Contents

Topics

Overview and Org. Structure

Invoice Verification/Valuation Automatic Account Determination

Material Master
Purchasing Master Data Procurement Inventory Management/ Valuation

Overview and Organizational Structure

Definition: Logistics
NCPDM (US National Committee on Physical Distribution Management) : "..physical distribution management .. is .. the integration of one or more activities for the purpose of planning, implementing and controlling the efficient flow of raw

materials, in-process inventory and finished goods from point of origin to point of consumption..."

Resource Management in Logistics Capital long-term Investment Expense/costs Cash short-term Capital resources Logistics chain Procurement Purchase orders  materials  services Production Warehouse Sales Warehouse Sales orders  products  services Distributions Vendor Material resources Customer Capacity resources .

.Overview of MM Material requirements planning External procurement Internal procurement Purchasing Production Invoice verification Invoice receipt Goods receipt Inventory management Warehouse management Master data Material Batch Vendor G/L accounts Customer Storage bins . A ? Goods issue Transfer posting B Internal and external accounting Sales and distribution . .

Procurement Process Order Invoice MRP ? 7 Invoice verification 1 Requirement determination MM Goods receipt and 6 inventory management Materials management 2 Source determination Order Order follow-up 5 4 3 Vendor selection Order processing .

Organizational structures in R/3 Organizational units Company Controlling areas Sales organizations Purchasing organizations Company codes Valuation areas Plants Storage locations/batches/special stocks .

Invent. mgmt w/o warehouse mgmt Company Code Plants 0001 0002 0003 Storage locations 0001 0001 0002 .

mgmt with Warehouse mgmt Company Code Plants 0001 0002 Storage locations Warehouse numbers 0001 0088 0088 0002 001 Storage types 001 005 Storage bins 05-04-03 05-04-04 .Invent.

Valuation Client Company codes 0001 0002 Plants 0001 0002 0003 .

CODE VAL.Example for Valuation Company codes RC Plants VAL. AT PLANT Mumbai plant 125/ BAG 125/ BAG Delhi depot 125/ BAG 150/ BAG . AT CO.

Accounting Client Company codes 0001 0002 0003 Business area 0001 Business area 0001 Business area 0002 .

Purchasing Organization 0001 Company (Group) Company codes 0001 0002 Purchasing organizations 0001 0002 0003 Plants 0001 0002 0003 0004 .

Organizational Entities in Purchasing Purchasing group 1 Purchasing group 2 Purchasing organization 1 Purchasing organization 2 Purchasing organization Plant 1 Plant 2 Plant 2 Plant 10 .

Material Master .

Material master record General data Material number Description Units of measure Technical data Plant-specific data Valuation Warehouse Management system data Unit of measure Palletting instruction Sales-specific data Delivering plant Sales texts Valuation price MRP/type Planned delivery time Valuation procedure Valuated quantity Purchasing group Batch indicator Storage locationspecific data Storage time Stockfields Forecast data Consumption data .

Units of measure Base unit: Piece 4 16 72 Box (unit of issue) Crate (order unit) Pallet (sales unit) .

Material data maintenance: accounting Valuation class MART ROH HALB HIBE Allowed values 3000 3010 7920 3000 .

Maintenance of material data Price control S V Standardprice control: Valuation of standard price from the material master record Moving average price control: Final delivered price (such as purchase order price) influences the valuation price .

Purchasing Master Data .

Purchasing Master Data
The Vendor

The vendor
Purchasing

purch ase order

Bank
DEUTSCHE MARK DEUTSCHE MARK

Payment

DEUTSCHE MARK

Material

Vendor
Invoice

order

account

? =
Goods receipt

Invoice verification

Organizational levels of vendor master record
General data

Purchasing organization data

Company code 001 data
Company code

Vendor master record General data Address Communication Valid for the whole group Purchasing data Order currency Incoterms Minimum order value Valid for one purchasing organization Accounting data Bank data Payment transactions Account management Valid for the whole group or for one company code .

Account group One-time account Account group Type of number assignment Interval for number assignment Field selection .

Control account Invoice You Vendor Invoice Enter invoice Accounts payable Vendor A G/L accounting Payables "Parallel" Vendor .

Purchasing Master Data Info Record .

Purchasing info records Piece % Conditions USD Material Info record Vendor A Info record Stock material M1 Info record Consumable material M2 Info record Vendor B Info record Service S1 .

Data in the purchasing info record General data Vendor data Origin data Order unit Texts Control data Delivery time Minimum quantity Tolerances Prices and conditions Gross price Discounts Freight Price history Purchasing statistics Changes .

Outline agreement 2.Pricing 1 Pricing procedure RM000 Purchase order Vendor 123 Purchasing organization 2000 Item 10 PB00 Price 120 pcs $99 1. Vendor/material group/ organizational level Records for condition type No valid record exists Valid record exists 5 4 Scale $100 for $99 for $98 for 1 pcs 100 pcs 200 pcs . Vendor/material/ organizational level 3.Price 2.Discount PB00 RA00 2 3 Condition type: PB00 Access sequence: PB01 Access sequence: PB01 1.

Conditions Pricing procedure Condition type Gross price Discount % Net price: Fixed freight charge + Effective price: PB00 RA01 FRA1 Calculation type Scale basis Price/quantity scale .

Purchasing Master Data
Source List

Source list

1.1.95 - 30.6.95

1.7.95 - 31.12.95

Source list
Vendor 1 allowed Vendor 2 allowed Vendor 3 allowed
Vendor 1 fixed

Material M1 Plant 0001

Procurement

Procurement Procurement Environment .

Source list External procurement environment Requirements determination Purchase requisition RFQs Quotations Quota arrangement Source determination Vendor selection Piece % Conditions USD Info record Outline agreement Purchase order Purchase order history Invoice receipt Goods receipt .

Release order Scheduling agreement .Purchasing documents Purchase requisition RFQ Purchase requisition RFQ ? Quotation Quotation Quotation A ? Purch.order B Purchase order 31. Contract 1.

. .. Additional data for item 2 ....Purchasing document Structure of a purchasing document Document header ocument General data statistics Messages Conditions Item 1 General data Conditions Texts Schedule line Additional data for item 1 Purchase order history . Item 2 ..

category category .Item category Purchasing document A B C Item Account assign.

type .assign.Account assignment type Purchasing document A B C Item type Acct.

Procurement for stock Purchasing document(s) Item: no account assignment category Warehouse Goods receipt Goods issue Material Production Vendor .

Procurement for consumption Purchasing document(s) Item: with account assignment category Goods receipt Production Vendor Material .

Procurement Consumption-driven MRP .

Forecasting Lot sizing Scheduling A Material Material master Purchasing Inventory management .Consumption-driven MRP Requirements planning Net requirements calc.

Materials planning and control procedures Requirements planning Consumption-based Deterministic MRP VM. VB VV Reorder point procedure Stock level Stochastic Consumption Time Time .

Reorder Point Procedure Stock Lot size Reorder level Safety stock Reorder point Delivery date Time Replenishment lead time .

Net Requirements Calculation in the Reorder Point Procedure Purchase order proposal to the amount of the lot size Purchase order Fixed planned orders Fixed purchase requisition Warehouse stock Shortage Reorder level Comparison .

Safety Stock and Reorder Level Stock  Daily x Replenishment lead time Reorder level Safety stock Replenishment lead time Service level MAD Time Replenishment lead time .

g. purchase orders Purchase orders proposals Planned orders Purchase requisitions Comparison Warehouse stock Safety stock . Shortage Lot size Forecast requirements Fixed inward movements e.Net Requirements Calculation in Forecast Based Plng.

Groff procedure .Lotsizing procedures Exact lot size Static procedure Fixed lot size Replenish to maximum stock level Lot sizing procedures Periodic procedure Optimum procedure Part period balancing ...

Static Lot-sizing Procedures Exact lot size Quantity Inward movements Outward movements Time Planned warehouse stock =  Fixed lot size Replenish to maximum stock level .

Periodic Lot-sizing Procedures Quantity Time Period length Period length Inward movements Outward movements .

Dynamic Planning Calculation Req. x Price x Storage costs % x Time in storage Storage costs = 100 x 365 Price : Lot fixed costs: Storage costs percentage : Requirement date 06.07 Optimum .07.1994 20.36 76.1994 13.07.1994 27.07.71 115. quantity 1000 1000 1000 1000 Lot size 1000 2000 3000 4000 $ 20 $ 100 10 % Fixed costs Storage costs 100 0 38.1994 Req.07.

78 1000 2000 3000 4000 Optimum .1994 Req.07 Total storage costs 0 38.07.36 76.07.07. x Price x Storage costs % x Time in storage Storage costs = 100 x 365 Price : Lot fixed costs: Storage costs percentage : Requirement date 06.71 115.36 115.1994 13.1994 20.07.07 198.Part Period Balancing Req.1994 27. quantity 1000 1000 1000 1000 Lot size Fixed costs 100 $ 20 $ 100 10 % Storage costs 0 38.

10 0.07.Least Unit Cost Procedure Req.07.1994 27.14 Unit costs 0.07 330.1994 13.07 0.36 76.1994 20.11 0.07 Total costs 100 138. quantity 1000 1000 1000 1000 Lot size 1000 2000 3000 4000 $ 20 $ 100 10 % Storage costs 0 38.07.07.1994 Req.71 115.36 215. x Price x Storage costs x Time in storage Storage costs = 100 x 365 Price : Lot fixed costs : Storage costs percentage : Requirement date 06.08 Fixed costs 100 Optimum .

order delivery date MRP delivery date t Backward scheduling 2 Replenishment lead time GR processing time 1 Start / release date Purch.Scheduling in the case of external procurement Forward scheduling 1 Replenishment lead time GR processing time 2 Today + 1 Purch.order delivery date MRP delivery date t .

Material requirements planning MRP Order Planned order Opening period of materials planning/ control Purchasing Purchase requisition . 1.The requirements planning process Planning mark-out Process relevant to MRP 31.

Purpose of the forecast A Material MRP type VM VV Forecast Forecast Reorder level Safety stock Forecast requirements .

Procurement Processing Purchase Requisitions .

Purchase requisition Department MRP Requisition Requisition Purchasing .

k. Allocate and process RFQ Purchase order ? Release order .Purchase requisition processing MRP Direct entry Purchase requisition Determine source of supply Release Vendor o.

Procurement Processing Vendor Inquiry / Quotations .

Procure from which source? ? Vendor 1 Vendor 2 Quotation 1 Quotation 2 Price comparison list Purchase order Rejection .Request for quotation/ quotation RFQ 1 RFQ 2 Requirements known.

Entering an RFQ 1 Item list Vendor 1 Inquiry 1 2 ? Vendor 2 Inquiry 2 ? .

Issuing output Purchasing document Output Printer EDI Fax Reprint Reminder Rejection Order acknowledgement check .

Unfortunately... we cannot place an order at this time . Qty Price Steel 2t 350/t Vendor C. B .. .1 Processing Quotations: Example Enter price and pricing conditions Vendor A Quotation for RFQ 1 Item 10 Gross price: 400/t Discount: $50 Vendor B Quotation for RFQ 2 Item 10 Gross price: 400/t Surcharge: 50% Vendor C Quotation for RFQ 3 Item 10 Gross price: 400/t Fixed costs: $40 2 Compare quotations using price comparison list Steel 2 t 350/t 480/t 520/t 450/t Price Quotation 1 Quotation 2 Quotation 3 Mean value quotation 3 Create info record or reject quotation Vendor A .RejectionThank you for your offer.Order Mat..

Procurement Processing Purchase Orders .

Processing Purchase Orders Purchase requisition RFQ Reference document Contract ? Vendor Purchase order Order history Pcs % Conditions One-time vendor $ Info record .

Contract Contract request Reference RFQ Reference contract Purchase requisition Contract Release order 1 Vendor 2 .

Scheduling Agreements Purchase requisition RFQ Reference scheduling agreement Purchase requisition Scheduling agreement Einstellungen Einstellungen Schedule lines 1 Vendor 2 .

PROCUREMENT OF EXTERNAL SERVICES .

.

Inventory Management/Valuation .

Inventory Management Goods Movements .

Inventory management Old system Vendor In-house production Goods receipt Transfer posting Warehouse 1 Warehouse 2 Goods issue Scrapping Consumption .

Documents for goods movements Warehouse A Material Goods movement Material document Accounting document .

Material Valuation Levels Material valuation levels 0001 Company code Plant Valuation area .

00 Storage location Stor. price 0001 1 H 100 5.price 6. loc.Split Valuation: Structure Plant Plant 0001 Material 1 Valuation Valuation area Material Valuation category Quantity Mvg.00 Valuation type France Quantity 60 S . 0002 Quantity 70 Batch Italy Quantity 10 France Quantity 20 Italy Quantity 30 France Quantity 40 . 0001 Quantity 30 Stor. av.price 4. loc.20 Valuation type Italy Quantity 40 V .

period and. possibly. storage location and special stock On a value basis G/L accounts Debits and credits per company code.Updating the stock situation Stock situation On a quantity basis Material master Special stocks Stock fields per plant. business area .

Entering material documents Material document item Account determination Consumption update Movement type Quantity update Indicator for printout Field selection .

/stock list Material movement list Inventory control ABC-Analyses Stock value Range of coverage Slow-moving items/ inventory turnover Standard analyses Warehouse stock list .Analyses in inventory management Analyses Stocks overviews Stock per material Plant stock availability Reqs.

Inventory Management
Processing Goods Receipts with Purchase Order Reference

Purchase Order Views in Inventory Management
Purchase order
Header $ Conditions Conditions Output 01/01/95 10/01/95 30/03/95

Statistics
General

Vendor Texts Items

Purchase order history Changes

Schedule lines

Account assignment

Texts

Determining the purchase order during GR
Goods receipt for purchase order
Manual

Purchase Manuell order

Matchcode

List of open purchase orders by - vendor - material - delivery plant

.... .Stock types for goods receipt Goods receipt blocked stock Unrestricted-use stock Warehouse Vendor Stock in quality inspection Blocked stock Account assignment object Cost center Order ..

Posting procedure for goods receipt (example) Stock account Stock value GR/IR clearing Price differences ( ) ( ) Update for goods receipt .

Inventory Management Processing Goods Receipt w/o Reference .

Order or Production Order Preplanning Goods receipt Initial entry of stock balance Without purchase order Without production order Goods receipt of by-products Delivery free of charge Returns from customer without purchase order without production order .GR w/o Reference to a Purch.

Inventory Management Processing Stock Transfer / Transfer Postings .

Transfer posting Transfer posting Stock transfer Miscellaneous transfer postings From plant to plant From storage location to storage location From material to material From QM to unrestricted use From consignm. stores to warehouse .

00 (a) (a) (b) (b) Standardprice 3.00 .00 Any moving average price Stock plant 01 Expense / revenue from stock transfer 100.Valuation in the Case of Stock Transfer Issuing plant 100 pcs Receiving plant Standardprice 2.00 200.00 Stock plant 02 (a) (b) 200.00 200.00 300.00 Moving average price 2.

Inventory Management Processing Goods Issues .

Goods issues From warehouse Goods issue From consignment stores Issue Consumption Cost center Asset Sales Order Sampling Scrap .

Warehouse mgmt: Transfer order Quality management: Inspection lot .Effects of goods issue Material document Accounting document Stock quantity Consumption statistics .... Goods issue Reservation Order Point of consumption: Cost center Order . Stock account Consumption account . G/L account....

Posting method for goods issue Stock account Stock value Consumption account Update on goods issue .

Special Stocks and Special Procurement Types • • • • • • • • Consignment Subcontracting Stock Transfer with Stock Transport Order Third party processing Returnable Transport Packaging Pipeline handling Sales order stock Project Stock .

• Stock of material provided to Vendor • Consignment stock at Customer • Returnable packaging stock at Customer Company’s Own Special Stock .

Company’s Own Special Stock Managed at plant level Stock types • Unrestricted use stock • Quality inspection stock .

Externally-Owned Special Stocks • • • • Vendor Consignment Returnable Transport Packaging Sales order stock Project Stock .

Externally-Owned Special Stocks Managed at Storage location level Stock Types • Unrestricted Use stock • Quality inspection Stock • Blocked stock .

Inventory Management Physical Inventory .

Physical Inventory Procedures • • • • Periodic inventory Continuous inventory Cycle counting Inventory sampling .

Physical Inventory • Can be carried out for Company’s own stock and Special Stock • Inventory for Company’s own stock and Special stock must be taken separately in different physical documents • Physical inventory can be taken for Unrestricted-use stock in the warehouse Quality inspection stock Blocked stock .

Physical inventory procedure Create physical 1 inventory document Set blocking indicator 3 Batch-Input 2 Batch-Input Print physical inventory document 4 Physical inventory document 5 List of differences Arrange recount Change count 6 5a 5b Post differences .

Invoice Verification / Valuation .

Types of invoice verification Purchase order Purchase order or or Vendor invoice Goods receipt ? Invoice verification .

Purchase order Invoice verification environment G/L accounts Assets ---Goods receipt Material master Invoice verification Invoice document Cost centers Purchase order Vendor master Material master Conditions .

51000123 Vendor GR/R 100100+ Material master Moving average price Value Purch. order history Goods receipts Down payments Invoices . No.Posting an invoice Invoice relating to purchase order Post A XX B XX GR/R account Vendor account Doc.

5 kg 26/11/95 .Variances Invoice WE 40 Goods receipt Quantity 50 pieces Invoice Price at $6 Invoice 10 pieces = 250 g Purchase order $5 Goods receipt 10 pcs = 200g Order price quantity Invoice Purchase order = 2 kg 10 pieces at $20/kg Purchase order Planned delivery date 04/12/95 Date 10 pieces Invoice = 2.

Tax Material value + input tax Company Material value +Tax on sales/ Purchases A A A Vendor Customer Tax payable Tax office .

Invoice receipt postings GR/R clearing Input VAT Vendor (control acct.) Stock account Stock value Price differences ( ) ( ) ( ) ( ) .

00 ( 3) Event Stock Total value Standard price Moving av.10 Purchase order price 2.20 2.00 400.00 2.00 20.00 (3) 220.Postings at Standard Price Stock account (2) 200. / revenue Price difference Vendor / general ledger (2) 40. order: 100 @ 2.20 100 200 200 200.40 / pc Invoice price 2.00 2.00 240.00 2.00 2.20 / pc .40 IR for purch.00(2) Exp.00 2. order: 100 @ 2. price (1) (2) (3) Initial situation GR for purch.00 GR / IR clearing account (3) 240.00 400.

00 ( 2 ) 240.00 ( 6 ) Event Stock Total value Moving av.40 IR for purch.00 2.20 2.00 240.00 ( 6 ) 220.00 Exp.00 ( 3 ) 550.Stock account (2) (4) 240.20 (5) (6) Goods issue: 250 @ 2.00 ( 3 ) 220.00 Postings at Moving Average Price GR / IR clearing account 240.20 GR for purch. price (1) (2) (3) (4) Initial situation GR for purch.00 2.20 IR for purch.00 660.20 2.10 2. / revenue Price difference 10.00 Vendor / general ledger 20. order: 100 @ 2.00 ( 5 ) 10.00 2. order: 100 @ 2.. order: 100 @ 2.00 .00 100.20 50 50 110.00 420.00 ( 6 ) (3) ( 6) 240. order: 100 @ 2.00 240.00 440.00 ( 4 ) Raw material consumption ( 5 ) 550.40 100 200 200 300 200.

INVOICING PLANS Facility to schedule Invoicing dates for planned procurement independent of goods and service receipts Periodic Invoicing Plan Partial Invoicing Plan .

Account Determination Procedures for Automatic Postings in MM .

Types of Account Determinations SD MM PP FI CO R/3AM Client/Server QA ABAP/4 WF PS PM HR IS MM SD Movement Type based Transactions Non-Movement Type based Transactions Cond. Technique .

Grouping Organizational Levels for Account Determination Case: valuation area = plant Valuation grouping code Plant Company code Chart of accounts 0001 0001 0002 0001 0002 0003 GKR 0002 0003 0004 0003 0005 0004 IKR .

Grouping of Material Type Valuation Class Material type Account category reference Valuation class FERT 0001 HALB HAWA . ROH1 ROH2 0003 0002 3000 3010 3020 3030 3040 3100 7900 0004 ROH3 . 3200 . . ...

Grouping of Materials for Account Determination Option 1: ROH Mat 1 Mat 2 Acct. 2 HIBE Mat 3 Mat 4 Acct. 1 Acct. 1 Option 3 ROH Mat 1 Mat 2 Acct. 2 HIBE Mat 3 Mat 4 FERT Mat 5 Mat 6 Acct. 3 . 1 Option 2 ROH Mat 1 Mat 2 Acct. 3 FERT Mat 5 Mat 6 Acct.

Procedure Part 1: Value String Processing Keys Inventory Management Material Invoice verification Transaction Value String (Generalized posting record) Invoice verification ? = BSX WRX Processing keys KBS 300100 191100 G/L account number 425000 .

Procedure Part 2: Processing Key Rules 1 Transaction Processing keys for debit/credit posting 2 Processing Key (Transaction) Chart of accounts Rules Parameters on which account allocation depends .

Procedure Part 3: Rules Account Allocation Processing Key (Selection of transaction) Selection of chart of accounts (Valuation grouping code) (Account grouping code) (Valuation class) Account number Rules specify account determination key .

Reference Plant Step 1 or 2 Value Posting String Company Code Step 3 Rules Processing Key (GBB) Account modification Valuation Class Val. Structure Main Customizing area G/L Account . Posting String Account Categ. Grouping Code Processing Key (AUF) Step 4 Chart of Account Legend Information derived from Transaction type Information derived from Material Master Information derived from the organiz.Account Determination Procedure: Overview Type of Transaction Movement type based Transaction Non-movement type based Transaction Material Master "Type of Material" Material Type Qty.

Automatic Posting: Maintenance of the Settings 1 Selection of the valuation grouping code 2 Selection of the posting transaction 3 Allocation of the G/L account number(s) per valuation class (and account grouping code) .

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