P2P Overview

Supply Chain Management Modules

• Purchasing
• Inventory
• Order Management
 Purchasing
• P2P and O2C cycles are implemented at
operating unit.
• Eg. Tata business group (business group) and
TCS, TELCO & TISCO are operating units.
 P2P Cycle (Procure 2 Pay)
• Prerequisites for P2P are defined suppliers (min 2), defined item (2 types
buy items and make items).
• Create the Requisition. (Requisition is a requirement document created
by the purchasing dept of org.). The purchasing dept gathers requirement
of items from different departments. Two types of Requisitions (1
Purchase REQ and 2 Internal REQ). Purchase REQ (If the company knows
what type of item is required, quantity of item and when they require it
(need by date). Internal REQ is when they don’t know the item details. In
P2P we use Purchase REQ because we already know the item details.
• Create RFQ (A request for quotation is a business process in which a
company or public entity requests a quote from a supplier for the
purchase of specific products or services). RFQ is another document. RFQ
is sent to the suppliers through fax or email.
• We get the quotations from the supplier through RFQ document.
• Select the best quotation using quote analysis. (Various options
available in quote analysis.)
• Raise PO against the quotation and send it to the selected
supplier. (A purchase order is a commercial document and first
official offer issued by a buyer to a seller indicating types,
quantities, and agreed prices for products or services. It is used to
control the purchasing of products and services from external
suppliers.)
• Supplier supplies the goods against the PO.
• Receive the order and create the receipt.
• Make the payment.
• Accounting, transactions stored in respective modules.
• Check the availability of goods in Inventory.
 Types of Purchase Order
• Standard PO (used where all of the key details are known at the time the
order is made: the specific item(s) to be purchased, the quantity, the price,
the delivery schedule)
• Planned Purchase Order (For this purchase order, most details are known:
items, quantity, price, and payment terms, but the exact delivery schedules
are not yet known. By using this purchase order, you are committing to price
and quantity etc, but you only make a tentative delivery schedule).
• Blanket Purchase Order (Exact delivery date, price and quantity are not
known. You will still specify which item you want on certain delivery terms,
but nothing further until you make a release against the BPO)
• Contract Purchase Order (For this the specific item needed is also not
known. In this case, you may agree on terms and conditions with your
supplier, but nothing further until the items and quantities that you want are
known). There are no item details at all.
 PO Routing Methods
• How we will receive the items from the supplier.
• They are of three types (1 Standard Routing, 2 Direct Routing and 3
Inspection Routing)
• Standard Routing (Supplier-->Inventory-->Sub Inventory--
>Customer Location)
• Direct Routing (Supplier-->Sub Inventory within the Inventory Org--
>Customer Location.
• Inspection Routing (Supplier-->Inventory (Quality Control people
will check the quality of the item)--> Sub Inventory-->Customer
Location.
• Defective goods at quality control are returned to the supplier.
How? We create return transaction.