Procurement

Processes

EGN 5620 Enterprise Systems Configuration

Fall, 2012
 Procurement Processes

SAP Implementation

EGN 5620 Enterprise Systems Configuration

Fall, 2012
Business Process Integration

FI MM SD

Rules
FI

MM

SD © SAP AG - University Alliances and

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Business Process Integration

Purchase Process

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Rules (review)

 Rules define the parameters for Master

Data and Transactions
 Rules determine functionality for Master
Data and Transactions
 Rules are relatively fixed
 Rules change, when corporate policy
changes

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Rules (review)
Material Management
• Fiscal Periods
• Account Groups
• Material Types
• Plant Parameters
• Purc./Rec./Inv.
Tolerances
• Automatic Account
Assignment
• Reservations
• Material Group
• Loading Group
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Transaction Data (review)
 Transaction data are application data; each
transaction is dynamic and unique, unlike
master data and organization data which
do not change very often.
 Transaction data use (is comprised of)
organization data, master data, and rules
 Transaction data includes internal and
external exchanges that describe business
activities

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Purchasing in SAP R/3 (review)
 The purchasing process resides in the Materials
Management (MM) module of SAP R/3 as well as
the Finance (FI) module

 Master data for the purchasing process exists in

the (MM) and (FI) modules

 The purchasing process may interface with the

modules below:
◦ Production Planning (to plan for production),
◦ Quality Management (to check quality at receipt), and
◦ Warehouse Management (to put away)

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Procurement Process (Procure-to-Pay)
Purchase
Purchase
Requisition
Order

Notify
3-Way Vendor
Match
Payment
to Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt
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Create & Save Purchase Order
Purchase Order in SAP
Three sections in a
purchase order:
◦ Header
◦ Item overview
◦ Line item
Purchase Order Structure
Header

Vendor Company
Purch. Org. Date
Purch. Org. group PO Price

Item Overview
Purchase
Order Materials Price/UofM
Quantities Currency
45......01 Delivery Date Plant

Line Item

PO History Tolerances
Line Price Storage
Delivery Schedule
Purchase Order Structure:
Header
 Header - information specific to the entire
purchase order
◦ Vendor
◦ Purchase organization data
◦ Condition (total purchase price)
◦ Partner
◦ Payment process
◦ Status

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Purchase Order Structure:
Line Items
 Line item – purchasing information
required for the item
◦ Item category
◦ Material id and description
◦ Materials or services quantity
◦ Delivery date
◦ Net price
◦ Currency
◦ Plant
◦ Storage location
◦ Measurement unit
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Purchase Order Structure:
Item Details
◦ Material data for the item
◦ Quantities/weights
◦ Delivery schedule
◦ Invoice
◦ Conditions (Purchasing price for the item)
◦ Delivery address
◦ Confirmation
◦ Condition control
◦ Subcontracting
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Purchase Order: Output Format
 Printed and mailed
 E-mail
 Electronic Data Interchange (EDI)
 Faxed (hardcopy or electronic)
 eXtensible Markup Language (XML)

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Search Purchase Orders
 You can search for the purchase order
number with
◦ Material number,
◦ Vendor number, etc.

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MM: Goods Receipt
Notify Vendor
Purchase
Order
45......01

Vendor

Receipt Shipment
Goods Receipt – Movement Types
 Movement types - stock transactions
◦ Goods receipt
◦ Goods issue
◦ Stock transfer
 Movement type determines which
◦ Quantity fields are updated
◦ Stock types are updated
◦ General Ledger (G/L) stock or consumption
accounts are updated
◦ Fields are displayed during document entry

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Material Movements
When a goods movement takes place it is
represented by a Movement Type
◦ Movement types are three-digit keys used to
represent a movement of goods
101 – goods receipt into warehouse
102 - reversal of goods receipt for purchase
order into warehouse/stores
103 – goods receipt into GR blocked stock
122 – return delivery to vendor
501 - receipt w/o purchase order into
unrestricted-use stock
Goods Receipt
 Goods receipt is a goods movement
activity in which we accept goods into our
system.
 If materials are delivered against a
purchase order we will reference that
order and SAP can
◦ retrieve data from the PO for us to verify:
material, quantity, and so on
◦ Update inventory G/L account automatically
◦ Update purchase order history with the receipt
◦ Update physical inventory
Goods Receipt – Destinations
 Goods receipt into (destined for) the warehouse
◦ SAP increases total valuated stock by the delivered quantity.
◦ SAP updates the stock value at the same time.
 Goods receipt into consumption
◦ SAP only updates the consumption statistics in the material
master record
◦ SAP does not update the consumption statistics if the goods
movement posting uses the special stock types: sales order
stock type and project stock.
 Goods receipt posted into blocked stock
◦ SAP maintains the same stock level.
◦ SAP only records it in good receipt block stock of the purchase
order history.
 Note:
◦ If goods receipt is being posted into a storage location where
data does not yet exist for the material, SAP© automatically
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creates a storage location data in the material master
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Goods Receipt – Effects

 Purchase Order (PO) history and Purchase

Order (PO) updated
 Material Master - stock and value updated
 Notification of goods receipt issued
(optional)
 Transfer request to the Warehouse
Management module (if active)

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Goods Receipt – Effects
(continued)
 Material and financial documents created
and/or updated
 Stock and consumption accounts updated
 Inspection notification in the Quality
Management (QM) module - if active

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Goods Receipt – Account Postings

 Inventory account is debited at standard

price
 Goods Receipt/Inventory Receipt (GR/IR)
clearing account is credited at purchase
order price
 Price difference account is debited
(credited) with difference between
standard price and purchase order price

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Goods Receipt – Account posting

Purchase requisition No impact on

Financial Accounting (FI)
Purchase order
Materials Management (MM)
and Financial Accounting (FI)
Goods receipt via automatic account
assignment
Invoice Receipt Process
Tasks:
 Engage in 3-way match to validate the invoice.
 Enter PO number to retrieve the PO and view
(verify)
◦ Open dollar amount.
◦ Quantity,
◦ Price,
◦ receiving date,
◦ Vendor name
 Enter the invoice number and the dollar amount
to be paid
 Simulate invoice posting
 Post the invoice in SAP
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3-Way Match for Payment

Purchase
Order
Payment
Program
Invoice Debit Credit

Receipt

Verification

Goods
Receipt
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 Invoice Processing - 3-Way Match
Incoming Invoices are reference against a Purchase Order to
verify their content, prices, and arithmetic.
If discrepancies arise between the purchase order or goods
receipt and the invoice the system with generate a warning
or an error
◦ Depending on system configuration the difference could cause the
system to Block the Invoice

Purchase order
- Target quantity -
- Target price -

Invoice receipt Goods receipt

- Actual price - - Actual quantity -
Invoice Verification - 3-way match

 Matches the vendor’s invoice to the

purchase order and the goods receipt (3rd
part of 3-way match)
 Matches price and quantity
 Updates the purchase order and its
history
 Updates accounting information

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Financial effects of Invoice Posting
When an invoice is posted, SAP shifts the
liability
◦ From the Goods Receipt/Invoice Receipt
account (for the purchase order)
◦ To the vendor account
Upon posting, SAP:
◦ Updates the Purchase Order
◦ Updates the Material Master
◦ Creates an Accounting Document
◦ Initiates the payment process within
Financial Accounting
Invoice Receipt Reconciliation
Account

Amount owed is
Invoice receipt assigned and transferred to
vendor account payable
Invoice Payment

 Selects invoices for payment based on the

payment terms in the vendor master or
purchase order
 Generates payment for released invoices
 Updates accounting information

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Accounts Payable Settlement
Process
 Determines:
◦ Which open items to be paid
◦ When they will be paid
◦ Which bank to make payment
◦ Payment medium
◦ Who will get paid
 Payment process creates a financial
accounting document to record the
transaction

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Payment to Vendor
Can be done automatically or manually
◦ Post Outgoing Payment vs. Payment Program
Elements of the Payment Transaction:
◦ Payment Method
◦ Bank from which they get paid
◦ Items to be Paid
◦ Calculate Payment Amount
◦ Print Payment Medium
Process will create a financial accounting
document to record the transaction
Vendor Payment

Amount owed is paid to

Bank vendor and account payable
is reduced
 Procurement Processes

PEN, Inc.

EGN 5620 Enterprise Systems Configuration

Fall, 2012
 600

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Check PO History (ME23)

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Check PO History (continued)

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Check Inventory

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 Exercises: (Due date 10/15/2012)

100. Create a Purchase order for Slick Pens

101. Create a purchase order for premier pens
102. Create a purchase order for Promotions Ltd.
103. Create receipts for the purchase orders
104. Create an invoice receipts from vendors
105. Post payments to vendors
106. Display vendor line items
107. Create purchase outline agreement (contract) for Stock item