EGN 5620 Enterprise Sys Procurement Process Spring 2012

7/22/2019 EGN 5620 Enterprise Sys Procurement Process Spring 2012

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Procurement

Processes

EGN 5620 Enterprise Systems ConfigurationSpring, 2012


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Procurement Process

Concepts & Theories


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January 2008

SAP AG - University Alliances andThe Rushmore Group, LLC 2008. All

rights reserved. 3

Procurement Process

1. Requirements DeterminationRequisitionrequest

2. Request for Quotation (RFQ)

3. Vendor Selection

4. Order Processing - Purchase Order5. Order Tracking

6. Goods Receipt and Inventory Management

7. Invoice Receipt and Verification8. Payment


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January 2008


rights reserved. 4

Purchase Requisition (Request)

Is an internal document Requests a certain quantity of certain

material (or service) on a certain date

Is generated: Manually

MRP (automatically), or

Sales orders, etc.

With an optional request approval (orrelease) procedure


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rights reserved. 5

Purchase Requisition Sources

Non-inventory items: manually specifiedby the user department for: Office supplies, Project-specific materials, and Prototype materials

Inventory items: automatically created bya MRP/MPS planning mechanism for: Plant Maintenance Production Orders

Sales Orders


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SAP AG - University Alliances andThe Rushmore Group, LLC 2008. Allrights reserved. 6

Purchase Requisition Data

Default data for line items (from the materialmaster, vendor info record, & user preferences)

Delivery dates, Plants, storage location Purchasing groups, etc.

Individual line item data Material, Quantity, Delivery date

Account assignment (if required)

Cost center, General Ledger accounts, Project number, etc.

Check data


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January 2008


Quotation Process

1. Request for Quotation (RFQ)2. Maintaining a Quotation

3. Comparison of Prices

4. Creating a Contract5. Creating a Release Order


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Request for Quotation (RFQ)

Is an invitation to a vendor to indicatetheir terms and conditions (in particular,their price) for the supply of a material (or

service) by submitting a quotation Identifies the required material, quantity,

and delivery dates


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Request for Quotation

An RFQ is an invitation to a vendor by a PurchasingOrganization to submit a bid for the supply of materials orservices

The accepted quotations will generate PurchasingInformation Records

Perform Quotation Price Comparisons Finally Select a Quotation

PurReq.

generate RFQ

Vendor 1

Vendor 2

Vendor 3

Quote

Quote

Quote

P.O.4512

RejectLetter

Eval.


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January 2008


Maintaining a Quotation

1. Enter each vendor's quotation in theassociated Request for Quotation (RFQ)

2. Compare prices using the price

comparison list3. Store the best quote in an info record

4. Optionally, send rejection letters to thelosing bidders


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Vendor Evaluation Evaluate vendors (for sourcing) with respect to:

Price Price Level Price History

Quality Goods Receipt Quality Audit

Complaints/Rejection levelDelivery performance

On-time delivery Quantity reliability Compliance with shipping instructions

Confirmation Date A scoring range (1 -100) may be used with weight factors to

score each identified/qualified vendor.


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Comparison of Prices

Compares the prices from all quotationsfrom the competitive bidding processusing a price comparison list

Ranks the quotations in the comparisonlist by item from the lowest to highestprice


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Creating a Release Order

Release order is a purchase order thatreferences a contract; it specifies: Number of the contract

Quantity to be released

Delivery date

When a release order is created, releaseorder documentation is automaticallyupdated against the contract (including

open quantity, quantity released to date,total value)


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Creating a Release Order (2)

The vendor data, price data, and thedelivery terms and conditions are copieddirectly to the release order

Release orders can be created from a

proposed purchase requisition generatedoff a MRP run (net requirements) Automatically

Manually


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Purchase Orders

Purchase Orders are: a formal request to a vendor to provide materials or services An internal planning and tracking tool

Purchase Orders specify: Vendor Material and/or service Quantity and price

Delivery dates Terms of payment

A purchase order can be for variety of purposes: Standard Stock or Consumption

Services

Subcontracting Consignment


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Procurement Processes

SAP Implementation


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Business Process Integration

Rules

FI

MM

SD

FI SDMM


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Business Process Integration

Purchase Process


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Rules (review)

Rules define the parameters for MasterData and Transactions

Rules determine functionality for Master

Data and Transactions Rules are relatively fixed

Rules change, when corporate policychanges


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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; eachtransaction is dynamic and unique, unlikemaster data and organization data whichdo not change very often.

Transaction data use (is comprised of)organization data, master data, and rules

Transaction data includes internal andexternal exchanges that describe businessactivities


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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 asthe Finance (FI) module

Master data for the purchasing process exists inthe (MM) and (FI) modules

The purchasing process may interface with themodules below: Production Planning (to plan for production),

Quality Management (to check quality at receipt), and

Warehouse Management (to put away)


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January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rightsreserved. 23

Procurement Process (Procure-to-Pay)

PurchaseRequisition

Paymentto Vendor

NotifyVendor

Vendor

ShipmentInvoiceReceipt

GoodsReceipt

PurchaseOrder

3-WayMatch


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Create & Save Purchase Order


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Purchase Order in SAP

Three sections in apurchase order: Header

Item overview

Line item


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Purchase Order Structure

PurchaseOrder

45......01

Header

Vendor CompanyPurch. Org. DatePurch. Org. group PO Price

Item Overview

Materials Price/UofMQuantities CurrencyDelivery Date Plant

Line Item

PO History TolerancesLine Price StorageDelivery Schedule


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Purchase Order Structure:Header

Header - information specific to the entirepurchase 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

Material or service 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 Quantity/weight

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 ordernumber with Material number,

Vendor number, etc.


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MM: Goods Receipt

PurchaseOrder

45......01

Vendor

Notify Vendor

ShipmentReceipt


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Goods Receipt Movement Types

Movement types - stock transactions Goods receipt (from a vendor or production) Goods issue (to customer or production/use)

Stock transfer (from one SL to another)

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 isrepresented by a Movement Type Movement types are three-digit keys used to

represent a movement of goods101 goods receipt into warehouse

102 - reversal of goods receipt for purchaseorder into warehouse/stores

103 goods receipt into GR blocked stock122 return delivery to vendor

501 - receipt w/o purchase order intounrestricted-use stock


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Goods Receipt

Goods receipt is a goods movementactivity in which we accept goods into oursystem.

If materials are delivered against a

purchase order we will reference thatorder 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


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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 goodsmovement posting uses the special stock types: sales orderstock 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 purchaseorder history.

Note: If goods receipt is being posted into a storage location where

data does not yet exist for the material, SAP automaticallycreates a storage location data in the material master record.


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Goods Receipt Effects

Purchase Order (PO) history and PurchaseOrder (PO) updated

Material Master - stock and value updated

Notification of goods receipt issued(optional)

Transfer request to the WarehouseManagement module (if active)


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Goods Receipt Effects(continued)

Material and financial documents createdand/or updated

Stock and consumption accounts updated

Inspection notification in the QualityManagement (QM) module - if active


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Goods Receipt Account Postings

Inventory account is debited at standardprice

Goods Receipt/Inventory Receipt (GR/IR)

clearing account is credited at purchaseorder 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

Purchase orderMaterials Management (MM)

and Financial Accounting (FI)via automatic account

assignmentGoods receipt

No impact onFinancial Accounting (FI)

Dr Cr

Inventory (account)

$100

Dr Cr

GR / IR

$100


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Invoice Receipt ProcessTasks: 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

PurchaseOrder

GoodsReceipt

InvoiceReceipt

Debit Credit

PaymentProgram

Verification


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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 goodsreceipt and the invoice the system with generate a warningor an error Depending on system configuration the difference could cause the

system to Block the Invoice

Purchase order- Target quantity -

- Target price -

Goods receipt- Actual quantity -

Invoice receipt- Actual price -


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Invoice Verification - 3-way match

Matches the vendors invoice to the

purchase order and the goods receipt (3rdpart 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 theliability

From the Goods Receipt/Invoice Receiptaccount (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 withinFinancial Accounting


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Invoice Receipt ReconciliationAccount

Amount owed isassigned and transferred to

vendor account payableInvoice receipt

Dr Cr

Vendor

$100

Dr Cr

GR / IR

$100

Dr Cr

A/P

$100automaticposting


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Accounts PayableReconciliation Account

January 2008


Accounts Payable (AP)Reconciliation

950

250

Vendor 100435

200

Vendor 100234

100

Vendor 100621

400

Vendor 100846


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Invoice Payment

Selects invoices for payment based on thepayment terms in the vendor master orpurchase order

Generates payment for released invoices Updates accounting information


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Accounts Payable SettlementProcess

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 thetransaction


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Payment to VendorCan be done automatically or manually

Post Outgoing Payment vs. Payment ProgramElements 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 accountingdocument to record the transaction


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Vendor Payment

Amount owed is paid tovendor and account payable

is reducedBank

Dr Cr

A/P

$100

Dr Cr

Banks

$100

Vendors

Dr Cr

$100

automaticposting


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(FI MM) Integration Points

InvoiceReceipt

PaymentProgram

GoodsReceipt

Vendor

Dr Cr

GR / IR

$100

BankDr Cr

Inventory

$100 $100 $100

Dr CrDr Cr$100$100

AP

Dr Cr

$100$100

automaticposting


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PEN, Inc.

Procurement Processes


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3

600

Cxxx

xxx

Pxxx

xxx


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Check PO History (ME23)

January 2008



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Check PO History (continued)

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Check Inventory

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Exercises:

100. Create a Purchase order for Slick Pens101. 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

EGN 5620 Enterprise Sys Procurement Process Spring 2012

Documents

Transcript of EGN 5620 Enterprise Sys Procurement Process Spring 2012