1Material management

SAP

MATERIAL MANAGEMENT

2Procurement via Sub-Contracting

Procurement via Purchase Outline Agreement

Procurement of Materials

Procurement of Services

Materials Management

Organization of an enterprise

0003

0001

00020001

00030001 0002

001

0002

0004

client

Plant

Co. code

Pur. orgn

Organizational Entities in Purchasing

Purchasing organization 1Purchasing organization 2

Purchasing group 1

Purchasing group 2

Purchasing

organization

Plant 2 Plant 3 Plant 5

Organizational Units

Client

A grouping or combination of legal, organizational, business

and/or administrative units with a common purpose.

Company code

This level represents an independent accounting unit within a

client. Each company code has its own balance sheet and its own

profit and loss statement.

Plant

This can be a plant in the true sense (a manufacturing plant), or

can represent a branch office / site / within a company code.

Purchasing organization

An organizational unit responsible for procuring materials and services for

one or more plants and for negotiating prices and terms of delivery with the

vendor

Purchasing group

The purchasing organization is further subdivided into purchasing groups

(buyer groups), which are responsible for day-to-day buying activities

A purchasing group can also act for several purchasing organizations.

Organizational Units

Procurement Cycle

Order

Order processing

Order follow-up

Goods receipt and

inventory management

MMPurchasing

6

5

4

Source

determination2

Vendor selection3

InvoiceOrder

?

Invoice verification7 Requirement determination1

MRP

Purchasing: Ordering

Directentry

Reference andcopy function

PURCHASE ORDER- Normal- Subcontracting- Consignment- Third-party- Stock transfer- Text

Statistics

Purchaseorder history

Generation frompurchase requisitionprocessing

Contract

Purch. orderPurch. info rec.

Req. for quot.

?

Accountassignment

- Single- Multiple

Stock material

Consumable material

Service

Material provided

Deadline item

Purchasing: Contract/Scheduling Agreement

Contractrelease order

Schedule update

manual from MRP

Sched.agreement

Supplement

Supplement

Monitoring: degree of fulfillmentContract

Quantity contract Value contract Consignment

contract Central contract

Purchasing: Centrally Agreed Contract

Contract release

order

Plant 3

PU FOAM

Plant 2

ELEC

Plant 1

E4

Metal Processing Ltd.

Prices andconditions

Plant 1

Plant 2

Plant 3

Steel Inc.

Vendor 1

Vendor 2

Vendor 3

Vendor 4

Vendor 1Vendor 2Vendor 3Vendor 4

Partner roles

Centrally agreed

contract

Steel Inc.

Material A

500,000t

Contract Types

When creating a contract, you can choose between the

following contract types:

Value

The contract is regarded as fulfilled when release orders

totaling a given value have been issued. Use this contract

type when the total value of all release orders should not

exceed a certain amount.

Quantity

The contract is regarded as fulfilled when release orders

totaling a given quantity have been issued. Use this contract

type when the total quantity to order over the duration of

the contract is known.

Working with Scheduling Agreements

Sched.aent requisition

ReferenceSched. gmt.

RFQ

Purchaserequisition

DeliverySchedule

Statistics

Sched. agmt.Vendor

One-timevendor

With material

Single/multipleaccount assgt.

Cost center Project Order Asset

Item/item category Standard Item Consignment Item Subcontracting Item Third-party Item

Scheduling Agreements

The scheduling agreement has similarities with a quantity

contract: it states the target quantity of a material to be

ordered from a vendor over a period of time, and the price.

For each material to be procured, you create a scheduling

agreement item. For each scheduling agreement item, you

subsequently set up a rolling delivery schedule by creating

a number of individual schedule lines.

Delivery Schedule

Schedulingagreement

Deliveryschedule

Item 1007.01. 10:00 10007.15. 09:00 2008.01. 09:00 50

Deliveryschedule

Item 1007.01. 10:00 10007.15. 09:00 12008.10. 09:00 170

Display showingcumulative quantities

15

The material to be produced by the vendor can be

ordered as a subcontract item in a purchase requisition,

purchase order or scheduling agreement. Each

subcontract item has one or more sub-items which

contain the individual components the vendor needs to

perform the subcontract work or value-added service.

The individual component items can either be

Entered or changed manually

Copied from an existing bill of material (this is known

a BOM explosion)

Sub - Contracting

Overview of Subcontracting

Purchasing Inventory management Invoice Verification

Subcontracting SC vendorS C Vendor

Purchasing

Purchase order

SC Item __

Comp__

Comp__

Storage

location

Storage

location

Provision of

components

GR for

finished

material

Invoice

Verification

?

Invoice

Labor costs $ __

Component

Consumption

Entry Tools for Goods Issue to Subcontract Order

Storage.Ln

Purchase Order

Subcontracting

Comp ___

Comp ___

SC Inventory Monitoring

Mat x Post

Mat y Goods issue

SC vendor LOH1

Goods Receipt

SC Vendor

Storage Location

Purchase Order

Comp. 1

Purch. Order

history

Goods receipt

for the end

product

1) Goods receipt for the end

product

2) Component consumption

Settlement

SC Vendor

Invoice

via

labour costs to item

category

Invoice

verification

?

Value correction

Order history

Actual

consumption of

your components

for item category

Subsequent

adjustment

Valuation

correction

Stock change

20

Creation ofservice

specifications

Determinationof requirements

Serviceacceptance

Invoiceverification

Serviceentry

POmonitoring

Orderingprocess

Vendorselection

Quotationentry

Bid invitation

- User department- PM Plant maintenance- PS Project system

PO Invoice

?=

RFQ

External Service Management

Service Master

The service master database (comprising all the individual service master records) is

used to store the descriptions of all services that have to be procured on an ongoing

basis.

In addition to the description of the service, a service master record contains

information necessary for its procurement (for example, texts, units of measure,

prices).

The service master serves as a source of default data provided by the system during

the subsequent creation of service specifications.

External Service Management

22

Electrical works

Install conduit

Final installation

Sanitary/ plumbing works

ForemanInstall sockets

30 hrs. $100.-56 no. $18.-

01

01

02

02

Specifications

Electrical works

Install conduitInstall outlets 20 no. $12.-

Sanitary/ plumbing works

Foreman 10 hrs. $80.-Clean floor 2 hrs. $35.-

01

02

01

06.30.95

08.15.95

03.31.95

Service entrysheet

Install empty conduitInstall outlets

6 m $45.-70 no. $80.-

WashbasinsSkilled worker

Unplanned services

up to a maximum of$60,000.-?Value limit

120 m $3.-80 no. $12.-

External Service Management Service Entry Sheet

Procurement of Services

Determinationof material

requirements

Createservice

specifications

Bid invitation

Entry ofquotation

Vendorselection

Ordering

Purchaseorder

monitoring

Entry ofservices

performed

Acceptanceof servicesperformed

Invoiceverification

OK

?

Inquiry

Order

PMPS

Basic Concept Goods Movement

Basic Functions Managing Stocks on quantity and value basis Goods Issue Transfer Posting Physical Inventory

Integration with Accounts Accounting Document Material Document

Inventory Management

Goods Receipt - Stock types

Account assignment object

Unrestricted-use stock

Stock in quality inspection

Blocked stock

Stock in transit

Storage.Ln

Cost center

Order

......

Vendor

Posting a Goods Receipt

Purch. order history

Goods receipts

Down payments

Material master

Moving average

price

Value

GRrelating to purchaseorder Post

A

XX

B

XX

GR/R account

Inventory account

Doc. No. 50000001

Inventory A/C 100+

GR/R 100-

Stock Transfer

Transfer Posting

Stocks can be transferred from one plant to other plant within a company code.

Stocks can be transferred from one storage location to another.

Physical Inventory

Physical Inventory Procedures Periodic Inventory

All stocks are to be physically counted on the balance sheet key date.

Continuos Inventory The stocks are counted continuously during the

entire fiscal year.

Inventory Management: Overview

Goodsreceipt/issue slip

Goods receipt

Inventory

Consumption statistics

Dec 95

Stock

Storage location stock

Special stock

Analysis/ inventory controlling

Movementin-/outwardStock transferTransfer post....

Quantity and values

Types of Invoice Verification

Purchase order-based: All purchase order items may be settled regardless of partial deliveries.

Goods receipt-based: Goods receipt must already have been entered for the quantity invoiced. Each receipt is entered and settled individually. Invoices for quantities greater than receipt quantities cannot be posted. This type of invoice verification must be specified in the purchase order.

Types of Invoice Verification

?

Invoice verification

Invoice items can be posted with reference to a purchase order, a goods receipt, or a vendors invoice

Relevant account postings are made automatically

Posted items appear as open items to be paid on the vendor account

or orPurchase

order

Purchase

order

Goods receipt

Vendor

invoice

Posting an invoice

Purch. order history

Goods receipts

Down payments

Invoices

Material master

Moving average

price

Value

Invoicerelating to purchaseorder Post

A

XX

B

XX

GR/R account

Vendor account

Doc. No. 51000123

Vendor 100-

GR/R 100+

33

ITS TIME FOR DISCUSSION..

QUESTIONS???