Procurement Processes EGN 5620 Enterprise Systems Configuration Spring, 2015 Procurement Processes...

Procurement Procurement Processes Processes

EGN 5620 Enterprise Systems Configuration EGN 5620 Enterprise Systems Configuration Spring, 2015Spring, 2015

Procurement ProcessesProcurement Processes

SAP Implementation SAP Implementation

January 2008January 2008

© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All The Rushmore Group, LLC 2008. All rights reserved. rights reserved. 33

Business Process IntegrationBusiness Process Integration

MM

Rules

MM

Master D

ata

MM

MM



Transaction DataTransaction DataTransaction data

• application data• dynamic, and • unique,

Transaction data use organization data, master data, and rules.

Transaction data describing business

activities includes ◦Internal exchange, and ◦External exchanges



Purchasing in SAP ERPPurchasing in SAP ERPPurchasing process resides in

◦Materials Management (MM) module, and◦Finance (FI) module

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

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)

January 2008January 2008© SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. reserved. 66

Procurement Process (Procure-to-Pay)

Purchase Requisition

Paymentto Vendor

Notify Vendor

VendorShipment

InvoiceReceipt

GoodsReceipt

Purchase Order

3-WayMatch

Purchase Order StructurePurchase Order Structure

PurchaseOrder

45......01

1. Header

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

2. Item Overview

Materials Price/UofMQuantities CurrencyDelivery Date Plant

3. Line Item

PO History TolerancesLine Price StorageDelivery Schedule



Purchase Order Structure:Purchase Order Structure:1.1. HeaderHeader

information specific to the entire purchase order, such as◦Vendor◦Purchase organization data◦Condition (total purchase price)◦Partner◦Payment process◦Status



Purchase Order Structure:Purchase Order Structure:2. 2. Line ItemsLine 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



Purchase Order Structure:Purchase Order Structure:3.3. Item DetailsItem Details

◦Material data for the item◦Quantities/weights◦Delivery schedule◦Invoice◦Conditions (Purchasing price for the item)◦Delivery address◦Confirmation◦Condition control◦Subcontracting



Purchase Order: Output FormatPurchase Order: Output Format

Printed and mailedE-mailElectronic Data Interchange (EDI)Faxed (hardcopy or electronic)Extensible Markup Language (XML)



Search Purchase OrdersSearch Purchase OrdersYou can search for the purchase order

number with◦Material number, ◦Vendor number, etc.

MM: Goods ReceiptMM: Goods Receipt

PurchaseOrder

45......01

Vendor

Notify Vendor

ShipmentReceipt



Goods Receipt – Movement TypesGoods 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

Material MovementsMaterial MovementsWhen a goods movement takes place it is

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

represent a movement of goods101 – goods receipt into warehouse102 - reversal of goods receipt for purchase

order into warehouse/stores103 – goods receipt into GR blocked stock122 – return delivery to vendor501 - receipt w/o purchase order into

unrestricted-use stock

Goods ReceiptGoods ReceiptGoods 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 retrieve data from the PO for us to verify: 1) material, quantity, and so on2) Update inventory G/L account automatically3) Update purchase order history with the receipt4) Update physical inventory



Goods Receipt – DestinationsGoods Receipt – Destinations

Goods receipt into (destined for) the warehouse◦ increases total valuated stock by the delivered quantity. ◦ updates the stock value at the same time.

Goods receipt into consumption◦ only updates the consumption statistics in the material master

record◦ 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◦ maintains the same stock level. ◦ only records it in good receipt block stock of the purchase order

history.



Goods Receipt – EffectsGoods Receipt – Effects1) Purchase Order (PO) history and Purchase Order

(PO) updated2) Material Master - stock and value updated3) Material and financial documents created and/or

updated4) Stock and consumption accounts updated5) Inspection notification in the Quality Management

(QM) module - if active6) Notification of goods receipt issued (optional)7) Transfer request to the Warehouse Management

module (if active)



Goods Receipt – Account PostingsGoods 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

Goods Receipt – Account postingGoods Receipt – Account posting

Purchase requisition

Purchase orderMaterials Management (MM) and Financial Accounting (FI)

via automatic account assignment

Goods receipt

No impact onFinancial Accounting (FI)



Invoice Receipt ProcessInvoice 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 postingPost the invoice in SAP



3-Way Match for Payment3-Way Match for Payment

PurchaseOrder

GoodsReceipt

InvoiceReceipt

Debit Credit

PaymentProgram

Verification

Invoice Processing - 3-Way MatchInvoice Processing - 3-Way MatchIncoming 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 will 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 -

Goods receipt - Actual quantity -

Invoice receipt- Actual price -



Invoice Verification - 3-way matchInvoice 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 quantityUpdates the purchase order and its

historyUpdates accounting information

Financial effects of Invoice PostingFinancial 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 invoice, SAP:1)Updates the Purchase Order2)Updates the Material Master3)Creates an Accounting Document4)Initiates the payment process within Financial Accounting

Invoice Receipt vendor and Invoice Receipt vendor and Reconciliation AccountReconciliation Account

Amount owed isassigned and transferred tovendor account payable and

automatically move to Account payable (A/P)

Invoice receipt

Payment to VendorPayment 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 PaymentVendor Payment

Amount owed is paid tovendor and account payable

is reducedBank

Global Bike, Inc. Global Bike, Inc.

Procurement Processes

33

320

US##

DL##/MI##/SD##

US## Nxx

US##

Purchase RequisitionPurchase Requisition

3131

Purchase OrderPurchase Order

3232

Check PO History (ME23N)Check PO History (ME23N)

3333

Check InventoryCheck Inventory



Lab 5Lab 5 Exercises: Exercises: (Due date 3/2/2015)(Due date 3/2/2015)

1. Create raw materials2. Create purchase requisitions for trading goods3. Create Purchase orders for trading goods from PR4. Create goods receipt for trading goods5. Post invoice for purchasing trading goods6. Pay vendors for trading goods7. Create purchase order for raw materials8. Create goods receipt for raw materials9. Post invoice for purchasing raw materials10. Pay vendor for raw materials11. Review purchase order history12. Review stock status after purchase orders processed

Procurement Processes EGN 5620 Enterprise Systems Configuration Spring, 2015 Procurement Processes...

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