. Various
control parameters like required material master views could be selected here, new account category reference could be assigned. Procurement control (internal or external or both), screen reference field and
quantity and update controls also could be selected. Screen reference field is group of material master
fields where suppress, display, optional and required (mandatory) features are defined. If a non valuated
material type is to be defined then it should not have value updating option in nay of the valuation area.
Select material type and click on
to view quality and value updating control valuation areawise.
Figure i.68 Selecting a material type for quantity and value update
Figure i.69 Configuring a material type for quantity and value update
I.5 Configuring Purchasing

I.5.1 Shipping Instruction
IMG Path: SPRO Materials Management Purchasing Material Master Define Shipping
Instructions
Shipping instructions are parameter to instruct and monitor shipping conditions (e.g. pack size, packaging,
pallet size etc.) of vendor delivery. Shipping instructions are mentioned while creating purchase order to
inform vendor and it is also mentioned at the time of goods receipt to evaluate the delivery already made.
Various points are assigned to different shipping instructions which help to evaluate vendor on delivery
basis at the time of vendor valuation.
Figure i.70 IMG path to define shipping instructions
Figure i.71 Selecting a shipping instruction for configuration
Figure i.72 Configuring shipping instruction
I.5.2 Purchasing Value Key

IMG Path: SPRO Materials Management Purchasing Material Master Define Purchasing
Value Keys
Purchasing value key is assigned to a material. Purchasing value key controls many parameters about
deadline monitoring, Goods receipt control and vendor evaluation. As per the assigned purchasing value
key in material master, various control parameters values are defaulted in purchase order. Various control
parameters are under delivery tolerance, over delivery tolerance, unlimited delivery, shipping instructions,
minimum delivery quantity percentage,
(standard delivery date variance) etc.
Figure i.73 IMG path to define purchasing value keys
Figure i.74 Selecting purchasing value key either to change or to create new by copying
Figure i.75 Changing a purchasing value key
I.5.3 Purchasing Groups

IMG Path: SPRO Materials Management Purchasing Create Purchasing Groups
Purchasing group is the group of individuals (it could be a single individual), who control a particular
type of procurement activity based on some classification. For example, different groups or individuals
may procure raw materials and trading materials, different groups or individuals may be procuring in different geography.
Figure i.76: IMG path to create purchasing groups (for full view click here)
Figure I.77 Defined purchasing groups
I.5.4 Configuring RFQ/Quotation

In the configuration of RFQ/Quotation we need to define customized document types, number ranges
for customized document types, document linking to subsequent documents (purchase order) as well as
preceding document (purchase requisition), allowed item categories for the document, screen layout, text
and comments for quotation evaluation.
I.5.4.1 Define Document Types

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Define Document
Types
Figure i.78 Selecting a document type either to change or creating new document type by copying
In document type we define number range code (e.g. 70), Field screen group, item increment etc.
Figure i.7 Item categories allowed for a selected document type
Figure i.80 Copy control when RFQ is created with reference to a purchase requisition
I.5.4.2 Define Number Range

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Define Number Ranges
Figure i.81Defining number range for purchasing documents. Purchasing documents include RFQ, Purchase
requisition, purchase order, scheduling agreement and contract
Click on
to display the overview of number range
Figure i.82 Defined number ranges for various purchasing documents

Click on
to display the defined number ranges.
Figure i.83 Display defined number ranges
Click on
ber generated).
to change the status of number range (current running number or last num-
Figure i.84 Display and change of current number within the defined number range
Click on
to change the number range or create and add new number range.
Figure i.85 Display and change of number range of the already defined number range
Click on
to create a new number range.
Figure i.86 Defining new number range (for full view click here)
Figure i.87 Defining new number range
Click on
to add the created number range in the table.
I.5.4.3 Define Screen Layout at Document Level

Here screen layout at document type level is defined. Field selection key is defined at the document level.
This key controls that which field should be hidden or suppressed or optional or required (obligatory or
mandatory).
Figure i.88 Field selection key of various documents
Figure i.89 Field selection key ZNA of document type ZAN
Here for document type ZAN Field selection key is ZNA.

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Define Screen Layout at Document Level
Figure i.90 IMG path to define screen layout at document level
Figure i.91 Selecting field selection key ZNA to display or change the screen layout
Click on
to see the details of field selection key.
Figure i.92 Field selection group for filed selection key ZNA
Figure i.93 Fields for a field selection group
I.5.4.4 Texts for RFQs/Quotations
Figure i.94 IMG path to define text types for header text for quotation
I.5.4.5 Define Text Types for Header Texts

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Texts for RFQs/Quotations Define Text Types for Header Texts
Here we define the various header texts applicable to the RFQ document.
Figure i.95 Various text types for header text for quotation
I.5.4.6 Define Copying Rules for Header Texts

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Texts for RFQs/Quotations Define Copying Rules for Header Texts
Here copying rules for text are defined. When the subsequent documents are created with reference to
quotation then following settings should be configured:
Which of the text should be copied or not,

Which of the text may require users decision
We have three options to configure as shown in Fig. I.96.
Figure i.96 Three options to configure copying control of header text of quotation
Figure i.97 Selecting a text type to define text linkages
Figure i.98 Defining text linkages
Figure i.99 Specifying text linkages
I.5.4.7 Maintain Quotation Comments

IMG Path: SPRO Materials Management Purchasing RFQ/Quotation Maintain Quotation
Comments
Figure I.100 IMG path to maintain quotation comments
Quotation comments are the comments which should be mentioned while evaluating and comparing
different quotations received from different vendors.
Figure I.101 Maintaining quotation comments
I.5.5 Purchase Requisition

Configuration related to purchase requisition includes document types, number ranges, release procedure,
screen layout and Texts.
Figure I.102 IMG path to configure purchase requisition (for full view click here)

IMG Path: SPRO Materials Management Purchasing Purchase Requisition Define
Document Types
Configuration is similar to configuration of document types of RFQ. Please refer to that configuration
I.5.5.2 Define Number Ranges

IMG Path: SPRO Materials Management Purchasing Purchase Requisition Define Number
Ranges
Configuration is similar to configuration of number ranges of RFQ documents. Please refer to that
configuration.

IMG Path: SPRO Materials Management Purchasing Purchase Requisition Define Screen
Layout at Document Level
Configuration is similar to configuration of screen layout of RFQ documents. Please refer to that
configuration.
I.5.5.4 Texts for Purchase Requisitions

IMG Path: SPRO Materials Management Purchasing Purchase Requisition Texts for Purchase Requisitions
Configuration is similar to configuration of texts of RFQ documents. Please refer to that configuration.
Figure I.103 IMG Path to configure purchase requisition
I.5.5.5 Release Procedure for Purchase Requisition

Release procedure is a procedure to approve purchasing documents in the system for further approval or
further use as a reference document for further activities. Release procedure for purchase requisition can
be configured in two different ways, i.e. with classification or without classification. Steps for both the
release procedure are explained here.
Figure I.104 IMG path to configure release procedure
I.5.5.5.1 Release Procedure for Purchase Requisition without Classification

Steps for configuration of release procedure without classification as follows.

1. Release codes
2. Release indicator
3. Assign release indicators
4. Release Points: Prerequisites
5. Determination of release strategy
IMG Path: SPRO Materials Management Purchasing Purchase Requisition Release Procedure Set Up Procedure without classification
Figure I.105 IMG path to configure release procedure without classification
Figure I.106 Prompt for configuration of release strategy without classification
Double click on the activity which is to be configured.
Figure I.107 Defining release codes
Figure I.108 Defining release indicator
Select a release ID and click on icon
to display the controls.
Figure I.109 Configuring release indicator
Controls of release indicator 1 shows that after the release of this purchase requisition it can only be
converted into RFQ (request for quotation) not purchase order.
Changeability indicator is control of release strategy behavior on account of purchase order changes
after release.
Figure I.110 Various changeability options to choose from

Tolerance for change of value in the released purchase requisition can be defined for release strategy
to apply again. Release strategy would not apply to release purchase requisition if the change in value is
within tolerance limit.
Assign Release Indicator
Figure I.111 Assign release indicator
Here we define that when purchase requisition is blocked or fully released for further use as a reference
document.
Release Points: Prerequisites
Figure I.112 Setting up prerequisite to release the document at all levels
Here we define the sequence of release procedure and their interdependencies. For example, whether
release code 03 can release the purchase requisition before release code 04 or not.
Figure I.113 Indicators to set release prerequisite
Determination of Release Strategy
Figure I.114 Configuring determination of release strategy by purchasing document
Figure I.115 Configuring determination of release strategy by purchasing document
Here we configure various logical criteria using four logical elements to determine the relevant release
strategy for a particular purchase requisition. Four logical elements are as follows.

1. Account assignment category

2. Material group
3. Plant
4. Value of purchase requisition
On the basis of combination of logical elements, a relevant strategy is picked and applied by the system.
I.5.5.5.2 Release Procedure for Purchase Requisition with Classification

Release procedure is also known as release strategy. There are following steps in defining the release
procedure with classification for PR:

1. Edit characteristics
2. Edit classes
3. Define release procedure for PR

(a)
(b)
(c)
(d)
Define release groups

Define release codes
Define release indicator
Define release strategies
IMG Path: SPRO Materials Management Purchasing Purchase Requisition Release Procedure Procedure with Classification Set Up Procedure with classification
Figure I.116 IMG path to set up release procedure with classification
While defining the release procedure, classification feature of the SAP is used. We classify various
criteria of release procedure and group them under a class. Classification feature specifies class type 032 to
be used for release strategy. Various criteria are classified and characteristics are created. A class is created
under class type 032 and required characteristics are grouped together under this class.
Edit Characteristics
IMG Path: SPRO Materials Management Purchasing Purchase Requisition Release Procedure Procedure with Classification Edit Characteristics
Figure I.117 Create characteristics (logical element) for release strategy
Here we create, change and display the characteristics (criteria elements) of release strategy. Using different characteristics we can create various release strategies as per the business need.
Figure I.118 Display characteristics for plant as a criterion in determination of release strategy
Figure I.119 Creating characteristics for plant
Figure I.120 Maintaining possible plant codes applicable for the characteristics
Figure I.121 Change characteristics for plant as a criterion in determination of release strategy
Figure I.122 Restricting characteristics for plant to a specific class type
Edit Class
IMG Path: SPRO Materials Management Purchasing Purchase Requisition Release Procedure Procedure with Classification Edit Class
We define the class to group together the characteristics required to define a release strategy. SAP
specifies class type 032, which should be used for defining release strategy classes.
Figure I.123 Display class made for configuring release strategy. Please note class type 032

(for full view click here)
Figure I.124 Characteristics has been assigned to class for release procedure
Defining Release Procedure

IMG Path: SPRO Materials Management Purchasing Purchase Requisition Release Procedure Procedure with classification Set up procedure with classification
Figure I.125 Prompt for configuring release procedure
Figure I.126Release group being assigned release procedure class. Please note check box of overall
release of purchase requisition
While defining the release group, release object is 1 for purchase requisition. In case of purchase
requisition system also gives us the option of setting release strategy at item level or header level of the
document. By default release procedure of purchase requisition is at item level. To make release at header
level check box of
should be checked. This control is also found at the configuration node of
purchase requisition document level.
Figure I.127 Release codes assignment to release group
Figure I.128 Defining release codes
Figure I.129 Creating release strategies
Figure I.130 Configuring release strategy
Click on
to set the prerequisite of release procedure. Here we define the sequence of release (codes) of the documents.
Figure I.131 Setting up release prerequisite
In the given example, document should be released first using CG code, before it can be released using
release code CH.
Click on icon
to set the release status of the document. Here we can configure that at
what stage of release procedure document can be considered release for further use of the document.
Figure I.132Setting up release indicator. These indicators show the status of the purchasing document as
blocked/released for used as a reference document
Figure I.133 Setting up values for different criteria characteristics
Figure I.134 Simulating release procedure
We can also simulate release run, to verify the settings correctness. Click on
appears showing release strategy and release code and then click on
, a pop up
, another pop up
appears to simulate release. Put cursor on release code and click on

to change the release
status of the release code. Repeat it for all the release codes and status of the release strategy would change
from blocked to released.
Figure I.135 Different steps of simulating release strategy

Once the release strategy is configured in development server it is transported to quality and production server after due testing at every stage. But characteristics and class should be defined in every server.
There are no transportable objects. Value assignment to the characteristics is also done in every server
individually.
After configuring release strategy, set up of release strategy (as a master data) is done to make it work.
Transaction codes CL20N and CL24N are used to assign release strategy to class and the values are assigned to the characteristics of the release strategy. In CL20N, we can work on any one of the release
strategy but in CL24N, we can work on many release strategies.
Figure I.136 Release strategy set up using T-code CL24N
I.5.6 Purchase Order

Purchase order is a legal document which sets binding on vendor to send the material and on vendee to
receive the material. Purchase order is sent to vendor either in PDF format through mail or in print form.
Figure I.137 MG Path to configure purchase order related configuration

IMG Path: SPRO Materials Management Purchasing Purchase Order Define Document Types
Configuration is similar to configuration of document types of RFQ. Please refer to that configuration.
I.5.6.2 Define Number Ranges

IMG Path: SPRO Materials Management Purchasing Purchase order Define Number Ranges
configuration.

IMG Path: SPRO Materials Management Purchasing Purchase Order Define Screen Layout at Document Level
Configuration is similar to configuration of screen layout of RFQ documents. Please refer to that
configuration.
I.5.6.4 Texts for Purchase Orders

IMG Path: SPRO Materials Management Purchasing Purchase Order Texts for Purchase
Orders
Configuration is similar to configuration of texts of RFQ documents. Please refer to that configuration.
I.5.6.5 Set Tolerance Limits for Price Variance

IMG Path: SPRO Materials Management Purchasing Purchase Order Set Tolerance Limits
for Price Variance
When purchase orders are created system compare the effective price of the material to the valuation price of the
material in accounting view of the material master. As per the configuration, system issues a warning or error
message if the variation exceeds the tolerance level on the both the direction i.e. upper limit and lower limit.
As we move ahead with the configuration guide we shall see that there are various other types of variations at different stages of procurement process. SAP system differentiates and identifies different types
of variation using tolerance keys. Tolerance key for price variation at purchase order stage is PE.
Figure I.138 IMG path to set tolerance limits for price variance
Figure I.139 Select a tolerance key for a given company code to configure
Figure I.140 Configuring tolerance key PE
After comparison system may flash any one of three messages, message number viz. 06205, 06206
and 06207, depending upon the comparison results. These messages could be a warning message or error
message as per the system message configuration.
I.5.6.6 System Message Configuration

System messages are to highlight the important information to user about the transaction being executed.
System messages act as a process control. System messages can be configured as Error message or Warning message or suppress the message.
IMG Path: SPRO Materials Management Purchasing Environment Data Define Attributes
of System Messages
Figure I.141 IMG path to define attributes of system message
Figure I.142 Changing system message attribute
We can have three types of message attributes as shown in Fig. I.143.
Figure I.143 Three types of message attributes
I.5.6.7 Release Procedure for Purchase Orders

Release procedure is a procedure to approve purchasing documents in the system for further approval or
further use as a reference document for further activities. Unlike release procedure for purchase requisition, release procedure for purchase order is available only with classification.
While defining the release procedure, classification feature of the SAP is used. We classify various
criteria of release procedure and group them under a class. Classification feature specifies class type 032 to
be used for release strategy. Various criteria are classified and characteristics are created. A class is created
under class type 032 and required characteristics are grouped together under this class.
IMG Path: SPRO Materials Management Purchasing Purchase Order Release Procedure
for Purchase Orders
Release procedure is also known as release strategy. There are following steps in defining the release
procedure with classification for PO.

1. Edit characteristics
2. Edit classes
3. Define release procedure for PR
(a)
(b)
(c)
(d)
Define release groups

Define release codes
Define release indicator
Define release strategies
Figure I.144: IMG path to set up release procedure for purchase order
I.5.6.7.1 Edit Characteristics
Figure I.145 Characteristics for purchasing group for release strategy of purchase order
Figure I.146 Characteristics for purchasing group for release strategy of purchase order
Figure I.147 Allowed value for characteristics purchasing group
Figure I.148 Characteristics reference to structure CEKKO and field EKGRP (for full view click here)
I.5.6.7.2 Edit Class
Figure I.149 Defining class for release strategy. Please note class type 032 (for full view click here)
Figure I.150 Specifying characteristics in class for release strategy
I.5.6.7.3 Define Release Procedure for Purchase Orders
Figure I.151 Prompt for configuring release strategy
Figure I.152 Defining release group and assigning release object and class for release strategy
Figure I.153 Defining release codes and being assigned to release group
Figure I.154 Define release indicator and their changeability attributes
Release ID is the ID which is assigned to the purchase order and shows the status of the purchase
whether released or not. Release ID B is assigned to the PO when PO is not released and release ID G gets
assigned when PO is released. Changeability of purchasing document during/after release is controlled by
changeability codes.
Figure I.155 Changeability options
Changeability codes define the behavior of the purchase document during or after release of the PO,
as per the business requirement. If changeability code 1 is assigned to the release ID is B (i.e. PO status is
unreleased), then PO can not be changed after it is saved. Subsequently, if changeability code 1 is also assigned to release ID G (i.e. PO status released), then PO cannot be changes even after release. Some business
requirement says that PO should be changeable before or after release and change in PO value or release
strategy criterion should trigger determination of new release strategy. To meet this requirement release ID
B (i.e. PO status is unreleased), should be assigned changeability code (blank) and release ID G (i.e. PO
status released), should be assigned changeability code 4. We can also define that what minimum percent-

age variation in value of PO should trigger determination of new release strategy. This feature works only
with changeability code 4 not with 6. Change in purchasing group may also trigger determination of release
strategy, if the two different purchasing groups are assigned to different release strategy.
Figure I.156 Define release strategy of various levels and for different types of PO (for full view click here)
Figure I.157 Setting up release strategy (for full view click here)
Figure I.158 Setting up prerequisite for releasing the PO at different level (for full view click here)
Click on
to set the prerequisite of release procedure. Here we define the sequence of release (codes) of the documents.
In the given example document should be released first using HO code, before it can be released using
release code HC and so on.
Click on icon
to set the release status of the document. Here we can configure that at
what stage of release procedure document can be considered release for further use of the document.
Figure I.159 Setting up release indicator to show the status of the PO (for full view click here)
Figure I.160 Classification of release strategy (for full view click here)
Figure I.161 Simulating release strategy (for full view click here)
We can also simulate release run, to verify the settings correctness. Click on
, a pop
up appears showing release strategy and release code and then click on
, another pop up
appears to simulate release. Put cursor on release code and click on
to change the release
status of the release code. Repeat it for all the release codes and status of the release strategy would change
from blocked to released.
Figure I.162 Different steps of simulation of release strategy (for full view click here)
Once the release strategy is configured in development server it is transported to Quality and production server after due testing at every stage. But characteristics and class should be defined in every server.
There are not transportable object. Value assignment to the characteristics is also done in every server
individually.
Transaction codes CL20N and CL24N are used to assign release strategy to class and the values are
assigned to the characteristics of the release strategy. In CL20N, we can work on any one-release strategy
but in CL24N, we can work on many release strategies.
Figure I.163 Setting up master data for release strategy. T-code CL20N (for full view click here)
Figure I.164 Setting up master data for release strategy (for full view click here)
Figure I.165 Setting up master data for release strategy. T-code CL24N
I.5.6.8 Set up Stock Transport Order (STO)

Stock transport order (STO) is the internal purchase order to order goods from another plant or group
companies. There are two types of STO i.e.,
Intra Company STO (Plant to plant of the same company)

Inter Company STO (Plant to plant of two different companies but of same business group)
Process of internal procurement is as follows.

Intra Company STO
STO Outbound Delivery Picking PGI (Post Goods Issue) Goods Receipt with reference to
outbound delivery
STO is created by receiving plant

Outbound delivery is created by supplying plant
Goods Receipt with reference to outbound delivery is made by receiving plant
Inter Company STO

STO Outbound Delivery Performa Invoice Picking PGI (Post Goods Issue) Commercial
Invoice Goods Receipt with reference to outbound delivery Logistics Invoice Verification
In inter company STO performa invoice is not a mandatory step, it may be required if the material is
sent across the country border.
There are 5 steps of configuring STO.

1.
2.
3.
4.
5.
Define shipping data for Plants

Create checking rule
Define checking rule
Assign delivery type and checking rule
Assign document type, one-step procedure, under delivery tolerance
IMG Path: SPRO Materials Management Purchasing Purchase Order Set up Stock Transport Order
Figure I.166 IMG path to set up stock transport order
I.5.6.8.1 Define Shipping Data for Plants

Each plant is defined as a customer and a sales area is attached to that customer. Customers codes are
created using transaction code XD01 and then those customer codes are attached to the respective plants
in configuration. A sales area is also attached to the customer plant (Supplying Site). System use this sales
are when outbound delivery is created at the supplying site. Supplying site acts both like a vendor as well
customer, vendor because it is supplier of materials and customer (pseudo) because it has to perform shipping functions.
Figure I.167 Define shipping data for plants
Figure I.168 Plants for which shipping data is being defined
Figure I.169 Shipping data for a plant
I.5.6.8.2 Create Checking rule
Figure I.170 Checking rule for availability check
I.5.6.8.3 Define Checking Rule
Figure I.171 Availability check control for STO
Figure I.172 Configuring availability check control
I.5.6.8.4 Assign Delivery Type and Checking Rule
Figure I.173 Assignment of delivery type and checking rule
Delivery Type NL is used for Intra Company STO and NLCC is used for Inter Company STO. Inter
Company STO is also called as Cross Company.
Figure I.174 Default document type for stock transport orders
UB is document type for Intra Company STO and DCD is for Inter Company STO.
In case of inter company/cross company STO, supplying plant should be assigned vendor along with
customer. While customer is assigned in configuration vendor is assigned in vendor master.
Vendor Master Purchasing View Extras Additional Purchasing Data
Figure I.175 Assigning plant to vendor master for inter company STO
Figure I.176 Plant assignment to vendor master for inter company STO
STO is created using transaction ME21N.
Figure I.177 Stock transport order screen. T-code ME21N (for full view click here)
Outbound delivery is created using Transaction VL10B.
Figure I.178 Outbound delivery creation for STO to ship material out the plant. T-code VL10B
Click in
to execute the transaction.
Figure I.179 Selecting PO for outbound delivery creation
Select the line and click on
to create delivery.
Figure I.180 Outbound delivery created
Sales Document number is a delivery number. If the delivery number is not appearing in second line click
on
to see the delivery number. Click on delivery number system would display the delivery document.
Figure I.181 Display delivery document. T-code VL02N (for full view click here)
Click on
to change the delivery.
Figure I.182 Changing delivery document for picking (for full view click here)
Go to picking tab, enter pick quantity and batch number.
Figure I.183 Posting goods issue (PGI) after picking activity
Click on
to create goods movement.
I.5.7 Contracts and Scheduling Agreement

Configuration of contracts and scheduling agreement is similar to that of PO.
I.5.8 Conditions
It is the configuration of condition technique for pricing procedure (also called as calculation schema) of
purchasing document. There are following eight steps of configuring pricing procedure:
1. Define condition types
2. Define calculation schema
3. Define schema group
4. Define schema determination
5. Define transaction/event keys
6. Extend field catalog for condition tables
7. Maintain condition table
8. Define access sequences
9. Assign condition table to access sequence
10. Assign access sequence to condition type
11. Maintain condition record
Step numbers 6, 7, 8,9,10 and 11 are used when automatic pricing is required.

IMG Path: SPRO Materials Management Purchasing Conditions Define Price Determination Process
Figure I.184: IMG path to define price determination process
Figure I.185: IMG path to configure various steps of price determination process
I.5.8.1 Define Condition Types
Figure I.186 Configuring condition types
Click on
to display the condition type details. Click on
to copy (selected condition type) and create a
new condition type. Enter new condition type name and description and necessary condition type controls.
Figure I.187 Attributes of pricing procedure (for full view click here)
I.5.8.2 Define Calculation Schema
Figure I.188 Defining pricing procedure (calculation schema)
Select a calculation schema and click on control data

to see the details of pricing procedure.
Click on
to create a new calculation schema. Click on
to copy existing (selected one) calculation schema and create a new schema.
Figure I.189 Calculation schema
Figure I.190 Calculation schema
I.5.8.3 Define Schema Group
Figure I.191 Prompt for configuring schema determination

Schema groups are the keys to make logical link to determine calculation schema for the purchasing
document at the time of creation. Vendor schema group is maintained in vendor master.
Figure I.192 Defining vendor schema group
Figure I.193 Assigning vendor schema group to vendor master to determine calculation schema in

purchasing document
Figure I.194 Define schema groups for purchasing organisation
Figure I.195 Assignment of schema group to purchasing organisation
I.5.8.4 Define Schema Determination
Figure I.196 Prompt for configuration of automatic schema determination (for full view click here)
Figure I.197 Determination of calculation schema in purchasing
Figure I.198 Determination of calculation schema for stock transport order
I.5.8.5 Define Transaction/Event Keys

Transaction/event key is the link to determine GL account while automatic posting of accounting document in the background. For example, when goods receipt is posted at the same an accounting is created
in the background.
Figure I.199 Prompt for creating new transaction keys
Figure I.200 Account keys configuration to determine GL for delivery cost conditions
I.5.8.6 Define Access Sequences

In automatic pricing access sequence is a search strategy to look for condition value within the defined
condition tables. Condition tables are arranged in the given sequence and search is made in that sequence
only. As soon as the search strategy finds a value in a table it stops searching further and returns the value
to condition type. Within a table there are logical elements on the basis of which value is defined and
looked for. Generally tables are arranged in most generalized logic to most specific logic but it could differ
as per the business requirement. These condition tables are called as Accesses.
Figure I.201 Defining access sequence
Select an entry and click on Accesses
to see the list of condition tables.
Figure I.202 Defining access (conditions) table within a access sequence
Select a table and click on Fields

elements.
to see the fields of the table. These fields are the logical
Figure I.203 Viewing fields of access (condition) table 88
Figure I.204 Viewing fields of access (condition) table 88
System first collects all the possible logical elements from the document and then with that information
it searches in the access sequence attached with the condition type.
Figure I.205 Specifying access sequence in a condition type
I.5.8.7 Maintain Condition Table

Conditions tables are created to create a new search strategy using different table fields. Customize condition tables can be created and desired fields can be included to create a new set of logical elements. Later
many such tables are arranged in a access sequence in the order of priority to create a new search strategy.
Customize tables code should be between 501 and 999.
IMG Path: SPRO Materials Management Purchasing Conditions Define Price Determination Process Maintain Condition Table
Figure I.206 Prompt for configuring condition table
Figure I.207 Displaying a condition table
Figure I.208: Selected fields in condition table 995
Field catalogue is the list of all the possible table fields (logical elements) which can be or are included
in a condition table. Selection fields are the fields which have been chosen to be the part of the table. If
any filed which is required to be added in a condition table and if it is not available, it can be included in
the table.
Figure I.209 Creating a new condition table
Figure I.210: Selecting fields out of given field catalogue
Put cursor on the desired fields the field catalogue table and click on
the selected fields.
to include the field in
Figure I.211 Field Country and Company selected from field catalogue
Click on icon
to generate table with the included fields.
Figure I.212 System prompts for generating condition table
Figure I.213 Specify package name to create the condition table

Use F4 help to search for customized package.
Figure I.214 Searching for package
If some customized package is not available, help of technical consultant (ABAP programmers) should
be taken to create new customized package.
Click on
to proceed.
Figure I.215 Prompt for transportable workbench request
System is asking for transport requested to save the table. This transport request is different from earlier (customizing request) transport request. This is a workbench request as we are creating a table in the
database of the SAP ERP software package. It is a technical object.
Click on
to proceed. System issues the log message about the creation of the table. We gave the
table name 555, system created table (i.e. technical object) A555.
Figure I.216 System log generation about table creation

We can delete the table also, in change mode.
Figure I.217 Condition table deletion path
I.5.8.8 Extend Field Catalog for Condition Tables

Field catalogue is the list of all the possible table fields (logical elements) which can be or are included
in a condition table. Selection fields are the fields which have been chosen to be the part of the table. If
any field which is required to be added in a condition table and if it is not available, it can be included
in the table.
Figure i.218 IMG path to extend field catalog for condition tables
Figure i.219 Change field catalogue to extend the available options
Click on
to add new fields. The field should exist in structures KOMG, KOMK and
KOMP; otherwise field can not be included in the field catalog. Tables are group of fields in which data
is stored. Structures are also group of fields but data is not stored in them. Structures are temporarily
used by programs during its execution. To view fields available in the above given structures, execute
transaction SE11.
Figure i.220 T-code SE11. To view the available fields in a structure
In front of view option enter the name of structure and click on the push button
display the structure.
to
Figure i.221 Fields in structure which can be added to the extended field catalogue can be viewed in structure

using T-code SE11 (for full view click here)
Click on
to add new fields. The field should exist in structures KOMG, KOMK and
KOMP; otherwise field can not be included in the Field catalog. Tables are group of fields in which
data is stored. Structures are also group of fields but data is not stored in them. Structures are temporarily used by programs during its execution. To view fields available in the above given structures,
execute transaction SE11.
Figure i.222 Adding a new field in the field catalogue

Press Enter
Figure i.223 A new field added in the field catalogue
Click on save icon

to save the filed added. Here system again for workbench transport request (instead of customizing request).
I.5.9 Account Assignment

Account assignment categories are the keys which help system to identify for suitable account for procurement cost booking. There are various types of account assignment categories given by the standard
package and customized can also be made with desired control of purchase process and screen-fields. For
account assignment category A, procurement cost goes to asset account specified in the purchase order.
Figure i.224 IMG path to maintain account assignment categories
IMG Path: SPRO Materials Management Purchasing Account Assignment Maintain Account Assignment Categories
IMG Path: SPRO Materials Management Purchasing Account Assignment Define Combination of item categories/Account Assignment Categories
Figure i.225 Maintaining account assignment categories
Figure i.226 Configuring account assignment categories (for full view click here)

Account assignment category 1 is customized. It has been created for non valuated GR i.e. no generation of accounting document in background and hence no receipt of vendor invoice is expected.
Figure i.227 Displaying a customized account assignment category
Item categories and account assignment categories are linked to each other for their possible use in
purchasing document
Figure i.228 Creating item and account assignment category combination
I.5.10 Messages
In SAP, a message (or output) means printouts. SAP script or Smartform is written by technical consultant
(ABAP programmer). Purchase orders can have different type of printouts for the different purchasing
organisations; it could for different document type also. So there are two different activities for output,
one development of message (SAP script or Smartform) and message determination. Here we are going
to understand message determination. Message determination also uses the condition technique which we
have already discussed for pricing procedure.
We have following steps to do the configuration:

1.
2.
3.
4.
Define message types for purchase order

Define message schema for purchase order
Define condition table for purchase order
Define access sequence for purchase order
IMG Path: SPRO Materials Management Purchasing Messages Output Control Message
Types
IMG Path: SPRO Materials Management Purchasing Messages Output Control Message Determination Schemas

IMG Path: SPRO Materials Management Purchasing Messages Output Control Message
Types
IMG Path: SPRO Materials Management Purchasing Messages Output Control
Condition Tables
IMG Path: SPRO Materials Management Purchasing Messages Output Control Access
Sequence
Figure i.229 IMG path to configure message
Figure i.230 IMG path to configure condition tables, access sequence, message type and message

determination schema (for full view click here)
I.5.10.1 Maintain Message Types for PO

IMG Path: SPRO Materials Management Purchasing Messages Output Control
Message Types Maintain Message Types for PO
Figure i.231 Prompt to maintain message types for PO
Figure i.232 Define output type
Select a message or output type and click on

to see the details of message type. Select a message
or output type and click on
to copy and create a new message type and output type.
Figure i.233 Details of output type ZNEP
Figure i.234 Details of output type ZNEP
Figure i.235 Mail title of output type ZNEP
Figure i.236 Smart form has been assigned to output type ZNEP
Figure i.237 Partner roles has been defined for output type ZNEP
I.5.10.2 Fine-Tuned Control: Purchase Order
Figure i.238 Configuring fine-tuned control of purchase order output type
I.5.10.3 Message Determination Schemas

I.5.10.3.1 Define Message Schema for Purchase Order
Figure i.239 Prompt to configure message schema
Figure i.240 Maintaining message schema for purchase order
Figure i.241 Schema for purchase order
I.5.10.3.2 Assign Schema to Purchase Order
Figure i.242 Assignment of message determination schema to application type
I.5.10.4 Condition Tables

I.5.10.4.1 Define Condition Table for Purchase Order
Figure i.243 Condition table for message output type access sequence
I.5.10.5 Access Sequences

I.5.10.5.1 Define Access Sequence for Purchase Order
Figure i.244 Define access sequence for message output type
Figure i.245 Condition table 903 in access sequence ZOUT
Figure i.246 Fields in condition table 903 in access sequence ZOUT
Once the development of smartforms and configuration of messages are complete, condition records
are maintained for message determination.

T-code MN04 (Create), MN05 (change) and MN06 (Display)
Figure i.247 Condition record is being maintained for output type ZNEU
Figure i.249 Condition record is being maintained for purchasing organisation 4500 and

Document type DDB
Select the line item and click on icon
Figure i.250 Communication data is being maintained for document type DDB (for full view click here)
I.5.11 Vendor Evaluation

As per ISO: 9000 guidelines vendor evaluation is mandatory process for procurement function. Vendor
evaluation also helps purchasers to monitor the performance of vendors on various criteria.
Score for vendor rating is calculated in two stages, first at sub-criteria level and then at criteria level.
At first calculation we get the score at criteria level and at second level we get the overall score. Score at
sub-criteria level is defined (not calculated) during configuration.
SUB-CRITERIA
Weightage
CRITERIA
Weightage
OVERALL SCORE
Given below is the sample calculation of vendor evaluation score to understand the process:
Figure i.251: Calculation of Vendor Evaluation Score
Price Level
Price
History
30%
70%
Price
100%
Quality
On time
Delivery
Quantity
Reliability
Shipping
Instructions
25%
70%
Quality
Overall
Score
70%
10%
5%
Delivery
20%
Figure i.252 Calculation of vendor evaluation overall score
Score calculation which we have discussed, works for those criteria which have been defined for automatic calculation (scoring method at sub-criteria level). If any criterion is defined for manual calculation
then system asks score of that particular criterion at the time of execution of vendor evaluation program.
Some sub-criteria are semiautomatic i.e. score is to be given at the time of transaction, which shall be
considered by vendor evaluation program for the calculation of overall score.
Figure i.253 Scoring method for each sub-criterion
Explanations
(1) Vendors overall score
Overall score represents the general evaluation of a vendor. This score is calculated from the Vendors
performance in the areas like quality, price and delivery.
The system calculates the overall score for a vendor from the score for the individual main criteria,
taking into account the weighting factors assigned to each main criterion.
(2) Score for main criteria

Each of the main criteria represents an area in which the vendors performance is to be evaluated.
The system calculates the score for a main criterion from the sub-criteria into which the latter has been
subdivided, taking into account the weighting factors assigned to each sub-criterion.
(3) Score for sub-criteria

Elements of a vendor performance area (main criteria) are represented by sub-criteria. These are the smallest units for which scores are awarded to vendor evaluation. The score of each sub-criterion is calculated
for all the products (raw materials) recorder of a vendor.
Definitions of different sub-criteria

A.Price Level: This sub-criterion compares relationship of a vendors price to the budgeted price. If
the vendors price is lower than the budgeted price, vendor receives a good score; if it is higher than
the budgeted price, vendor is assigned a poor score.
On the basis of the sub-criterion Price Level you can compare a vendors price to the current
budgeted price at a certain point in time.
Price Level Variance in Percentage can be calculated as under.
Price variance % =
(Vendors latest effective price budgeted price)

Budgeted price
100
Scores attached in the system to price variance % are as under.

Price Variance % (Level*)
Score
Explanation*
50.0
30.0
If vendors price > Budgeted price by 50%, Vendor gets score 1

i.e. between 15.1% to 50.0%, score is 1
(Contd.)

Price Variance % (Level*)
Score
Explanation*
15.0
30
10.0
30
If Vendors Price > Budgeted price by 15% up to 8.1%, Vendor

gets score 30.
8.0
50
If Vendors Price > Budgeted price by 8% up to 0.1%, Vendor

gets score 50.
70
7.0
70
If Vendors Price =/< Budgeted price by 7.0% up to 0%, Vendor

gets score 70.
i.e. between 0% to -7.0%, score is 70
8.0
80
If Vendors Price < Budgeted price by 11.9% up to 8%, Vendor

gets score 80.
12.0
100
20.0
100
If Vendors Price < Budgeted price by 20.0% up to 12.0%,

Vendor gets score 100.
Price variance beyond the above mentioned range is beyond scope of evaluation.
These levels can be configured as required.
System calculates the score for each product. Average of these scores is the vendors score for the
sub-criteria Price Level.
For productwise vendor evaluation, the individual product score is considered for further calculations.
For overall evaluation, the average score is taken into consideration for further calculations.
B.Price History: This sub-criterion compares the development of the vendors price with the
budgeted price over the period. On the basis of the sub-criterion Price History, you can determine
whether the vendors price has increased or decreased over a certain period in comparison with
changes in the budgeted price over the same period.
The Price History can be calculated as follows.
Budgeted Price for Y1

INR 100
Vendors Price for Y1

INR 105
Budgeted Price for Y2

INR 120
Vendors Price for Y2

INR 130
B.P.Y2 (120) B.P.Y1(100) 100 = 20% (Increase)

B.P.Y1(100)
Expected Increase In Vendor Price is 20%
i.e. 110 + (110 * 20%) = INR 132
Actual Vendor Price = INR 130

Expected Vendor Price (132) - Actual Vendor Price (130)
Variance __________________________________________
= 100
Expected
Vendor Price
(132)
Variance = 1.5%
Score = 50 (As per weightages assigned to the Price History Variance Levels)
The price history for each product offered by the vendor is calculated.
The total score for price history of a vendor is the cumulative average of all such weightages.
Materialwise, vendor wise price history can be calculated in this way.
C.Quality: This sub-criterion is used to evaluate the quality of the material that the vendor delivers.
Quality inspection takes place at the time of goods receipt.
Weightages for Quality can be calculated as follows.
GR for Raw Material received at Plant posts the goods to QA and creates Inspection Lot of origin 01
Following scores are attached to the QA results.
S. No.
QA Result (Usage Decision)
Score
OK
100
Pro-rata
95
Conditional
85
Partial approval
60
Rejection
Averages score of the inspection lots (01 origin) generated in last n (current 90) number of days is the
QUALITY SCORE of the vendor.
Example: Four results in last 4 days are OK, Pro-rata, Conditional, Rejection. Vendors quality score
will be 70.25 i.e. 71.
System calculates the score for each product. Average of these scores is the vendors score for the subcriteria Price Level.
For productwise vendor evaluation, the individual product score is considered for further calculations.
For overall evaluation, the average score is taken into consideration for further calculations.
D.On-Time Delivery Performance: This sub-criterion is used to determine how precisely a

vendor has adhered to the specified delivery dates.
Calculations

(1) Input.
(a)System uses the Statistical-relevant delivery date in the PO and the goods receipt sate to calculate date variance.
(b)Standard Delivery Time Variance (SDTV): This is the value in days that specifies how many
days variance from the planned delivery date are to count as a 100% variance.
In our case it is defined as 10. (It is configured and defined with purchasing value key)
(2) System considers 101 and 105 movements for the purpose.
(3) Calculation.
Date variance = GR date Statistical relevant delivery date .A
SDTV = 10...B
Percentage variance = A/ B *100
The variance of 1 to 10 days + / results in scoring of 10 to 100 % + or .
The scores attached to the percentage variance are as under.
% Variance
Score
99
100
70
90
50
80
40
70
35
50
15
30
20
20
15
25
35
30
40
50
50
75
70
95
99
100
(4) Score for percentage not belonging to ( 99, 99 ) is 0.

(5) The new score is then included to the previous scores after applying the smoothing factor.
(6) System maintains score at vendor-material-plant level.
(7) Average of all delivery scores is the vendors delivery sub-criteria score.
E.Quantity Reliability: This sub-criterion is used to determine whether a vendor has delivered
the quantity specified in the purchase order.
(1) A vendors score is updated in the statistics file when a purchase order is closed.
A purchase order is considered to be closed when one of the following has occurred:
(a) By marking the delivery completed indicator.
(b) By short closing the PO.
(c) By automatic closure at the time of GR when the GR quantity equals the permissible quantity in the PO after considering limits, if any, specified for over delivery or under delivery.
(d) By deleting the line item.

(2)
(3)
(4)
(5)
System considers first three ways for vendor evaluations.

Movement types 101 and 105 are considered for the purpose.
Percentage variance = (GR quantity-order quantity) / Order quantity * 100
Scores attached to the percentage variance is as under.
% Variance
Score
60
100
100
80
40
(6)
(7)
(8)
(9)
(10)
Score for % variance beyond the above range is 0.

The new score is then included to the previous scores applying the smoothing factor.
System maintains score at vendor-material -plant level.
Average of no.8 is the vendors delivery sub-criteria score.
For product wise calculation, only the relevant products data is considered.
F.Shipping Instructions: This sub-criterion is used to determine how precisely a vendor complies with the instructions for the shipping or packing of a material.
(1)When goods are received against a purchase order, the system checks whether the purchasing dept.
has specified any shipping instruction.
(2)If so receiving clerk must enter a score for the vendor compliance with the shipping instruction.
The options are as under.

Compliance With Shipping Instructions
Score
Quantity and packing perfect
100
Quantity ok, packing not ok
90
Quantity ok, packing ok, marking poor
80
Quantity ok, packing poor
50
Quantity not ok, packing ok
30
(3)Movement types 101 and 105 are considered for the purpose. At the time GR user would
specify the level of shipping instruction (mention in the PO) has been followed by selecting
right option out of given list. Similarly for service criteria user has to do similar selection in
service entry sheet.
(4)The new individual score for the material-vendor-plant level is merged with previous score for the sub
criterion. To calculate the new score for the sub criterion from the already existing composite score
and this new individual score, the system applies smoothing factor.
(5)When a new evaluation is run, the system calculates the average from the individual scores for all the
material-vendor-plant combination.
(6)For product wise calculation, only the relevant products data is considered.
Model Calculation
It is a three steps calculation process as under.
Step 1: Sub-criteria level score is calculated as explained above. Source of data for calculating the score
is as under.
Sr. No.
Main Criteria
Sub-criteria
Source of Data
Price
Price level
Price history
Quotation/ PO
Quality
Quality
QA. ( Inspection lot is generated while GR )
Delivery
On time delivery quantity reliability

ship. instructions
GR
Step 2: Criteria level score is calculated based on the weightages assigned to the sub-criteria.
Step 3: Overall score is calculated.
Example:

Step 1: Scoring the Sub-criteria
Sub-criteria
Price
level
Price history
Quality
On-time
delivery
Quantity
reliability
Shipping
instructions
Scores
(Out of 100
Points)
90
80
85
95
90
90
Weightages
30
70
100
50
25
25
Step 2: Scoring for the Main Criteria

Criteria
Price
Quality
Delivery
Scores
{(90 30) + (80 70)}/100 = 83
85/100 = 85
{(95 50) + (90 25) + (90 + 25)}/100

= 92.50
Weightages
25
20
55
Step 3: Overall Score for a Product

Criteria
Overall Score for the Material
Calculation
(73 25/100 = 18.25
Score
18.25 + 15 + 50.87 = 84.12 ~85
(75 20) = 15
(92.50 55) = 50.87
Step 4: All such scores of materials supplied by the vendor are averaged out to give the score of the vendor.
There are 4 steps to configure:

1.
2.
3.
4.
Define weighting keys

Define criteria
Define scope of list
Maintain purchasing organisation data
IMG Path: SPRO Materials Management Purchasing Vendor Evaluation
Figure i.254 IMG path to configure vendor evaluation
I.5.11.1 Define Weighting Keys
Figure i.255 Defining weighting keys
I.5.11.2 Define Criteria

Main
Criteria
Sub-criteria
Scoring Scoring Method Description

Method
Price
Price Level
Automatic Determination from Purchase Statistics: Price Level
Price Behavior
Automatic Determination from Purchase Statistics: Price

Behavior
Quality
GR Inspection
Automatic Determination from Quality Statistics: GR Inspect.
Rejection/Complaint 8
Automatic Determination from Quality Stat.: Quality Notification
Audit
Automatic Determination from Quality Statistics: System Audit
Delivery
On-Time Delivery
Automatic Determination from On-Time Delivery Performance

Statistics
Quantity Reliability
Automatic Determination from Quantity Reliability Statistics
Shipping Instruction
Automatic Determination from Shipping Instructions Statistics
Adherence to
Confirmation Date
Automatic Determination from Delivery Confirmations
Service
Quality of Service
Determination from Quality Rating of Service
Service Timeliness
Determination from Timeliness Rating of Service

(Contd.)

Main
Criteria
Sub-criteria
Scoring
Method
Scoring Method Description
Invoices
Price Variance
Determination of Price Variance from Invoice Documents
Quantity Variance
Determination of Quantity Variance from Invoice Documents
Figure i.256 Defining main criteria for calculation of overall score
Figure i.257 Defining sub-criteria of main criteria price
Figure i.258 Defining sub-criteria of main criteria quality
Figure i.259 Defining sub-criteria of main criteria delivery
Figure i.260 Defining sub-criteria of main criteria service
Figure i.261 Defining sub-criteria of main criteria invoices
Figure i.262: Scoring method for sub-criterion
I.5.11.3 Define Scope of List
Figure i.263 Define scope of list for vendor evaluation
Click on
Figure i.264 Scope of list vendor evaluation of version STANDARD
Figure i.265 Scope of list vendor evaluation of version VERSION1
I.5.11.4 Maintain Purchasing Organisation Data
Figure i.266 Maintaining purchasing organisation data for calculating overall score
Figure i.267 Maintaining purchasing organisation data for calculating overall score
Figure i.268 Main criteria
Figure i.269 Sub-criteria of main criterion
Figure i.270 Weighting factors assigned to sub-criteria
Figure i.271 Weighting factors assigned to sub-criteria
Weighting is the weightage given to the different criteria. It is the ratio of the maximum percentage
weightage to the minimum percentage weightage given to the criteria.
Figure i.272 Weightage ratio calculation
Figure i.273 Scale for calculation score for each sub-criterion

Points to be scored when a particular criteria is met by the vendor is configured. Vendor may have met
the criteria completely or partially and accordingly score is awarded for during relevant transactions.
I.5.12 Partner Determination

There are various business partners involved in a purchasing process. Suppose a company XYZ wants
to buy color pigments from Asian Paints. Buyer from XYZ raises a purchase order and sends by mail to
their office at Mumbai. As per the internal communications in Asian Paints material would be sent by
Baroda factory and invoice would be raised by Delhi office and payment from XYZ would be received
by Mumbai office. In this example we can see that though Asian Paint is a single organisation but got
organisation XYZ it has multiple existence. All the existence of Asian Paints which are involved in
procurement process with XYZ is business partner of XYZ. Each location of Asian Paints which are
part of the process are mapped as vendors in database of XYZ and linked with each other by partner
function feature of SAP .
While raising a purchase order when vendor code is mentioned (where PO is to go by mail) system uses partner determination and brings the entire associated business partner automatically in the
purchase order.
IMG Path: SPRO Materials Management Purchasing Partner Determination
Figure i.274: IMG Path to configure Partner Determination
I.5.12.1 Partner Roles

Partner roles are the keys to be attached to the vendor depending on the role vendor performs.
Figure i.275 Definition of partner roles
Figure i.276 Standard partner functions available in the standard system
I.5.12.2 Define Permissible Partner Roles Per Account Group
Figure i.277 Define permissible partner roles per account group
I.5.12.3 Partner Settings in Vendor Master Record

I.5.12.3.1 Define Partner Schemas
Figure i.278: Define partner schema for vendor master
Figure i.279 Partner determination procedure
I.5.12.3.2 Assign Partner Schemas to Account Groups
Figure i.280 Assignment of partner schemas to account groups
I.5.12.4 Partner Settings in Purchasing Documents

I.5.12.4.1 Define Partner Schemas
Figure i.281 Define partner schema for purchasing document
Figure i.282 Partner schema for purchasing document
Figure i.283 Partner schema for purchasing document
I.5.12.5 Assign Partner Schemas to Document Types
Figure i.284 Assignment of partner schemas to document types (for full view click here)
I.6 External Service Management

In external service management, we do configuration related with service procurement. Most of the
configuration is covered as that is similar to what we have discussed till now. Configuration of number
ranges, system messages, screen layout, release procedure, conditions and messages has already been
covered.
Figure i.285 IMG path to configure external service management
We are going to discuss configuration related with service master only.

IMG Path: SPRO Materials Management External Services Management Service Master
Figure i.286 IMG path to configure service master
I.6.1 Define Organisational Status for Service Categories
Figure i.287 Defining organisation service category
I.6.2 Define Service Category
Figure i.288 Defining service category. Please note account category reference
Account category reference is linked with valuation class in service master which in turn are linked
with GL accounts. This linking helps in finding GL accounts during accounting document posting at the
time of service acceptance.
I.7 Inventory Management and Physical Inventory

In this section settings related to goods movement (inbound, outbound or internal), would be discussed.
Most of the settings are related with screen layout (addition, hiding or mandatory fields) and movement
types to capture complete goods movement process information and to control the process by asking some
mandatory information. This capturing of process information and process control information helps in
capturing data for inventory reports.
Figure i.289 IMG path to configure inventory management and physical inventory (for full view click here)
I.7.1 Define Attributes of System Messages

IMG Path: SPRO Materials Management Inventory Management and Physical Inventory
Define Attributes of System Messages
Configuration is similar to configuration of system messages of purchase order. Please refer to that
configuration.
I.7.2 Number Assignment

Number Assignments
configuration.
I.7.3 Field Selection for Goods Movements Initial/Header Screens

Field Selection for Goods Movements Initial/Header Screens
This configuration node is meant for transactions MB01, MB1A, MB1B and MB1C. We can see the difference between standard SAP settings and modified settings as per business requirement. Three fields,
Delivery Note, Bill of Lading and Header Text have been made mandatory and highlighted (blue color).
Figure i.290 IMG Path to configure field selections for goods movement
Figure i.291 Configuring field selection: Modifiable fields (for full view click here)
Figure i.292 Configuration changed for Bill of Lading, Delivery Note No. and Document Header Text
Figure i.293 Screen of MB01, before configuring screen control
Figure i.294 Screen of MB01, after configuring screen control. Fields has become mandatory and highlighted
I.7.4 Settings for Enjoy Transactions

I.7.4.1 Field Selection for MIGO
IMG Path: SPRO Materials Management Inventory Management and Physical Inventory Settings for Enjoy Transactions Settings for Goods Movements (MIGO) Field Selection for MIGO
Figure i.295 IMG path for settings for goods movement transaction. T-code MIGO
This configuration node is meant only for Enjoy transaction MIGO. The transaction MIGO consists
of all processes and features of MB01, MB1A, MB1B and MB1C. We can see the difference between
standard SAP settings and modified settings as per business requirement. Three fields, Delivery Note, Bill
of Lading and Header Text have been made mandatory and highlighted (blue color). These settings are
without any reference to movement types and hence applicable to each movement type.
Figure i.296 Configuring field selection: Modifiable field (for full view click here)
Figure i.297 Configuration changed. Observe highlighted points
Figure i.298 Screen of MIGO, before configuring screen control
Figure i.299 Screen of MIGO, after configuring screen control
I.7.4.2 Field Selection Per Mvt Type

IMG Path: SPRO Materials Management Inventory Management and Physical Inventory Settings for Enjoy Transactions Settings for Goods Movements (MIGO) Field Selection for MIGO
Here screen fields properties (like optional (input), Required, Display and Hidden) are controlled at movement type level. Hence, control at process level is possible through this configuration.
Figure i.300 Filed control at movement type level

In this configuration technical name of the field has been used instead of English name. here we can add
more fields to a particular movement type with desired control, using pushbutton
or copy .
But not all fields can be added to a particular movement type for desired control. System keeps checks on
addition as per the definition of movement type and process it is supposed to execute.
Figure i.301 Error shows that every field is not applicable for control at movement type level
I.7.4.3 Settings for Transactions and Reference Documents

This is a standard configuration and it rarely needs any change in settings. Here settings for various goods
movement transactions for different transaction types (event) and their reference documents are done.
Figure i.302 Settings for transaction type and corresponding reference document type applicable in

MIGO Transaction
Figure i.303 List transaction type available in MIGO transaction (for full view click here)
Figure i.304 List of reference document for transaction type A01 Goods Receipt
I.7.5Goods Issue/Transfer Postings

Here settings for goods issue and transfer postings are done.
Figure i.305 IMG path to configure goods issue/transfer postings
I.7.5.1 Create Storage Location Automatically

Here settings for automatic creation of storage location data (material master storage view) are done.
Figure i.306 Configuring creation of storage location material master view automatically
Figure i.307 Configuring creation of storage location material master view automatically at plant level
Figure i.308 Configuring creation of storage location material master view automatically at movement type level
I.7.5.2 Set Manual Account Assignment

Here we configure the settings to specify the general ledger account for posting while executing a goods
movement. Normally, general ledger accounts are determined automatically by the system using AAA
(Automatic Account Determination). But due to business requirement one may have to specify the general
ledger account other than that already specified in AAA (T-code OBYC) and controlled by users rather
than system. This configuration is done at movement type level. Not all movement types need this configuration. This setting may be required for customized movement type. This configuration also controls
the availability of the field for input of general ledger account.
Figure i.309 Configuring manual account assignment
Figure i.310 Options available to configure manual account assignment
I.7.5.3 Define Screen Layout

Here also screen layout (field control as suppress, display, optional or required) is maintained for goods
issue and transfer posting. This setting has integration with general ledger master maintenance with the
field Field Status Group.
The field selection for the movement type must correspond with the following field selections:
field status definition of the G/L account to which postings are made (through the field status group)
field selection of the posting key
IMG Path: SPRO Financial Accounting (New) Financial Accounting Basic Settings Ledgers
Fields Define Field Status Variants.
Figure i.310a Options available to configure manual account assignment
Figure i.311: IMG path to define field status variants
In General Ledger Master Data (T-code FS00), in tab Create/bank/interest field group is specified.
Figure i.312 Field status group in general ledger master data (for full view click here)
In customizing for valuation and account assignment, when we simulate account determination (T-code
OMWB), we can compare the screen layout of the movement type with that of the G/L accounts relevant
to the movement.
Figure i.313 Viewing field selection of movement type 201
Figure i.314 Maintain field status group

Double click on any group to see the fields of that group.
Figure i.315 Maintain field status group: General data of movement type 201
Click on
to move on to next group of fields.
I.7.6 Goods Receipt
Figure i.316: IMG path to configure goods receipt settings
Here we shall discuss only Set Tolerance Limit Create Purchase Order Automatically and Set
Expiration Date Check.
Rest others have already been explained or not required as they already configured with standard package and that is not changed generally.
I.7.6.1 Set Tolerance Limits

When goods receipts documents are posted or checked system compare the order price quantity of the document to the order price quantity of the purchase order. System also notifies the change in MAP (moving
average price) if the document is posted. As per the configuration, system issues a warning or error message
if the variation exceeds the tolerance level on both the directions i.e. upper limit and lower limit.
As we have seen in the case of purchase order configuration and shall see that there are various other types
of variations at different stages of procurement process. SAP system differentiates and identifies different
types of variation using tolerance keys. Tolerance key for price variation at purchase order stage is PE. Tolerance keys for order price quantity and moving average price variation at goods receipt are B1, B2 and VP.
Figure i.317 Tolerance keys for which configuration is being done
Figure i.318 Configuration of tolerance keys is done at company code level
Figure i.319 Configuration of tolerance key B1 (for full view click here)
Figure i.320 Configuration of tolerance key B2
Figure i.321 Configuration of tolerance key VP

Tolerance key B1 issues error message and B2 and VO issue warning message.
I.7.6.2 Create Purchase Order Automatically
Figure i.322 Configuring automatic creation of purchase order at goods receipt
If we have this setting already configured, system creates the purchase order automatically when goods
receipt is made (i.e. movement types 101 and 161). Goods receipt (T-code MIGO) against others with
movement type 101 should be attempted.
Figure i.323 Goods receipt MIGO screen. Please note transaction type A01, reference document type R10 and

movement type 101
I.7.6.3 Set Expiration Date Check

In this setting we specify that during goods movement system asks and checks for BBD/SLED. BBD
stands for Best Before Date and SLED stands for Shelf Life Expiry Date. This kind of checks is

required in chemical industry, pharmaceutical industry, foods and beverages etc. where material are perishable or deteriorates during the course of time. Such checks are imposed at the time of goods receipt
and goods issue.
Figure i.324 Activating or deactivating expiration date check
Figure i.325 Activating or deactivating expiration date check at plant level
Figure i.326 Activating or deactivating expiration date check at movement type level
Figure i.327 Options available for activating or deactivating expiration date check
After this configuration material master data is set up for this functionality to work.
In plant/storage data view total shelf life and minimum remaining shelf life is defined. Total shelf life
is the total life of the material for safe use. Minimum remaining shelf life is balance shelf life at the time
of goods movement which should be remaining, to allow goods movement.
Figure i.328 Basic data for expiration data required in material master
At the time of goods receipt (either from vendor or production) system asks for date of manufacturing
or production date and system calculates the expiry date based on the total shelf life.
Figure i.329 Specifying date of manufacturing at the time of goods receipt

System also compares the balance shelf life with minimum remaining shelf life of material master and
accordingly flashes the message.
Figure i.330 Error message when remaining shelf life is less than as specified in material master
In the step Define system message attributes, set the following messages:

(a)
(b)
(c)
(d)
(e)
(f)
M7 210 Shelf life expiration date & lies in the past

M7 211 Date of production lies in the future
M7 212 Required shelf life expiration date &
M7 213 Required date of production &
M7 214 Shelf life exp. date & of batch does not match entered sh. life exp. date &.
M7 215 Date of production should be & based on sh. life exp. date & of batch
I.7.7 Automatic Movements

Configuration in this node is similar to other nodes.
Figure i.331 IMG path to configure automatic movements
I.7.7.1 Reservation
Here settings about reservation are done. Reservation is a requirement document which is created in advance prior to goods movement. Goods movements are execute with reference to reservation document.
Reservation documents are considered for calculation of availability of stocks.
Reservation
Figure i.332 IMG path to configure settings about reservation
I.7.7.1 Define Default Values
Figure i.333 Default values of non usable and retention period of reservation document is to be defined
Figure i.334 Default values of non-usable and retention period of reservation document is to be defined
Following four points are set here:

1. Goods movement for reservation allowed.

2. No. of days, if movement allowed is set automatically i.e. number days before required date,
before which goods movement is not allowed against reservation document number.
3. Retention period, in days, for reservation items i.e. the time period in days during which a reservation
document is valid and exist in the system before being deleted by the reservation management program.
4. Create material master storage location stock data automatically for reservation.
I.7.8 Physical Inventory

Here most of the time standard settings are used. But configurations at certain places may be required.
Physical Inventory
Figure i.335 IMG path to configure physical inventory
I.7.8.1 Default Values for Batch Input

There are transactions to execute physical transactions through batch sessions. These batch session transactions do not require document data from users, it uses system data using defined filter criteria. Transaction MI01 is creation of physical inventory document where user needs to mention input data (material
code, batch, stock type etc.) but batch session MI31 (creation of physical inventory document) is batch
session transaction and require only filter criteria. Configurations about filter criteria on selection screen
are configured here.
Figure i.336 Configuring selection screen of program RM07II31, T-code MI31
Figure i.337 Configuring selection screen of program RM07II31, T-code MI31
T-code MI31 is
Figure i.338 Selection screen of program RM07II31, T-code MI31 (for full view click here)
I.7.8.2 Allow Freezing of Book Inventory Balance in Storage Location

Here freezing of book inventory is allowed before physical inventory count. When inventory documents
are created frozen book inventory is recorded in inventory document. This book inventory is used in determining the differences of physical stock and book stock. Even if the stock changes after count, system
still uses frozen book inventory is recorded in physical inventory document.
Figure i.339 Selecting work area (Plant) to configure freezing of book inventory
Figure i.340 Configuring to allow freezing of book inventory balance in storage location
I.7.8.3 Define Tolerances for Physical Inventory Differences

When physical inventory differences are posted system checks the difference amount and compares that
with upper limit of difference defined at this node in configuration. If the difference amount is more than
the defined value system disallows the posting. This upper limit of difference amount is defined at document level as well as at item level. If the difference amount is below defined value at document level but
exceeds at for some items, then except those items rest of the items of documents are posted.
Figure i.341 Maintain physical inventory tolerance
Figure i.342 Defining tolerance group for a company code (for full view click here)
Figure i.343 Defining tolerance group for a company code

Various tolerance groups of different upper limit of difference amount can be defined and assigned to
various users as per their approved authorizations of posting. If same tolerance group is to be applied to
all users then tolerance group should be assigned to user * .
Figure i.344 Tolerance group assigned to users log-in ID
I.7.8.4 Cycle Counting

In the configuration of cycle count we need to specify number of counting cycles in a year, interval of days
after which count would happen, float time (after which material would be considered for next counting
cycle) and percentage to decide category of article.
Figure i.345: Setting up parameter of cycle counting method of physical inventory
Either the user or the system can decide the category of the material using ABC classification and assign ABC indicator in the material master. T-code MIBC is used if system is to classify the materials as
per ABC classification and assign ABC indicator in material master.
ABC classification can be done by Consumption or Usage basis or Requirement Criteria basis.
Figure i.346 Selection screen of ABC analysis to put cycle counting indicator in the material master. T-code MIBC
Figure i.347 ABC analysis of materials for cycle counting (for full view click here)
Click on
to see physical counting effort.
Figure i.348 Inventory count effort per fiscal year for cycle counting

Click on
to change the percentage of ABC classification for material categorization into ABC.
Figure i.349 For cycle count, percentage of consumption can be changed to have new ABC analysis
T-code MICN
Batch Input: Create Phys. Inv. Docs. For Cycle Counting
Figure i.350 Selection screen for creating physical inventory document as per the parameters of cycle counting
I.7.9 Movement Types

Understanding movement types is core to understand materials management. Movement types are related
with inventory management and integrate materials management module to financial accounting module.
Financial accounting documents are created in the background while executing goods movements. The
movement type has important control functions in inventory management. It is essential for
updating the quantity fields

updating the stock and consumption accounts
selection of the fields used for entering documents
Most of the time there, is no need to change movement type configuration. But one may need to
create customized movement type to meet business requirement which is not being met by standard
movement types.
Movement Types
Figure i.351 IMG path to configure movement types
I.7.9.1 Record Reason for Goods Movements

Here we can define various reasons for a movement type to be chosen from while executing the goods
movement. Choosing reason during execution may be mandatory depending on the screen layout setting
for that movement type. If execution of a movement type do not show field to choose reason, that could
be added by changing screen layout of that movement type.
Figure i.352 IMG path to configure reasons for goods movements
Figure i.353 Configuring reasons for goods movements
Figure i.354 Set up control: Reason for movement
Figure i.355 Defining reason codes for movement
I.7.9.2 Copy, Change Movement Types

T-code is OMJJ. This configuration of movement type is most exhaustive and must be understood to understand basic working principle of movement type. Click on the node a pop up appears. Check the check
box of movement type and press enter.
Figure i.356: Prompt for asking movement type for which change or copying shall be done

System shows up another pop-up, asking for movement type. Enter the movement type or range of
movement type of which you would like to display or change the details. If a new movement type is to be
created, then it must be copied from a reference movement type. Work area in the pop up means movement
type. Enter a reference type in 101 From and To new movement type Z01.
Figure i.357 Specifying work area (movement type) which is to be copied and new movement type which

shall Fig be created by copying
Figure i.358 Select movement type which shall be copied to create new movement type
Select reference movement type and click on
to copy and create a new movement type.
Figure i.359 While copying overwrite reference movement type by new movement type

Enter a new movement type Z01 and press enter. Customized movement type can be created starting
with 9, Y or Z.
Figure i.360 Prompt for asking the extent of copying
System shows a pop up; you must click on
to copy all the dependent entries.
Figure i.361 Prompt informing about completion of copying
Figure i.362 New movement type created
If you enter any other customize movement type, for example Z09 which was not entered in the popup asking for work area (movement type), system throws an error, stating that Specify the key within the
work area. Refer to Figs. I.363 and I.364.
Figure I.363 New movement type being specified is Z01
Figure i.364
New movement type being entered is Z09 hence the system is issuing error message
Figure i.365 Movement type overview
After copying the movement type, a menu on the left hand side can be seen. Select newly created
movement type and click on the options in the menu to display or change the required details.
Figure i.366 Different options in menu area to display of changing the movement type
In short texts option we can change the text description of newly created movement types. These descriptions are language-based. EN is the language code for English language.
Figure i.367 Changing short text description of movement type
In the allowed transactions option we can define that in which transaction codes this movement type
can be executed.
Figure i.368 Changing transaction allowed for the given movement type
In the field selection option we can control the screen layout applicable to that movement type.
Figure i.369 Control the screen layout applicable to the given movement type
Figure i.370 Field status group maintenance
In Field Selection (Enjoy) section we can control the field controls (required or optional) of MIGO
transaction for a particular movement type.
Figure i.371 Changing field control for enjoy transaction MIGO
Select Field Selection and click on icon
to display and change the details.
Figure i.372 Changing field control for enjoy transaction MIGO (for full view click here)
Select Update Control and click on icon

In the account grouping section of movement type we can create new account modifier for customized
movement type. These keys are used for automatic account determination which is configured through
T0code OBYC.
Figure i.373 Changing account grouping of the given movement type
Figure i.374 Changing account grouping of the given movement type
Select Account Grouping and click on icon
Figure i.375 Changing reversal movement type for the given movement type

In the option Reversal/Follow-on movement types, we define the reversal movement type applicable
for the standard or customized movement type. For customized movement type reversal movement type
should be customized to match the account grouping (which is mandatory).
Figure i.376 Changing reason for movement type for the given movement type
In Deactivate QM inspection/delivery category section quality management activation is controlled.

For example for movement type 101 and special stock category O, it can be activated or deactivated as
per the business need.
Figure i.377 Changing deactivation of QM inspection lot generation for the given movement type
I.8 Valuation and Account Assignment

Here, we do the configuration required for the following areas.

1. Inventory valuation
2. Materials management and financial accounting integration
IMG Path: SPRO Materials Management Valuation and Account Assignment

In this node we are going to see the configuration of following sub-nodes.

1. Split Valuation
(a) Activate split valuation
(b) Configure split valuation
2. Account Determination
(a) Define valuation control
(b) Group together valuation areas
(c) Define valuation classes
(d) Define account grouping for movement types
(e) Purchase account management
(i) Activate purchase account in company code
(ii) Calculation of value for purchase account
3. Configure Automatic Postings
Figure i.378 IMG path to configure valuation and account assignment
I.8.1 Define Price Control for Material Types

IMG Path: SPRO Materials Management Valuation and Account Assignment Define Price
Control for Material Types
This configuration can be done while configuring material types. T-code OMS2 to configure material types.
I.8.2 Split Valuation

Split valuation is valuation of different lot of same material for some reason. The possible reasons for
valuating different lot of same material are origins of different lots, chemically or physically different
lots, and lots for different usage etc. Different lots of same material can be procured locally and imported,
hence different valuation is desirable. Some chemical products need to be valuated differently because
chemical content vary batch to batch. For each valuation type of material, system has different accounting
view with different valuation price.
I.8.2.1 Activate Split Valuation
Figure i.379 IMG path to configure split valuation
Figure i.380 Activating split valuation
I.8.2.2 Configure Split Valuation
Figure i.381 Three activities to be done to configure split valuation
I.8.2.2.1 Valuation Type

Initially, we are calling valuation type as global valuation type because it is not being defined at plant level
rather it is at company code level. In latter configuration we can restrict the usage of valuation type at plant
level. There valuation type is referred as local valuation type.
Figure i.382 Creating global valuation type
Click on
to create a new valuation type.
Figure i.383 Creating global valuation type

We should enter indicators for external and internal purchase orders.
Figure i.384 Indicators to be specified while creating global valuation type
We should choose for which account category reference this valuation type shall be used. Using this link
system knows that for which material type and valuation class this valuation type can be used. Since valuation type has its own accounting view in material master, so it can have its own valuation class also.
After entering all the details we must click on icon
of this screen, without which system does
not create it. We must not save it before creating it.
I.8.2.2.2 Valuation Categories

Valuation categories are the reasons because of split valuation is being considered.
Initially, we are calling valuation category as global valuation category because it is not being defined
at plant level rather it is at company code level. In latter configuration we can restrict the usage of valuation category at plant level. There valuation category is referred as local valuation category.
Figure i.385 Global valuation category (for full view click here)
Here, we can create valuation categories and assign valuation types to valuation categories. For example
origin is valuation category and whether origin is domestic source or foreign source is valuation type.
Click on
category to create a new valuation category.
Figure i.386 Creating global valuation category
Valuation category is one character code. We can also make use of valuation type mandatory during
internal or external procurement or both and default most usable valuation type. Check box of valuation
type automatic is used for chemically different lots of same material and lot to lot it differs chemically.
After entering all the details we must click on icon
of this screen, without which system does
not create it. We must not save it before creating it.
Figure i.387 Allocating valuation types to valuation category (for full view click here)

Put cursor on a valuation category and click on
to assign valuation type to valuation
category. In the next screen put a cursor on a valuation type and click on
to activate a
valuation type for the selected valuation category.
Click on
to activate the valuation category for organisation units (OUs). Here organisation
unit is plant.
Figure i.388: Allocating valuation types to valuation area (plants)
In the next screen put a cursor on a plant and click on

to activate a valuation category for the selected plant (organisational unit).
We can also do some default settings for valuation categories, like default valuation type for a plant.
Figure i.389 Specifying default valuation type for a valuation area, if required
I.8.3 Account Determination

As we discussed earlier that in SAP every goods movement is characterized by three-character numerical code. These three-character numerical codes are known as movement type. Every movement type has
various controls related with value and quantity updation, batch management, quality activation, special
stock indicators, and screen field controls. Those movement types, which have financial impact, are linked
with transaction event keys and account grouping code (or account modifiers or general modifier).
In automatic account determination process, valuation-grouping code (or valuation modifier) is another key to
determine GL account. Valuation grouping code is used to group different valuation areas from accounting point of
view. Valuations areas under one valuation grouping code have same accounts for the same type of posting.
To determine account automatic system needs a logical path made up of four keys. Four keys are: transaction event key, account modifier, valuation grouping code and valuation class. Valuation class is defined at material master level. Not in all the cases, system require the logical path made up of four keys. In some cases only
one key that is transaction event key is sufficient. It all depends upon the business and business requirement. In
AAA, there are rules, where it can be defined that how many keys are required to determine a GL account.
Figure i.390 IMG path to configure account determination without wizard
I.8.3.1 Define Valuation Control

IMG Path: SPRO Materials Management Valuation and Account Assignment Account Determination Account Determination without Wizard Define Valuation Control
Figure i.391 Activating valuation control: Activating valuation grouping code
Valuation grouping code (also called as valuation modifier) is to group different valuation areas (generally plant) which follows same accounting entries for the same goods movements.
I.8.3.2 Group Together Valuation Areas
Figure i.392 Grouping together valuation areas by assigning valuation grouping code
Valuation grouping code (also called as valuation modifier) is to group different valuation areas (generally plant) which follow same accounting entries for the same goods movements. If any valuation area
needs different accounts to be posted than the other for same goods movement then different valuation
grouping code should be assigned to that plant.
I.8.3.3 Define Valuation Classes
Figure i.393 Define assignment between account category reference and valuation class
Account category reference links material type with valuation classes which should be applicable for
that material type only. One material type is linked with one ACR (account category reference) only but
one ACR can be linked with many valuation classes.
Figure i.394 Defining or displaying account category reference
Figure i.395 Assigning valuation class to account category reference
Figure i.396 Assignment or display of material type to account category reference
I.8.3.4 Define Account Grouping for Movement Types

T-code OMWB
Figure i.397 Automatic account assignment
Click on
to configure automatic account assignment. Click on
to simulate
account determination during goods movement. Click on
to see the assignment of GL
accounts against various transaction event keys.
I.8.3.5 Account Assignment
Figure i.398 Transaction/Event Keys for Automatic Posting

Double click on any of the transaction event key for which configuration is to be done, change or display.
Upon clicking system ask, for which chart of accounts configuration is to be done, change or display.
Figure i.399 Specifying charts of accounts while configuring or displaying account assignment to

transaction/Fig event keys
First step in configuration is to create rule for determining the account.

A logical path to determine a GL account is illustrated as follows.
TEK + GM + VM + VC GL Account
TEK = Transaction event key
GM = General modification (Account modifier)
VM = Valuation modifier (Valuation grouping code)
VC = Valuation Class
So we have to choose which logical path is required for determining the GL account for different transaction event keys, and that is determined using rules. Account modifier is available for few transaction
event keys only like GBB, WRX and PRD.
Figure i.400 Making rules for configuring automatic account assignment for transaction/event keys BSX
Figure i.401 Making Rules for configuring Automatic Account Assignment for transaction/event keys

RKA, PRD and GBB
After setting and saving, the rules posting keys are set. This can be done with the help of SAP finance
consultant.
Figure i.402 Defining posting keys for transaction/Event key BSX
After setting the rules and posting keys GL accounts are assigned as per the rules.
Figure i.403 Assigning general ledger accounts to transaction/event key BSX, after making rules and

assigning posting keys
Figure i.404 Assigning general ledger accounts to transaction/event key GBB and account modifier AUA,

after making rules and assigning posting keys
I.8.3.6Simulation
T-code OMWB
Figure i.405 Simulation of automatic account assignment for automatic posting
Click on
to check account determination.
After configuration of automatic account determination, there is a provision to check the account determination. Correct account assignment can be checked through simulation. In simulation we check that for
a given plant, material and goods movement what accounts are being determined for accounts posting. We
can also simulate for a given valuation class (instead of a material code) plant and goods movement that
what accounts are being determined for accounts posting.
Figure i.406 Simulating possible accounting entries for the given plant, material and movement type
Figure i.407 Changing simulation input mode. Instead of simulating of a material code, simulation

can also be done for a valuation class
Figure i.408 Changing input mode for simulation
Figure i.409 Simulating possible accounting entries for the given plant (valuation area), valuation

class and movement type
Figure i.410 Simulated automatic account posting for the given plant, material and movement type

Figure i.411 Simulated automatic account posting for the given plant, valuation class and movement type


Click on the icon
to the where used list of GL accounts on the screen of T-code OMWB.
Figure i.412 To view where-used list of general ledger accounts in MM account determination
Figure i.413 Viewing where-used list of general ledger accounts in MM account determination
I.8.4 Purchase Account Management

Sometime business wants to track purchase value through purchase account. In that case purchase account management is activated and configured. Here we specify the company codes in which purchase account management is to be activated. Then maintain the automatic account determination (T-code OBYC
or OMWB) function for the following transactions event keys.
EIN purchase account

EKG purchase offsetting account
FRE freight purchase account
IMG Path: SPRO Materials Management Valuation and Account Assignment Account Determination Account Determination without Wizard Purchase Account Management
Figure i.414 IMG path to configure purchase account management
Figure i.415 Activating purchase account management for a company code
Figure i.416 Deciding purchase account entries
There following three cases can be configured.

1. Accounting entries without purchase account management
With MAP (moving average price)
General Ledger Account
Debit
Inventory
120
Credit
GR/IR clearing account
100
Freight clearing account
20
With Standard Price (when purchase price is matching with material master price)
Debit
Inventory
100
Credit
100
20
Price difference account
20

With Standard Price (when purchase price is not matching with material master price)
Debit
Inventory
90
Credit
100
20
30
Debit
Inventory
110
Credit
100
20
10
Debit
Inventory
130
Credit
100
20
10
2. Accounting entries with purchase account management with receipt value (GR/IR value)
In the configuration only receipt value check is marked
With MAP (moving average price)
Inventory
120
100
20
Freight purchase account
20
Purchase account
100
Purchase offset account
120
With standard price (when purchase price is matching with material master price)
Debit
Inventory
100
Credit
100
20
20
Purchase account
100

120
20
With Standard Price (when purchase price is not matching with material master price)
Debit
Inventory
90
Credit
100
20
20
Purchase account
100

120
30
3. Accounting entries with purchase account management with stock posting value
In the configuration only delivery costs check is marked
.
With MAP (moving average price) (This scenario has not been observed by the author but SAP has
suggested this possibility.)
Debit
Inventory
120
Credit
100
20
20
Purchase account
120
120
20

With standard price (when purchase price is matching with material master price)
Debit
Inventory
100
Credit
100
20
20
Purchase account
100

120
20
With standard price (when purchase price is not matching with material master price)
Debit
Inventory
90
Credit
100
20
20
Purchase account
90

110
30
I.9 Logistics Invoice Verification

Logistics invoice verification is third and last major step in the procurement process. Here we are going to
consider the configuration of incoming invoice and tolerance limits of variation.
I.9.1 Incoming Invoice

IMG Path: SPRO Material Management Incoming Invoice
Figure i.417: IMG path to configure incoming invoice related settings (for full view click here)
I.9.1.1 Tax Treatment in Invoice Reduction

Tax treatment in invoice reduction means that how the tax would be calculated and accounted for in LIV
as well as credit memo. If business requires that in case of invoice reduction LIV be posted by full tax
amount as per the vendor invoice and reduction of tax amount would happen in credit memo then option
should be chosen.
If business requires that in case of invoice reduction LIV be posted by actual tax amount as per
the goods receipt amount and reduction of tax amount would happen in credit memo then option
should be chosen.
Figure i.418 Configuring tax treatment in invoice reduction
Figure i.419 Choosing option to configure tax treatment in invoice reduction
I.9.1.2 Maintain Default Values for Tax Codes

Default tax code should be chosen for a company code, which would appear by default in LIV document.
If unplanned delivery cost is to be posted to a different account in LIV then the default tax code for unplanned delivery cost is also used.
Figure i.420: Setting up tax defaults in invoice verification
Figure i.421 Setting up tax V1 as defaults in invoice verification
I.9.1.3 Configure How Unplanned Delivery Costs are Posted

While posting LIV, unplanned delivery cost can be distributed among the invoice item or to a different GL account. If we configure to post unplanned delivery cost to a different GL account
then the account determination configuration should also be done. Transaction event key is UPF
.
Figure i.422 Configuring posting of unplanned delivery costs
Figure i.423 Options available in setting up posting of unplanned delivery costs
I.9.1.4 Edit PO Supplement Text in Invoice Verification

If accounts functions wants to receive any critical information from the purchaser or if purchase wants to
inform accounting function while posting LIV then the notifiable order text types should be configured. Here
we first active this functionality and then we define what are the notifiable texts from purchase order.
Figure i.424 Configuring PO text types prompt during logistics invoice verification
Figure i.425 Activating PO supplement text for a company code
Figure i.426 Specifying PO supplement for a company code

Put cursor on company code and click on
. A pop appears for selection notifiable text types.
Figure i.427 Choosing PO supplement out of the given list
Select the required text type and click on
to assign the notifiable text types to company code.
Figure i.428 Specifying PO supplement for a company code
I.9.1.5 Configure Vendor-Specific Tolerances

Tolerance group is defined to accept the variation in vendor invoice and actual goods receipt amount.
Tolerance group is specified in vendor master.
Figure i.429 Specifying vendor specific tolerance for a company code
Figure i.430 Specifying positive small and negative small differences and maximum limit for automatic

invoice reduction

Three types of tolerance are defined. Negative small difference, positive small difference and positive
difference which is more than the already defined positive small difference for which system automatically reduces invoice by creating a credit memo.
Suppose goods receipt value is INR 500/- and tax amount is INR 50/-, so net amount payable is INR
550/-. Let us consider four different examples of variations.

1.
2.
3.
4.
No variation
Negative small difference of INR 10/Positive small difference of INR 10/Positive difference INR 20/- (more than positive small difference of INR10/-)
CASE 1: No Variation
Enter amount value as INR 550/- and system shows balance zero and invoice can be posted.
Figure i.431 Vendor invoice, no difference between system and invoice value
Please note balance field
Figure i.432 Simulated accounting entries, when there is no difference between system and invoice value
CASE 2: Negative small difference of INR 10/Enter amount value as INR 540/- and system shows balance negative 10 but the traffic light of balance
is still green and invoice can be posted. By simulating we can see that balance negative amount is being
posted to predefined GL account for transaction event key DIF (T-code OBYC).
Figure i.433 General ledger account is being maintained for automatic posting of small differences
Figure i.434 Difference between system and invoice value is EGP -10/- (negative), which is equal to

upper limit of defined allowable small differences. System value of material receipt is EGP

500/- and tax amount is EGP 50/-

Please note balance
limit of defined allowable small negative differences.
is EGP -10/- (negative), which is equal to lower
Figure i.435 Simulated accounting entries, when there is negative small difference
CASE 3: Positive small difference of INR 10/Enter amount value as INR 560/- and system shows balance positive 10 but the traffic light of balance
is still green and invoice can be posted. By simulating we can see that balance negative amount is being
posted to predefined GL account for transaction event key DIF (T-code OBYC).
Figure i.436 Difference between system and invoice value is EGP 10/- (positive), which is equal to upper limit

of defined allowable small differences
Please note balance

limit of defined allowable positive small differences.
is EGP 10/- (positive), which is equal to upper
Figure i.437 Simulated accounting entries, when there is positive small difference
If we enter amount INR 539/-, which exceeds the tolerance limit of small negative difference amount
of INR10/-, system gives error message and does not allow to post invoice document.
Figure i.438 Small negative difference is less than lower allowable limit
Please note balance

able limit.
, small negative difference is less than lower allow-
Figure i.439 This is the error message system gives when small difference limits are violated on either side

CASE 4: Positive difference INR 20/- (more than positive small difference of INR10/-)
Upper limit for automatic invoice reduction has been changed to INR 20/- .
Enter amount INR 570/- , which is INR 20/- more than the actual amount INR 550/- (and also more
than the tolerance limit of positive small difference INR 10/-). As per the defined upper limit, system creates the invoice reduction on its own.
Figure i.440 Positive difference between system and vendor invoice is greater than the define positive small

differences but less than or equal to the upper limit for automatic invoice reduction limit
Please not balance

, positive difference between system and vendor
invoice is greater than the define positive small differences but less than or equal to the upper limit for
automatic invoice reduction limit.
Figure i.441 Simulated accounting entries, when there is positive difference between system and vendor

invoice is greater than the define positive small differences but less than or equal to the upper

limit for automatic invoice reduction limit

If we enter INR 580/- , the positive difference is INR30/-, which is more than the defined upper limit,
, hence system issue the error message.
Figure i.442 Error message when there is positive difference between system and vendor invoice is greater

than the define positive small differences as well as to the upper limit for automatic invoice

reduction limit
I.9.1.6 Activate Direct Posting to GL Accounts and Material Accounts

Direct posting to GL accounts and materials accounts are activated to directly post some amount while
posting LIV. This feature may be used as per the business requirement.
Figure i.443 Customizing: Direct posting in logistics invoice verification
I.9.1.7 Set Check for Duplicate Invoices

Business often requires a system control to check the posting of same vendor invoice twice. To have this
check this configuration is required.
Figure i.444 Configuring for duplicate invoice check during logistics invoice verification
I.9.1.8 Set Tolerance Limits

IMG Path: SPRO Materials Management Logistics Invoice Verification Invoice Block Set
Tolerance Limit
Tolerance limits are defined to tolerate the various type of variation which may occur between the vendor
invoice and goods receipt or purchase order amount, quantity, order price unit etc. These type of variances
do not issue any error but they block the invoice for further processing of payment.
Figure i.445 Setting up tolerance limits for invoice block. Theses blocks are applied when system

suggested value is changed by the user
Figure i.446 Setting up upper tolerance limit for tolerance key AN (for full view click here)
Figure i.447 Setting up tolerance limit for tolerance key BW
The system uses the following tolerance keys to check for variances.
AN: Amount for item without order reference
If you activate the item amount check, the system checks every line item in an invoice with no-order reference against the absolute upper limit defined.
AP: Amount for item with order reference
If you activate the item amount check, the system checks specific line items in an invoice with order
reference against the absolute upper limit defined. Which invoice items are checked depends on how you
configure the item amount check.
BD: Form small differences automatically
The system checks the balance of the invoice against the absolute upper limit defined. If the upper limit
is not exceeded, the system automatically creates a posting line called expense/income from small differences, making the balance zero and allowing the system to post the document.
BR: Percentage OPUn variance (IR before GR)
The system calculates the percentage variance between the following ratios: quantity invoiced in order
price quantity units : quantity invoiced in order units and quantity ordered in order price quantity units :
quantity ordered in order units. The system compares the variance with the upper and lower percentage
tolerance limits.
BW: Percentage OPUn variance (GR before IR)
The system calculates the percentage variance between the following ratios: quantity invoiced in order
price quantity units : quantity invoiced in order units and goods receipt quantity in order price quantity
units : goods receipt quantity in order units. The system compares the variance with the upper and lower
percentage limits defined.

DQ: Exceed amount: quantity variance
If a goods receipt has been defined for an order item and a goods receipt has already been posted, the system
multiplies the net order price by (quantity invoiced (total quantity delivered total quantity invoiced)).
If no goods receipt has been defined, the system multiplies the net order price by (quantity invoiced
(quantity ordered total quantity invoiced)).
The system compares the outcome with the absolute upper and lower limits defined.
This allows relatively high quantity variances for invoice items for small amounts, but only small quantity variances for invoice items for larger amounts.
You can also configure percentage limits for the quantity variance check. In this case, the system calculates the percentage variance from the expected quantity, irrespective of the order price, and compares
the outcome with the percentage limits configured.
The system also carries out a quantity variance check for planned delivery costs.
DW: Quantity variance when GR quantity = zero
If a goods receipt is defined for an order item but none has as yet been posted, the system multiplies the
net order price by (quantity invoiced + total quantity invoiced so far).
The system then compares the outcome with the absolute upper tolerance limit defined.
If you have not maintained tolerance key DW for your company code, the system blocks an invoice for
which no goods receipt has been posted yet. If you want to prevent this block, then set the tolerance limits
for your company code for tolerance key DW to do not check.
KW: Variance from condition value
The system calculates the amount by which each delivery costs item varies from the product of quantity
invoiced * planned delivery costs/planned quantity. It compares the variance with the upper and lower
limits defined (absolute limits and percentage limits).
LA: Amount of blanket purchase order
The system calculates the sum of the value invoiced so far for the order item and the value of the current
invoice and compares it with the value limit of the purchase order. It then compares the difference with the
upper percentage and absolute tolerances defined.
LD: Blanket purchase order time limit exceeded
The system determines the number of days by which the invoice is outside the planned time interval.
If the posting date of the invoice is before the validity period, the system calculates the number of
days between the posting date and the start of the validity period. If the posting date of the invoice is
after the validity period, the system calculates the number of days between the posting date and the
end of the validity period. The system compares the number of days with the with the absolute upper
limit defined.
PP: Price variance
The system determines by how much each invoice item varies from the product of quantity invoiced * order price.
It then compares the variance with the upper and lower limits defined (absolute limits and percentage limits).
When posting a subsequent debit/credit, the system first checks if a price check has been defined for
subsequent debits/credits. If so, the system calculates the difference between (value of subsequent debit/
credit + value invoiced so far)/quantity invoiced so far * quantity to be debited/credited and the product
of the quantity to be debited/credited * order price and compares this with the upper and lower tolerance
limits (absolute limits and percentage limits).
PS: Price variance: estimated price

If the price in an order item is marked as an estimated price, for this item, the system calculates the difference between the invoice value and the product of quantity invoiced * order price and compares the
variance with the upper and lower tolerance limits defined (absolute limits and percentage limits).
When posting a subsequent debit/credit, the system first checks whether a price check has been defined
for subsequent debits/credits, If so, the system calculates the difference between (value of subsequent
debit/credit + value invoiced so far)/quantity invoiced so far * quantity to be debited/credited and the
product quantity to be debited/credited * order price. It then compares the variance with the upper and
lower tolerance limits defined (absolute limits and percentage limits).
ST: Date variance (value days)
The system calculates for each item the product of amount * (scheduled delivery date date invoice entered)
and compares this product with the absolute upper limit defined. This allows relatively high schedule variances
for invoice items for small amounts, but only small schedule variances for invoice items for large amounts.
VP: Moving average price variance
When a stock posting line is created as a result of an invoice item, the system calculates the new moving
average price that results from the posting. It compares the percentage variance of the new moving average price to the old price using the percentage tolerance limits defined.
Variances are allowed within predefined tolerance limits. If a variance exceeds a tolerance limit, however, the system issues a message informing the user. If an upper limit (except with BD and VP) is exceeded, the invoice is blocked for payment when you post it. You must then release the invoice in a separate
step. If the tolerance limit for BD is breached, the system cannot post the invoice.
I.10 Batch Management

Batch management is used to track stock for quality and reliability reasons. Materials / products / items
of same batch (number) should have similar quality results and reliability behaviour. Batch management
is about numbering and tracking of batch and reporting. Batch is used in many organisations like pharmaceutical, chemical, beverages, FMCG, auto etc.
IMG Path: SPRO Logistics General Batch Management
Figure i.448 IMG path for configuring batch management (for full view click here)
I.10.1 Specify Batch Level

The first step of configuring batch management is defining level at which batch number would be
unique.
Figure i.449 Configuring batch level
Click on
to set the uniqueness of the batch number.
Figure i.450 Defining batch level
There are three levels:

1. Client
2. Material
3. Plant
Client Level
A batch number belongs to one material only across all the plants in an organisation. Technically batch
number is unique for only one material in a client.
Material XYZ has batch number ABC in plant 1000.
Material XYZ can have batch number ABC in plant 2000.
Material WXY can not have batch number ABC in any of the plant.
Constituents of batch ABC (of material XYZ) is same in both the plant.
Material Level
A batch number may belong to more than one material across all the plants in an organisation. Batch number is not unique for only one material but it may be unique for many materials. Different batch master
data would exist for different materials for the same batch number.
Material WXY can also have batch number ABC in any of the plant or in all the plants.
Constituents of batch ABC (of material XYZ) is same in both the plant.
Plant Level
A batch master data is unique at combination of material, plant and batch number.
Material WXY can also have batch number ABC in any of the plant or in all the plants.
Constituents of batch at different plants are different.
I.10.2 Manual Batch Number Creation

Batch number can be generated manually using T-code MSC1N (MSC2N to change batch master data and
MSC3N to display the data).
Figure i.451 Creating batch number manually. T-code MSC1N
Figure i.452 Creating batch number manually. T-code MSC1N
If the material code is subject to batch classification then characteristics value can also be maintained
and change through MSC1N and MSC2N, respectively.
Figure i.453 Maintaining batch classification while creating it manually (for full view click here)
I.10.3 Batch Number Assignment

I.10.3.1 Activate Internal Batch Number Assignment
Figure i.454 IMG batch activating batch number generation
Figure i.455 Activating batch number generation
I.10.3.2 Maintain Internal Batch Number Assignment Range
Figure i.456 Maintaining batch number range object

Click on number range
batch number.
to display standard number range for automatic generation of
Figure i.457 Maintaining batch number range
I.10.4 Creation of New Batches

Creation of new batch number is controlled at two level, movement type and material type. We can control
whether batch number creation is automatic or manual. If the creation is automatic then internal number
range should be assigned and if the creation is manual then external number range should be assigned.
I.10.4.1 Define Batch Creation for Goods Movements
Figure i.458 Definition of initial data creation for batch per movement for goods movement
I.10.4.2 D
efine Initial Creation of Data for Batch Master
Transactions for Material Type
Figure i.459 Definition of initial data creation for batch per movement for material type
I.10.5 Batch Classification

Batch classification is used to capture information specific to a particular batch. Batch information like
date of manufacturing, chemical contents, moisture content, weight etc. may be required to capture at
batch number level.
We define batch class under class type 023. T-code CL02.
Figure i.460 Displaying class created for batch classification. Please note class type (for full view click here)

Within batch class, names of batch characteristics are specified which would capture batch characteristics value during goods receipt. But before characteristics are specified in batch class they need to be created first. Creation of characteristics is done using t-code CT04. There are some standard characteristics
also which can be used in batch classification. For example, LOBM_VFDAT and LOBM_HSDAT are
standard characteristics.
Figure i.461 Displaying characteristics specified in class created for batch classification. Please note class type
Figure i.462 Displaying characteristics for expiry date
Figure i.463 Displaying characteristics for expiry date
Following standard characteristics are defined for batch search determination procedure.
LOBM_BWTAR valuation type (only if batches are unique at plant level)
LOBM_LFDAT delivery date
LOBM_LVORM deletion flag
LOBM_VERAB availability date
LOMB_VFDAT expiration date/shelf life
LOBM_ZUSTD batch status
LOBM_QNDAT next inspection date
LOBM_RLZ remaining shelf life
I.10.6 Batch Determination and Batch Check

Batch determination procedure is used to pick batch automatically for a particular material during goods
movement based on some predefined criteria. Goods movement like goods issue for consumption for
production and subcontracting (consumption of material provided to vendor for job work), goods issue for
delivery etc. require automatic batch determination. As per the scope of this title (materials management),
we consider only subcontracting scenario. Condition technique is used for automatic batch determination
(condition technique is used for pricing procedure and message configuration also).
IMG Path: SPRO Logistics General Batch Management Batch Determination and Batch Check
Figure i.464: IMG path to set up batch determination strategy
I.10.6.1 Strategy Types

I.10.6.1.1 Define Inventory Management Strategy Types
Figure i.465 Define strategy type
Figure i.466 Defining strategy type and assigning access sequence

Condition type ZSCB
has been access sequence YSCB
I.10.7 Batch Search Procedure Definition

I.10.7.1 Define Inventory Management Search Procedure
Figure i.467 Defining batch determination procedure
Figure i.468 Specifying strategy type in batch determination procedure
I.10.8 Batch Search Procedure Allocation and Check Activation

I.10.8.1 Allocate IM Search Procedure/Activate Check
Figure i.469 Assigning batch determination procedure to movement type
I.10.9 Define Sort Rules

Sort rule is the rule using which system sort and pick the batch from the various batches and suggest. Sort
rule is a characteristic or set of characteristics to create logic to sort and pick the batch.
Figure i.470 Defining sort rules for batch sorting during batch determination
Figure i.471 Change sort sequence
Click on
to change or display the sorting characteristics.
Figure i.472 Setting up sort sequence logic
I.10.10 Access Sequences

I.10.10.1 Define Inventory Management Access Sequences
To automate the process of batch determination a strategy (condition) type is assigned a search strategy
known as access sequence. Access sequence is set of tables (known as accesses) arranged in a most specific to most generalized table. Every table consists of certain parameter (technically fields). Most specific
table is that table, which has most number of parameters (fields) among the given set of tables. Most generalized table is that table which has least number of parameters (fields) among the given set of tables.
Figure i.473 Defining access sequence
Figure i.474 Displaying access sequence YSCB
Figure i.475 Displaying condition table in access sequence YSCB
Figure i.476 Displaying fields in condition table 904 access numbers 30 of access sequence 904
Figure i.477 Displaying fields in condition table 903 access numbers 50 of access sequence 904
I.10.10.2 Condition Tables

Define Inventory Management Condition Tables
Customized condition tables can be created or standard tables can be displayed using this transaction.
Figure i.478 Displaying condition table
Figure i.479 Displaying condition table 904
Field catalogue is also available to view what fields are available and if required to add additional fields
for the creation of customized tables.
Figure 6.480 Displaying field catalogue for creating condition table
After setting up (configuring) the batch determination strategy condition records are created to make it work.
T-code MBC1 creates condition records and MBC2 and MBC3 display condition records.
Path
SAP Menu Logistics Materials Management Inventory Management Environment Batch
Search Strategy
MBC1 Create
MBC2 Change
MBC3 Display
Figure i.481 Displaying condition record for strategy type ZSCB. T-code MBC3
Figure i.482 Choosing condition table to display or to maintain
Figure i.483 Selection screen for displaying the condition record
Figure i.484 Displaying condition record

Configuration Activity
T-code
T-code
PRICING PROCEDURE
TAX PROCEDURE
Define condition type
M/06
Assign country to calculate procedure
SM30
Define access sequence
M/07
Change message control for taxes
SM30
Define calculation schema
M/08
Check and change settings for tax

processing
OBCN
Define limits
OMKG
Access sequence for tax procedure
OBQ2
Define schema determination
OMFO
Check calculation procedure
OBQ3
OMFR
Tax condition type
OBQ1
OMFZ
Define tax jurisdiction code
OBCP
Define schema group
OMFM
Specify structure for tax jurisdiction code
OBCO
Define schema group
OMFN
Define schema group
OMFP
Define tax code for sale and purchase
FTXP
Define accounts for exchange rate

difference posting
OBYY
VENDOR EVALUATION
Define tax account
OB40
Define criteria
OMGI
Define purchasing organisation data for

vendor evaluation
OMGL
Consumption based planning
Define scope of list
OMGU
Define parallel processing in MRP
OMIQ
Define weghting keys
OMGC
Develop enhancements for purchasing
CMOD
Evaluation
Check texts for MRP elements
OMD5
PURCHASING
Define and group together exception

messages
OMD3
Create purchasing group
OME4
Define individual period split for period

totals
OMDA
Maintain matchcodes for purchasing

documents
OMHN
Define period display for period displays
OPPC
Define receipt element or range of

coverage calculation
OMIL
Account assignment
Screen sequence for extended header

(MRP list + stck/reqs)
OMIO
Define combination item categories/acct.

Assignment categories
OMG0
(Contd.)

T-code
T-code
Maintain account assignment categories
OME9
Forecast
Set subscreen for account assignment

(coding) block
OXK1
Assign forecast errors to error classes
OMDK
OMDG
Authorization management
Create profiles
Define deafault values for buyers
Define deafault values for buyers
Define function authorization for
buyers
Define function authorization for
buyers
Maintain authirizations
Material master
Define purchasing value keys
PFCG
OMFI
SU01
OMET
Define splitting of forecast requirement

for MRP
Weighting groups for weighted moving
avaerage
Master data
Check MRP types
Define MRP controllers
SU01
Define special procurement types
OMD9
PFCG
OME1
MD25
MD26
MD27
OMIP
Define shipping instructions
Purchase orders
OMEK
Define document types

Define release procedure
Define screen layout at document
level
Define text types and copying rules
for header text
Define tolerance limit for archiving
OMEC
OMGS
OMF4
Maintain planning calender

Reference platn for access to entral
master data
MRP groups
Define MRP group for each material
type
Mainatain all MRP groups
Number Ranges
OMI3
OMEY
Define number ranges for manual

processing
Define number ranges for planning run
Entry title was not found

Set tolerance limit for price variance
OMF5
OMEU
Planning
Set up authorization check for G/L

accounts
Set up stock transport order
OMRP
Activate material requirement planning OMDU
OMGN
Activate runtime statistics
TEFK
OMD2
OMDQ
OMD0
OMIG
OPPZ
OMI2
OMDR
(Contd.)

T-code
T-code
Define creation indicator
OMDZ
Purchase requistion
OMEB
OMDC
OMIB

level
OMF2
Define floats ( scheduling margin key)

Define start time of sporadic backgrounds jobs
Define storage location MRP per plant
OMF3
Maintain matchcodes
OMHM
Processing time
Set up authorization check for GL
accounts
Set up stock transport requisition
Purchasing info record

Define number ranges
Define price history
Define screen layout
Maintain inspection certificate category
Maintain matchcodes
OMEW
OMRO
Quota arrangenment
Define number ranges
Define quota arrangement usage
Reporting
TEBP
OMEX
OMIR
Define the maximum MRP period

OMIM
Indicator: only firm transmitted
OMIN
schedule lines
Maintain correction factors for forecast OMDJ
Parameters for determining the basic
dates
Lot size calculation
OMIT
OMI4
OMDY
OMDX
OMDW
OMI1
OPPI
OMEP
OMEQ
OMCI
Define lot-sizing procedures
MRP calculation
Define error processing
Define planning horizon
Define rescheduling horizon
Stocks
Define safety stock availability
Define stock in transfer and blocked
stock availability
Procurement proposals
Define external procurement
Define line item numbers
Plant parameters
Maintain general analyses
MORE
Maintain all plant parameters
OMI8
Maintain purchase requisition lists
OMGK
OMGR
OMEO
OMHP
OMF1
TEIP
OMEL
OMHL
OMDT
OMI5
(Contd.)

T-code
T-code
Maintain purchasing lists
OMEM
Procurement proposals
OPPH
RFQ/Quotation

Define release procedure
level
for header text
Maintain quotation comments
Scheduling agreement
level
for header text
Set up authorization check for GL
accounts
Set up release procedures
Set up stock transport scheduling
Agreement
OMEA
OMGS
OME8
Convert purchase requisition into

purchase orders
Define conversion of planned orders
into purchase requisitions
Define order profile
Inventory management
TEAK
Define attributes of system message
OMCQ
OMEE
OMES
OMED
OMF7
SU01
OMJ8
OMJA
OMJC
TELK
Define attributes of system message
Automatic documents
Create storage location automatically
Generate physical inventory documents
for good movement
Set expiration date check
OMEN
OMRP
Set manual account assignment

Set missing parts check
OMJ9
OMJD
OMGS
OMGP
Goods receipt
Source determination
Assign plants to supply regions
OMQL
OMB3
OMCJ
OMBZ
Define supply regions
SM30
Set up regular vendor
Source list
OMKH
Create storage location automatically

For GR-based IV, reversal of GR
despite invoice
Maintain copy rules for reference
documents
Set dynamic availability check
Set expiration date check
Set manual account assignment
OMDV
OMDD
OMJE
OMBI
OMCM
OMJ5
OMCH
(Contd.)

T-code
T-code
Define source list requirement at plant

level
Maintain match codes
Statistics
OME5
Set missing parts check
OMBC
OMHO
Set tolerance limit

Set delivery completed indicator
OMC0
OMCD
Maintain purchase order history

category
Set up statistics updating facility at
documentation level
Vendor master
OMEG
Movement type
OMGO
Change, copy movement types
OMJJ
OMBS
OXK1
Check incoterms
Define price marking
Define terms of payment
Define text types for central texts
Define text types for purchasing
organisation texts
Valuation and account assignment

Configure price change in previous
year/period
Define document type and number
range for material debit
Define document type and number
range for price change
AU : privce Define privce control for material
types
???
Account determination
Activate purchase account in
company code
Create automatic posting
OMSQ
OMKC
OME2
OMGA
OMGB
Reason for goods movements

Set subscreen for account assignment
(coding) block
Output determination
Assign layouts sets and programs
Define layout sets (forms)
Maintain access sequence
SM30
Maintain condition tables

M703
M704
M705
OMWA
Maintain conditions
MN21
OMW9
Maintain conditions
MN22
OMW1
Maintain conditions
MN23
OMWO
Maintain message schema

Maintain output types
M708
VOFM
M706
OMWB
OMWN
Invoice verification
OMSK
Configure automatic posting
OMR0
AU:
incoterms
Define account grouping for

movement types
Define valuation class
OMBO
SE71
M710
(Contd.)

T-code
T-code
Define valuation control
OMWM
Define attributes of System messages
OMRM
Group together valuation areas
OMWD
Define documents life
OMRZ
Authorization management
OMGJ
CMOD
Create profiles
Maintain authorizations
PFCG
PFCG
Split valuation
Activate split valuation
Configure split valuation
OMW0
OMWC
Message determination
Maintain conditions
Maintain conditions
Maintain conditions
Maintain message type
EDI
Allocate company code
Allocate tax codes
Enter program parameters
Printer determination
Printer determination by plant/storage
location
Printer determination by plant/storage
location/user group
MRM1
MRM2
MRM3
M808
M806
OBCA
OBCD
OBCE
OMJ3
Define tax jurisdiction

Develop enhancements for invoice
verification
Incoming Invoice
Define subsequent debit/credit key for
order history category
Determine mail to purchasing
Determine tax version
Edit PO supplement text in invoice
verification
Maintain document types and number
ranges
Maintain number ranges for LIV
Set default values
Invoice block
Determine payment block
Set tolerance limit
Item amount check

Activate item amount check
Set item amount check
Stochastic block
Activate stochastic block
Set stochastic block
OMJ4
Stochastic block
Release invoice
MRO2
OMRA
OMRK
OMRL
OMR8
OMR4
OMRJ
SM30
OMR9
OMR6
OMRH
OMRI
OMRF
OMRG
Figure i.39 Standard tax procedure for country India (Click here for go back)
Figure i.41 Attributes of condition types (Click here for go back)
Figure i.46 Assignment of tax procedure to country (Click here for Go back)
Figure i.53 Tax code rate maintenance (Click here for go back)
Figure i.56 Specifying chart of accounts with reference to which account assignment is being made

(Click here for go back)
Figure i.67 Creating a customized material type and changing its attribute (Click here for go back)
Figure i.76: IMG path to create purchasing groups (Click here for go back)
Figure i.86 Defining new number range (click here for go back)
Figure I.102 IMG path to configure purchase requisition (click here for go back)
Figure I.123 Display class made for configuring release strategy. Please note class type 032

(click here for go back)
Figure I.148 Characteristics reference to structure CEKKO and field EKGRP (click here for go back)
Figure I.149 Defining class for release strategy. Please note class type 032 (click here for go back)
Figure I.156 Define release strategy of various levels and for different types of PO (click here for go back)
Figure I.157 Setting up release strategy (click here for go back)
Figure I.158 Setting up prerequisite for releasing the PO at different level (click here for go back)
Figure I.159 Setting up release indicator to show the status of the PO (click here for go back)
Figure I.160 Classification of release strategy (click here for go back)
Figure I.161 Simulating release strategy (click here for go back)
Figure I.162 Different steps of simulation of release strategy (click here for go back)
Figure I.163 Setting up master data for release strategy. T-code CL20N (click here for go back)
Figure I.164 Setting up master data for release strategy (click here for go back)
Figure I.177 Stock transport order screen. T-code ME21N (click here for go back)
Figure I.181 Display delivery document. T-code VL02N (click here for go back)
Figure I.182 Changing delivery document for picking (click here for go back)
Figure I.187 Attributes of pricing procedure (click here for go back)
Figure I.196 Prompt for configuration of automatic schema determination (click here for go back)
Figure i.221 Fields in structure which can be added to the extended field catalogue can be viewed in structure

using T-code SE11 (click here for go back)
Figure i.226 Configuring account assignment categories (click here for go back)
Figure i.230 IMG path to configure condition tables, access sequence, message type and message

determination schema (click here for go back)
Figure i.250 Communication data is being maintained for document type DDB (click here for go back)
Figure i.284 Assignment of partner schemas to document types (click here for go back)
Figure i.289 IMG path to configure inventory management and physical inventory (click here for go back)
Figure i.291 Configuring field selection: Modifiable fields (click here for go back)
Figure i.296 Configuring field selection: Modifiable field (click here for go back)
Figure i.303 List transaction type available in MIGO transaction (click here for go back)
Figure i.312 Field status group in general ledger master data (click here for go back)
Figure i.319 Configuration of tolerance key B1 (click here for go back)
Figure i.338 Selection screen of program RM07II31, T-code MI31 (click here for go back)
Figure i.342 Defining tolerance group for a company code (click here for go back)
Figure i.347 ABC analysis of materials for cycle counting (click here for go back)
Figure i.359 While copying overwrite reference movement type by new movement type

Figure i.372 Changing field control for enjoy transaction MIGO (click here for go back)
Figure i.385 Global valuation category (click here for go back)
Figure i.387 Allocating valuation types to valuation category (click here for go back)
Figure i.410 Simulated automatic account posting for the given plant, material and movement type

Figure i.411 Simulated automatic account posting for the given plant, valuation class and movement type

Figure i.417: IMG path to configure incoming invoice related settings (click here for go back)
Figure i.446 Setting up upper tolerance limit for tolerance key AN (click here for go back)
Figure i.448 IMG path for configuring batch management (click here for go back)
Figure i.453 Maintaining batch classification while creating it manually (click here for go back)
Figure i.460 Displaying class created for batch classification. Please note class type (click here for go back)

Chapter I

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Chapter I

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Implementation Guide

to go to IMG (Implementation Guide).

Figure i.1 Customizing initial screen. T-code SPRO

 SAP Materials Management

to go to IMG (Implementation Guide).

Figure i.2 Implementation guide (IMG). T-code SPRO

IMG consist of various nodes and sub nodes

i.1 Configuring Enterprise Structure

Figure i.3 Define company

Figure i.4 Define company

 SAP Materials Management

to copy and create a new company. Press enter after putting

Figure i.5 Defining company, inputting company details

Click on save button

to save newly created company, system would pop up a screen to create

Figure i.7 Creation of customizing request

Figure i.8 Specifying customizing request in prompt

I.1.2 Company Code

 SAP Materials Management

Figure i.9 Defining company code

Figure i.10 Prompt for defining company code

Figure i.12 Copying company code

Figure i.13 Specifying standard company code for copying

Figure i.14 Edit newly created company code data

Figure i.15 Edit newly created company code

 SAP Materials Management

Figure i.16 Edit newly created company

Figure i.17 Create plant

Figure i.18 Prompt for creating plant

Click on Copy, delete, check site to create a new plant.

Figure i.19 Icons for copying/change and delete plant

Figure i.21 Prompt to create/change new plant

I.1.4 Storage Locations

10 SAP Materials Management

Figure i.22 Maintaining storage location for a specific plant

Figure i.24 Storage location maintenance

Select any storage location and click on icon

to copy and create a storage location and enter a new entry.

Figure i.25 Creating new storage location

I.1.5 Purchasing Organisation

12 SAP Materials Management

Figure i.26 Maintaining purchasing organisation

Figure i.27 Creating purchasing organisation by copying standard purchasing organisation

Select a purchasing organisation and click on icon

to copy and create a purchasing organisation and

Figure i.29 Assignment of organisational activities

Figure i.30 Assignment of company to company code

14 SAP Materials Management

I.2.2 Assign Plant to Company Code

Figure i.31 Assignment of plant code to company code

, to make the assignment and save.

I.2.3 Assign Purchasing Organisation to Company Code

Figure i.32 Assignment of company code and purchasing organisation

, to make the assign-

I.2.4 Assign Purchasing Organisation to Plant

Figure i.33 Assignment of purchasing organisation and plant

16 SAP Materials Management

, to make the assignment and save.

I.2.5 Assign Purchasing Organisation to Reference Purchasing Organisation

Figure i.34 Assignment of reference purchasing organisation to purchasing organisation

and make desired assignment.

Figure i.35 Assignment of reference purchasing organisation to purchasing organisation

I.3.1 Define Procedures

SAP Materials Management

SAP Materials Management

SAP Materials Management

SAP Materials Management