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Various steps involved in this process cycle can be elaborated as below:

1. Materials Requirement Planning (MRP): Determine requirements raised for a material from
planning or manually by buyer.
2. Source Determination: Determine list of suppliers based on previous transaction history or long
term agreements available in system and request quotes from them.
3. Vendor Selection: Compare quotes from all suppliers and select most suitable one for the
requirement.
4. Procurement of Goods/Services: Create contracts with the selected supplier and raise Purchase
Order (PO) and send to supplier. Monitor PO at regular intervals and check with supplier on
delivery.
5. Goods Receipt and Inventory Management: Receive goods/services in your premises and create
Goods Receipt transaction against PO in book of records for the received qty. Check if the
received quantity is within the tolerance limits agreed upon with supplier in contracts.
6. Invoice verification and Payments to Supplier: Receive invoice from supplier for the goods
supplied, process the Invoice and make payments to the supplier.

Procurement Types:
Let’s now discuss the procurement types. There can be multiple ways based on which procurement types
can be categorized. Here is the representation of basis-wise types.
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Material Being Procured

Based on the material being procured, there can be two Procurement Types
involved in the Purchasing Process. These are described below.

Procurement of Stock Material: Stock materials are the materials that are

inventoried/stored in warehouse and used when needed. Stock when received in
warehouse adds to the stored quantity and when consumed reduces the overall
stock quantity. Stock and consumption accounts are maintained and updated with
values after every transaction based on stock value moving in or out of the
warehouse respectively. Inventory is valuated at regular intervals to evaluate and
assess material movements. Every stock material must have a master record
created with parameters required to execute its life cycle and shows its current
stored quantity/value.

Procurement for direct consumption: This refers to the Materials procured for direct
consumption and not for storage. These may or may not have a master record
created and will need account assignment when an order is created to specify
where it is going to be consumed. Consumption account gets updated with value
when goods are received against PO in such scenarios. This also covers any
services we get from third party sources/suppliers.

Need to Procure

Based on the need to procure and process of implementation, there can be three
Procurement Types involved in the Purchasing Process. These are as below.
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One-time Purchase Order:  Purchase order is created directly without reference to
any existing contracts/agreements. This is used mostly for materials/services
needed on irregular basis.

Supplier Contracts:  Contracts/Outline agreements are created with suppliers

specifying terms and conditions of procuring a material including Pricing
conditions, total quantity, total value and validity date. This is used for materials
needed on regular basis and in estimated quantities. These contracts are released
into individual orders as and when required and sent to suppliers for fulfilment.
Purchase orders when created derive all the information from contracts.

Scheduling Agreements:  A Scheduling Agreement is similar to contract in terms of

the information it holds i.e., it specifies terms and conditions of procuring a
material from supplier but it is used for those that are needed at regular
schedules/time intervals. Delivery schedule lines are created against these
scheduling agreements specifying what is the quantity needed and by when.
These are then sent to supplier who will review and confirm on the delivery
schedules.

Special Procurement Types

Consignment: Consignment is a process where stock is procured from the supplier

but stored in one of the supplier managed locations within buyer’s organizational
premise until goods are withdrawn for use. Buyer in this scenario is not liable to
pay to supplier as long as the stock is sitting in supplier location but will become
liable as soon as it is taken out to warehouse.

Subcontracting: Subcontracting is a process in which a supplier is contracted with

manufacturing goods for buyer. In such scenarios, component materials required
to manufacture the product are supplied by buyer himself or bought by supplier,
cost of which will then be transferred to the buyer.

Stock transfer using Stock Transport Order:  This is the Process in which a plant orders
goods from another plant within the organization to meet the requirements using
STO (Stock Transport Order). Stock gets transferred from one plant to another by
processing this STO creating deliveries.

Direct Shipments/Drop Shipments:  This is also known as Third party processing. Sales
order when received from customer is forwarded to a supplier/manufacturer who
can supply the goods directly to the customer. This eliminates the intermediate
process of buying from supplier, stocking and supplying to customer reducing
overall costs.
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The stock is moved according to the entries, withdrawals and transfers of stocks.

On the diagram, there are entries linked to the internal production of finished or semi-
finished products (module PP), or entries linked to purchases (module MM Purchases
detailed in this document).

There are also outputs linked to sales and distribution (module SD)

All of this is reported in the accounts (FICO module).

Each stage of the purchasing process corresponds to a transaction, the main ones of
which are listed below :
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MARA - General Material Data

 MAKT - Material Descriptions

MARM- Units of Measure for Material

MVKE - Sales Data for Material

MLAN - Tax Classification for Material

MARC - Plant Data for Material

 MBEW -Material Valuation

 MLGN - Material Data for Each Warehouse Number

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Table SAP MM TABLE

EBAN Purchase Requisition

EBKN Purchase Requisition Account Assignment

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Table SAP MM TABLE

EINA Purchasing Info Record- General Data

EINE Purchasing Info Record- Purchasing Organization Data

EIPA Order price history record

EKAB Release Documentation

EKBE History per Purchasing Document

EKBZ Purchasing document history: delivery costs

EKET Scheduling Agreement Schedule Lines

EKKN Account Assignment in Purchasing Document

EKKO Purchasing Document Header

EKPB Material to be provided item in purchasing document

EKPO Purchasing Document Item

EKUB Index for Stock Transport Orders for Material

EORD Purchasing Source List

ESKN Account assignment in service package

ESLH Service package header data

ESLL Lines in service package

ESSR Service entry sheet header data

ESUC External services management: Unplanned limits for contract item

ESUH External services management: unplanned service limits header data

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Table SAP MM TABLE

ESUP External services management: unplanned limits for service packages

ESUS External services management: Unplanned limits for service types

SAP MM Tables for Inventory Management

The main Inventory Management Tables for SAP MM are:

SAP MM TABLE DESCRIPTION

IKPF Header- Physical Inventory Document

ISEG Physical Inventory Document Items

SAP MMBE : SAP Stock Overview MMBE Tcode

For SAP Stock Overview Tcodes, you have Vendor, Dunning, Bank and Transactions details.

The most important SAP MMBE SAP Stock Overview MMBE Tcode are:

Table SAP MM TABLE

LFA1 Vendor General Data

LFAS VAT registration numbers general section

LFB1 Vendor + Company

LFB5 Dunning data

LFBK Bank details

LFC1 Transaction figures

LFC3 Special G/L transaction figures