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ERP MM - Purchasing

Purchasing is a sub-component of Material Management. This page gives information about the Purchasing functionality. Nomally, Purchasing process is as follow:
1. Generation of material requirement: Material requirement is generated automatically through MRP and/or manually by user dept group or individuals. 2. Request for Quotation (RFQs): Once material requirement is identified then based on the procurement type (external procurment), the requirement is processed for getting the quotations from different vendors (including one time vendor) 3. Maintain Quotation: Vendor will send the quotations back to the purchasing dept giving all informations (terms and conditions) including rates, purchasing dept updates this information by maintaining quotation. 4. Comparision of Quotation and Vendor selection: once all the quotations are updated then purchasing dept generates comparistion list to get the better picture for final selection of the vendor. 5. Release Purchase Order: For selected vendor(s), purchasing dept sends purchase order which contains the information for supplying the material or perform of services, quantity of material/service, delivery schedules, terms & conditions, delivery address etc. 6. Purchase order confirmation: For some organizaiton, purchase order confirmation is very important to manage/plan their resource and space or to find alternative resource incase of short supply. 7. Reminders and Follow-up: In some case, purchsing dept follows up with vendor by sending reminders 8. Advance Notification: Vendor will send information about the supply of material ie. material, qty, against which PO, vehicle number, start date etc. This helps purchasing dept to inform their storage manager for managing their resource and warehouse space. 9. Goods Receipt: Vendor sends material to the plant and storage/warehouse receives material against purchase order 10. Invoice Receipt: Vendor sends invoice for the supplied material or performed services. Sometime, this happens before actual receipt of material. Account dept/ invoice dept checks this invoice against goods receipt and/or purchase order to confirm the qty, rate, schedule etc and post the invoice. 11. Payment: for successful supply, accounting dept will release the payments to the vendor.

12. ERP MM - Inventory Management
Inventory management is a component of Material Management. This page gives information about the inventory management processes i.e. Receving material with or without reference, material issue with planning or without planning, movements of materials (Inter company, Intra company, within plant, SLoc to SLoc, Material to Material, Batch to Batch, different stock type transfer posting), Material reservations & Physical Inventory. Inventory Management manages stock in Quantity & also Value basis.IM automatically updates Stock & G/L Accounts when material is received or issued & provides which accounts are updated. Apart from accounts cost center is also updated.Inventory Management can manage various types of a company's own special stocks and externally owned special stocks separately from standard stock.

?Entering invoices & credit memos that have been received
?Verify invoices with respect to content, prices and calculations. ?Executing account postings ?Updating data in MM & Financial Accounting

\l* Periodic inventory, inventory done periodically after some duration, l* Permanent inventory Inventory going on continuously, l* Cycle counting (periodic inventory) ,inventory done at irregular periods based on need, l* Inspect sample inventory.

with the appropriate valuation type and accounting data.subcontracting. ( B ) Source List: The sources (vendors) for a particular material will be maintained as source a list at plant level. Info record will be created as a master data . that is. according to different valuation criteria. (Valuation category : C) Integration The way the stocks of a material are valuated depends on how you define the following: Valuation category : This defines whether the stocks are valuated jointly or separately. Quota Arrangement can be created at transaction code MEQ1. There are mainly three categories of master data in Material Management as follow: a. if the valuation category isorigin. Split Valuation If you want to valuate stocks of a material separately. Valuation type : This is a further subdivision of the valuation category.Accounnting etc. Repaired. (a ) Info Record: In order to achieve effective purchasing process .During the creation of a purchasing document . Master Data in Material Management Master data plays an important role in Material Management. it also specifies the criteria used to valuate the stocks. inhouse production/external procurement. For example.Prerequisites Your system administrator has defined whether valuation at your company is at company code level or plant level and whether split valuation is allowed. a company may want to define the valuation typesstock from Los Angelesandstock from Detroit. you specify neither a valuation category nor a valuation type. (Valuation category : X) Valuation of repairable material : New. If stocks are to be managed separately. etc will be maintained . (B)Quota Arrangement: Quota Arrangement will decide about the quota for supplier to supply especially when there are number of sources to supply a material. for example: Stock from in-house production has a different valuation price than externally procured stock.Since the purchasing belongs to the purchasing organization in a firm and the accounting takes by the company the data will be maintained at company code level and purchase organization level for the vendor master. the information in the Info record will be pulled to the document there by reducing the effort. To be repaired.Material master can be created for a plant or sales organization etc. partner functions of the vendor . This record is called the valuation header record. which will tell about the Material .  Once you have specified the valuation category. Source list can be created at the transaction code ME01.This info record can be created at the transaction code ME11 for the purchasing processes like standard. The data like its address .MM-VAL      The R/3 System allows you to valuate stocks of a material either together or separately.planning. you must create a material master record with the appropriate valuation category. This will be extremely useful when a new source is being introduced along with other sources. . Material Master can be created at the Transaction code MM01. or individual batches.Financial details like tax details. (Valuation category : B) Stock obtained from one manufacturer is valuated at a different price than stock obtained from another manufacturer. ( A ) Vendor Master: This also serves as a centralized repository for the Vendor Data and will be pulled into the applications. whether they are valuated by origin. Centrally Vendor master data can be created at the transaction code XK01 and for purchase organization level at MK01.consignment etc. This data is stored in the material master record.Material Mater details will be pulled into the applications which when done the transactions. Also this data will be useful in finding a supply source during the creation of Purchase Requisition.Vendor combination for a price at purchase Organization level and at plant level . you can create a material master record for each quantity of the material you want to valuate separately. 3=Purchasing Master. Material Master: It is the Centralized Repository for the materials information for the functions of a company like Sales. Each material always has only one such record for each company code or plant (depending on whether the material is valuated at company code level or plant level).Forecasting. (Valuation category : H) Different batch stocks of a material have different valuation prices. For more information see ActivitiesJoint Valuation If you want to valuate all stocks of a material at the same price. Split valuation is necessary if. This master data will provide the compatibility to block or to fix a source from supply at purchasing level. that is.