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SAP business process

Procure to pay
Deloitte AERS
Agenda

Organizational structure

Master data

Sub-process involved

Configurations

Interaction with other modules

Key transactions

1 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Organizational structure
Organizational structure

Client 400

Company Company
code 0001 code 0002

Plant 1000 Plant 1100 Plant 2000

SLoc SLoc SLoc SLoc SLoc


0001 0002 0001 0002 0003

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Organizational structure (cont.)

Organizational levels in the procurement process

Client

Company code

Plant

Storage location

Purchasing organization/purchasing group

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Organizational structure (cont.)

The client is a unit within an SAP system that is self-contained both in legal and
organizational terms and in terms of data, with separate master records and an
independent set of tables.
Client From a business viewpoint, the client represents a corporate group and the highest
hierarchical level in the SAP system.
Specifications or data that we make and enter at this level apply to all company
codes and all other organizational units.
The company code is the smallest organizational unit for which one can have an
independent accounting department within external accounting.
Company A company code represents an independent unit producing its own balance sheet,
code for example, a company within a corporate group (client).
A company code is defined in the system by means of a four-character alphanumeric
key that is unique in the client.

5 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Organizational structure (cont.)

The plant is an organizational unit within logistics that subdivides an enterprise from
the viewpoints of production, procurement, and materials planning.
A plant is a manufacturing facility or branch within a company defined in the system
by means of a four-character alphanumeric key.
A plant may represent a variety of entities within a firm, such as:
Plant
Production facility
Distribution center
Regional sales office
Corporate headquarters
Maintenance location
The storage location is an organizational unit that facilitates the differentiation of
stocks of materials within a plant.
Inventory management on a quantity basis is carried out in the plant at storage
Storage location level.
location
The physical inventory is also carried out at this level.
A storage location is defined by means of a four-character alphanumeric key that is
unique in the plant.

6 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Organizational structure (cont.)

The purchasing organization is an organizational unit within logistics that subdivides


the enterprise according to the purchasing requirements.
A purchasing organization procures materials or services, negotiates conditions of
Purchasing purchase with vendors, and assumes responsibility for these transactions.
organization/
Purchasing A purchasing group is a key for a buyer or a group of buyers who is/are responsible
group for certain purchasing activities.
Internally, the purchasing group is responsible for the procurement of a material or
class of materials. Externally, it is the principal channel for an enterprises dealings
with its vendors.

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Master data
Master data for procurement process

1 Material master

2 Vendor master

3 Purchasing info record

4 Source list

5 Service master record

9 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data

Material master Organizational levels


Data that is valid for the whole company:
For example, material no., material short text, material group, base and alternative units of measure
Data that is valid within one plant:
For example, purchasing data, MRP data, forecasting data, work scheduling data
Data that is valid for one storage location:
For example, storage bin description, picking area
Some material data is valid for all organizational levels, while some is valid for certain levels only, so
that the material data can be administered centrally, without unnecessary load on the database due to
redundant information.

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Master data (cont.)

Material types
Materials with the same properties are assigned to the same material type.
Examples of material types are raw materials, semi finished products, and finished products.

Number assignment

Raw Procurement type


materials

User departments
Operating
supplies Control
Field selection
Semi-finished
products Account determination

Finished
products .

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Master data (cont.)

Purchasing data

Info rec. Pur.order.


Purchasing data

Order unit Pc.


1 %
Tolerance
Conditions
Reminder levels $
Material Purchasing group
PO text

Automatic PO
Source list requirement
Quota arrangement
usage
Optimized purchasing
Plant

Valuation class
Materials with the same properties are assigned to the same material type.
Examples of material types are raw materials, semi finished products, and finished products.

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Master data (cont.)

Material valuation procedure

Material valuation

Price control
(in material master)

S V
Standard price Moving average price

Material valuation determines or records the stock value of a material. The stock value is calculated
using the formula: Stock value = stock quantity x material price.
If a material is assigned a standard price (S), the value of the material is always calculated at this price.
If goods movements or invoice receipts contain a price that differs from the standard price, the
differences are posted to a price difference account.
If a material is assigned a moving average price (MAP), the price is automatically adjusted in the
material master record when price variances occur. If goods receipts are posted using a price that
differs from the moving average price, the differences are posted to the stock account; as a result, the
moving average price and the value of the stock change.

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Master data (cont.)

Vendor master Organizational levels

General data

Purchasing and
accounting data
can be maintained
centrally or
independently of
Purchasing each other
organization data Accounting data

14 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Vendor master data


The vendor master record contains information on an enterprises vendors. This information is stored in
individual vendor master records. In addition to the vendors name and address, a vendor master record
contains data such as the following:
Currency used in transactions with the vendor
Terms of payment
Names of important contacts (e.g., salespersons)
Since, for accounting purposes, the vendor is also a creditor of the enterprise, the vendor master record
also contains accounting data such as:
The reconciliation account from the general ledger
The vendor master record is therefore maintained by both purchasing and accounting. This is also the
reason for the subdivision of the data in the vendor master record into different categories.

15 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Vendor master data (cont.)


General data
Address, communication, control This data is valid for the whole client. It includes the vendors
data, bank details address and bank details, for example.

Company code data


Account management This is maintained at company code level. It comprises data
Payment transactions such as the number of the reconciliation account and the
payment methods for automatic payment transactions.
Correspondence
Withholding tax

Purchasing organization data


Purchasing data This data is maintained for each purchasing organization. It
Partner roles includes the purchase order currency, Incoterms, and various
control data pertaining to the vendor.

16 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Purchasing info record


The purchasing info record helps to define vendor-specific information for a material
The purchasing info record provides the option of storing information about a vendor and a material as
the master data at purchasing organization and plant level.
When creating the purchasing documents, the data from the info record is copied into the document as
default values.

Info record 5300000816


Vendor 1234
Screw A21 Material A21
Purch. Org 3000
Conditions
Price/UoM 6 UNI/kg
Freight 2%

Vendor 1234 Discount 4%


Last purchase order 4500006398

17 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Purchasing info record


A purchasing info record can be valid at both purchasing organization level and plant level.
It also includes general data that is valid cross-client for every purchasing organization or every plant.

General data
Vendor data (reminder data, vendors material no.)
Origin data
Order unit (conversion)
Internal info record memo
Administrative data

Purchasing organization data


Control (delivery time, minimum quality----)
Purchasing
Prices and conditions (gross price, discount, freight)
info record
Statistics (price history, PO statistics)
Texts (purchase order text.)

Purchasing organization/plant data


Control (delivery time, minimum quality----)
Prices and conditions (gross price, discount, freight)

Statistics (price history, PO statistics)
Texts (purchase order text.)

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Master data (cont.)

Sources of supply
A purchasing info
record is a repository
of information for
A source of supply can be both a Vendor purchasing.
vendor (external supplier) and one of
enterprises own plants. Info record

Vendor
Pc.
Material %
1
Purch.org.
Conditions
(Plant)
$
Price
Source
Outline agreement item
Contract Sched. agmt.
Vendor Vendor
Material Material
Purch.org. Purch.org.
An outline agreement is a longer-term Validity period Validity period
arrangement with a vendor for the
supply of materials or provision of
Item 10 Material Item 10 Material
services based on predefined terms
quantity quantity
and conditions. price price

Item 20 . Item 20 .

The outline arrangement is valid for a certain period and for a predetermined total purchase quantity or
value. There are two types of outline purchase agreement: Contract and Scheduling agreement

19 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Source list
The source list is an aid in the administration of sources of a material for a plant. Here we specify which
sources of a material are allowed and disallowed for a plant and the periods for which these two
statuses are valid.
Source list entries are taken into account in automatic source determination in purchasing and in
requirements planning.

Material 1 Material 2
Plant 1000 Plant 1000
01.01.-12.31. 01.01.-06.30.
Vendor A allowed Vendor Z fixed
Source list Vendor B allowed 07.01.-12.31.
Vendor C blocked Vendor Y fixed

Plant 1000 Material 1


Source list reqt. Source list reqt.

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Master data (cont.)

Source list

Source list

Material M1
Plant 1000

Validity Source of supply Fixed Tot MRP


01/01/0630/06/07 Contract 4711

01/01/0630/06/07 Contract 4712 1


Validity period
01/01/0631/12/07 Vendor ABC

01/04/0630/09/07 Vendor XYZ

You can decide that a source is preferable over a certain period (fixed indicator).
If no procurement is to be allowed from a source of supply (or vendor) during a
certain period, we set the blocked indicator for the relevant source list entry.
In automatic requirements planning, a purchase requisition can be generated
with a source of supply only if the source list for the material contains a valid
entry with the MRP-relevant indicator set.

21 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Master data (cont.)

Service master record


The service master record serves as source of data that can be used for creating service specifications
as well as in procurement transactions.
A service master record contains information on the service description such as:
Descriptive Texts
Units of Measure
Material Group
Valuation class for account determination
Service master can be used at many points in SAP system, by following areas:
Purchasing
Plant Maintenance
Project System
Customer Service
Prices can be assigned to each service master record using the conditions.
You can use formula for calculating quantities in the procurement of externally performed services in
service master record and purchasing documents

22 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Sub-processes involved
Material management cycle

What will
What do I
I pay?
need?
Purchase
Req.
Payment
How much Payment process 8 1 Determination of material requirements
did the
vendor
charge?
Source

Invoice
Invoice verification 7 2 Source determination
?
How much Purchase to pay
was
delivered? Where can
I get it?

QM Check
Goods receipt 6 3 Vendor selection
OK

Who will
Order I choose?
PO monitoring 5 4 Ordering
What is my How much
order will I buy?
status?

From determining needs to processing payments.

The procurement cycle is a series of steps taken to acquire materials and services.

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Purchasing Ordering

Reference and copy function

Stock material Account assignment Purchase order


Single Normal
Consumable material Multiple Subcontracting
Contract
Consignment
____________ Service
Purchase ____________
Third-party
order ____________ Material provided Stock transfer
Purchase
____
____________ info rec. Text
____________ Deadline item
____________
Request for
____________
____ quote ____________
?

Statistics
Direct
entry Purchase
order history
Generation from
purchase requisition
processing

25 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchasing Ordering (cont.)

Purchase order
Requisition Vendor
Material
Material Message parameters
Planning
Quantity Quality
User
Delivery date Quantity
department
(source) Delivery date
Price

Info record
Extended
Source list Outline agreement
conditions
Quotation

26 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchasing documents

Transmits a requirement defined in a requisition for a material or service to


RFQ
potential vendors

Quotation Contains a vendors prices and conditions and is the basis for vendor selection

The buying entitys request or instruction to a vendor (external supplier) to


PO supply certain materials or render/perform certain services/works, formalizing a
purchase transaction
A type of outline agreement, or longer-term buying arrangement. The contract is a
Contract binding commitment to procure a certain material or service from a vendor over a
certain period
Scheduling agreements provide for the creation of delivery schedules specifying
Scheduling
purchase quantities, delivery dates, and possibly also precise times of delivery over
agreement
a predefined period

Note: Purchase requisitions are not included on this list because they are usually regarded as internal documents

27 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Structure of purchasing documents

Each purchasing document contains the following sections:

Header Individual items Item details


Contains information relevant Specifies the materials or Provides extra information
to the whole document services to be procured about the item
For example, information For example, the material Additional data includes, for
about vendor and document description and the order example, account assignment
number are present in header quantity are specified in each data (such as cost center and
item G/L account) and the PO
history for an item

28 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase requisition

A purchase requisition is a request or instruction to purchasing to procure a certain quantity of a material


or a service so that it is available at a certain point in time.
Internal documents not used outside the company
Can be created
Manually
Directly by a requesting department
Automatically
Via Materials planning and control
Via networks (from the R/3 component PS Project System)
Via maintenance orders and production orders
Can be created for materials with or without a master record or by referencing another requisition
Purchasing converts the purchase requisition into an RFQ, PO, or outline agreement

29 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase requisition (cont.)

Release procedure
Source determination
_____ _____
_____


_____
_____ _____
_____ _____ Ok
_____ _____

Source list
_______
_______
Outline Assign and process
Fixed _______
agreement
vendor _______
_______ Change Generate
1 Quota Purchase purchase
_______ Req. order
_______ arrangement
Piece with Change
__________ __________ RFQ
____
percentage __________ __________
document
____
Request for
conditions quote____

________
DM ? ________
BANF Work list

Requirements Direct
planning entry

30 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase requisition

Menu path
Logistics Materials management Purchasing Purchase requisition Create
Transaction code: ME51N

Create purchase requisition


Enter the following data:
PR type: NB Purchase requisition
Item overview: material, quantity, delivery date, and plant
You can carry out a source determination process in PR. On the tab source of supply, click assign
supply source. If the system determines several sources for a material, these are suggested in a list and
you can select the desired source from the list.

Note: In case of creating a PR without a material master, it is mandatory to specify the account
assignment category. In such case, you need to mention material short text instead of material number.

31 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase requisition (cont.)

SAP screenshot

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Request for quotation (RFQ) and Quotation

Request for Quotation (RFQ)


RFQ is an invitation to a vendor to indicate his terms and conditions (in particular, the vendors price) for
the supply of a material or the provision of a service by submitting a quotation

Structure of RFQ
An RFQ consists of the RFQ header and the items
RFQ header
Contains general information on the RFQ, such as the vendors address
Items
Contain the total quantities and delivery dates for the materials or services specified in the RFQ.
An item of a quotation may contain a delivery schedule made up of a number of schedule lines in which the total
quantity is broken down into smaller quantities to be delivered on the specified dates over a certain period.
An item of the procurement type external service contains a set of service specifications.

Note: In contrast to other purchasing documents, an account assignment cannot be entered in an RFQ

33 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Request for quotation (RFQ) and Quotation (cont.)

Quotation
A quotation is an offer by a vendor to a purchasing organization regarding the supply of materials or
performance of services subject to specified conditions.
A quotation contains the vendors pricing and conditions for providing the material or service stated in the RFQ.
A quotation is legally binding on the vendor for a certain period.
A quotation consists of items in which the total quantity and delivery date of an offered material or service
are specified.
In MM purchasing, the RFQ and quotation are the same document. The vendors pricing and conditions
are entered in the original RFQ.
You can:
Use the price comparison list to help determine the best quotation
Send rejection letters to the appropriate vendors
Store the pricing and terms of delivery for certain quotations in the info record for future reference

34 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Request for quotation (RFQ) and Quotation (cont.)

Collective number for RFQs/Quotations


Issue of multiple RFQs for a certain planned procurement under a common number.
The system copies it for each RFQ created within a competitive bidding process.
The collective number enables tracking all RFQs for a given competitive bidding process.
Collective number is entered it into the header data of the RFQ.

General Collective number XX

RFQ 1 RFQ 2 RFQ 3


Vendor A Vendor B Vendor C
Collective XX Collective XX Collective XX

Material 1 Material 1 Material 1


Material 2 Material 2 Material 2
Material 3 Material 3 Material 3

35 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Request for quotation (RFQ) and Quotation (cont.)

Process flow

Create RFQ

Specify which vendors receive RFQ and send the RFQ to the vendors

Receive quotations from vendors

Enter prices and conditions from quotation submitted by vendor in RFQ document

Comparative appraisal of quotations by means of price comparison list

Select the most favorable quotation and save it in info record

Send rejection letters to unsuccessful bidders

Monitor status of follow-on activities related to RFQ or quotation

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Quotation processing

Enter price and conditions

Vendor A Vendor B Vendor C


Quotation for RFQ 1 Quotation for RFQ 2 Quotation for RFQ 3
Item 10 Item 10 Item 10
Gross price: 400/t Gross price: 400/t Gross price: 500/t
Discount: $50 Discount: 20% Discount: $40

Compare quotations using price comparison list


460/t Market 450/t
350/t 320/t
price 450/t
Steel 2 t price

A B C

Create info record or reject quotation

Info Rec Vendor B Vendor C and A


Conditions 400/t Purchase order Rejection
Discount 20% Mat Qty. Price Thank you for your quotation.
We regret to inform you
Steel 21 320/t

37 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create request for quotation

Menu path
Logistics Materials management
Purchasing RFQ/Quotation Request
for quotation
Transaction code: ME41
Enter the following data:
RFQ Type: AN
Quotation deadline date
RFQ No., in case of external number assignment
Purchasing organization
Purchasing group

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Create request for quotation

Click this icon to enter


vendor details

For each item, enter the


desired material with quantity
and delivery date. If there is
no master record for a
material, enter only a short
text, material group, and the
purchase order unit manually

39 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create request for quotation (cont.)

Enter the number of the


vendor. The system then
copies the address data from
the vendor master record.
When entering a one-time
vendor number, you must
enter the complete address
yourself.

40 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create request for quotation (cont.)

Save the RFQ so that it is


created for the relevant
vendors.
For every other vendor to
receive the RFQ, enter the
corresponding vendor number
and save the document.

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Maintain quotation

Menu path
Logistics Materials management Purchasing RFQ/Quotation Quotation Maintain
Transaction code: ME47

Enter the RFQ number and


choose Enter.
You will be taken to Item
overview screen

42 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Maintain quotation (cont.)

Item overview screen

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Purchase order

A purchase order is a formal request or instruction from a purchasing organization to a vendor or a plant
to supply or provide a certain quantity of goods or services at or by a certain point in time.
Purchase orders are used:
To procure materials for direct consumption or stock
To procure services and special procurement types (subcontracting, third party)
For procurement of materials from internal sources, i.e., from another plant
For once-only procurement transactions
As an internal planning and tracking tool
Purchase orders identify:
Vendor
Quantity ordered
Price and terms of payment
Delivery date and conditions

44 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase order (cont.)

Structure of purchase order

Header Item Item details


Delivery/invoice Account assignment Material data
Conditions Item category Quantities
Texts Material Delivery schedule
Address Plant Invoice
Communication Delivery date Purchase order history
Partners Order unit
Additional data
Organization data
Status

45 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase order (cont.)

Important fields in purchase order


Item category
The item category determines whether the Item category Characteristics
material defined in a purchase order item: Standard Goods and invoices can be received
Requires a material number Material number and GR necessary
Requires an account assignment No account assignments
Consignment
Is to be managed as a stock item Material kept in stock
Requires a Goods Receipt (GR) and/or an Invoice Invoice receipt not necessary
Receipt (IR)
Goods can be received
Subcontracting
Invoice receipt necessary
Material number and GR necessary
Stock transfer
No invoice receipt
Account assignment necessary
Third party
GR and IR can take place
Account assignment and GR
not necessary
Limit
IR and document type Framework
Order(FO) necessary

46 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase order (cont.)

Important fields in purchase order Account


assignment category
Account assignment category specifies: Description Required account assignment data
The nature of account assignment Asset Main asset number and sub-number
(cost center, sales order etc.) Order Order and G/L account number
Which accounts are to be charged when incoming Production Production order number
invoices or goods receipt order
is posted
Business Business process and G/L
Which account assignment data must be provided
process account number
Cost-center Cost center and G/L account number
Sales order Sales order and G/L account number
Project Project and G/L account number
Unknown None

Note: You can assign one or more account assignments for an item in purchase order

47 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Purchase order (cont.)

Important fields in purchase order


Partner roles: Instead of the vendor as the order recipient, other business partners can appear in
various partner roles (e.g., goods supplier or invoicing party).
Texts: There are two kinds of texts: Header text and Item text. You define which texts appear in which
order on printouts in customizing for purchasing.
Order unit: This is the unit you specify in connection with the order quantity.
Order price unit: This is the unit that applies in connection with the net price and which is taken as the
basis for invoice verification. If the order price unit does not correspond to the order unit, and if no
conversion factor is specified in the system, you must enter a conversion factor on the item detail
screen.
Incoterms: Incoterms are internationally recognized terms of delivery reflecting the standards set by the
International Chamber of Commerce, e.g., Free on Board (FOB).
Shipping instructions: These are the packing instructions the vendor has to comply with when
shipping the ordered materials.

48 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase order

Options available for creating a PO


Vendor known (manual): Use this procedure if you know which vendor is to receive the order.
Vendor unknown: Use this procedure if you want the system to select and suggest possible vendors.
These suggestions are then made on the basis of sources of supply that have been predefined in
the system.
From assigned requisitions: Use this procedure to list the requisitions for your purchasing group that
have already been assigned to a vendor (that is, those requisitions containing a vendor, outline
agreement, or info record as a procurement option). POs can be generated from these requisitions
automatically.
Stock transfer: This procedure is used to order from one of the plants.
Vendor-managed inventory (VMI): Use this procedure if you wish to create a purchase order from a
confirmation sent to you by your vendor via Electronic Data Interchange (EDI).

49 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase order (cont.)

Menu path
Logistics Materials management Purchasing purchase order Create
Transaction Code: ME21N
PO type: NB
standard PO

Vendor

Header: Company code,


purchase organization, and
purchasing group

Item overview: Material, quantity,


delivery date, and plant

50 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase order (cont.)

Net Price can be suggested by the system


if you have maintained info record or
outline agreement.

Note: In case of creating a PO without a material master, it is mandatory to specify the account assignment
category. In such case, you need to mention the material short text instead of a material number

51 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Outline agreement

An outline purchase agreement is a long-term Structure of an outline agreement


agreement between a purchasing organization As in the case of other purchasing documents,
and a vendor regarding the supply of materials an outline agreement consists of the
or the performance of services within a certain following elements:
period according to predefined terms Document header: It contains the information related
and conditions. to the entire agreement. e.g. the vendor information
In the SAP System, such agreements are and header conditions are in the document header.
subdivided into: Items: It contains the information specific to the
Contracts relevant material or service.

Centrally agreed contracts Statistics on ordering activities for the item

Distributed contracts Quantity or price of the item


Scheduling agreements Conditions, such as quantity discounts
and surcharges
Scheduling agreement referencing a centrally
agreed contract

52 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Outline agreement (cont.)

Quantity contract
Contract Contract
Value contract
Validity period Release order

Centr.-agr. contract Material Quantity


Total quantity/ Deliver date
total value
Distributed contract Conditions

Sch. agmt.
Scheduling agmt. Delivery
Validity period schedule
Material Quantity
FRC
Total quantity Delivery date
scheduled
Scheduling agmt. Conditions JIT scheduled
With release docu.

Note: Specific dates or quantities for individual deliveries are not set out in the outline
agreement. This information is provided separately in release orders or in schedule lines.

53 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Contracts

Contract is a type of outline purchase agreement against which release orders (releases) can be
issued for agreed materials or services as and when required during a certain overall time-frame.
The contract consists of items defining the individual materials, material groups, or services with prices
and in many cases quantities.

Quantity contract (MK)


Used when the total quantity to be ordered is known in advance.
The contract is regarded as fulfilled when release orders totaling a given quantity have been issued.

Value contract (WK)


Used if the total value of all release orders issued against the contract is not to exceed a certain
predefined value.
The contract is regarded as fulfilled when release orders totaling a given value have been issued.

54 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Contracts (cont.)

All the plants of a purchasing organization can order against a centrally agreed contract.
An enterprise working with a central purchasing organization covering several plants can negotiate
better conditions at a high level.

Contract 1

Plant 1000 Item Mat. Plant


10 1

Plant 2000 Contract 2


Item Mat. Plant
10 2 3000

Plant 3000

55 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Contracts (cont.)

Contract release order


If a contract exists, then a purchase order can be created referencing this contract. purchase orders
created in this way are called contract release orders
Before creating a contract release order, you need the following information:
Number of the contract
Quantity to be released (ordered)
Delivery date
The price, vendor data, terms of payment, delivery costs, and any instructions to the vendor are
adopted from the contract automatically.
The Goods are Received against this purchase order (Contract Release Order).
Also the Invoicing is done against the purchase order and not against the Contract.

56 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Contracts (cont.)

Contract release order


To inform vendors of which quantities are required and for which date, the contract release orders for a
contract are created. A release order is a purchase order that references a contract
If an info record with conditions exists for the material and the vendor, the system automatically
suggests the net price according to these conditions when trying to create the contract item.

Preq. RFQ Contract


Manual
10 10 10
20 20 20
30 30 30

Info record 5300007152


Contract
Vendor 1234
10
Vendor 20
Material Nail A21
Release PurchOrg 3000
30
documtn
Conditions

Price/UoM 6 UNI/kg

Freight 2%
Contr. Rel. ord.
Discount 5%
...
Last purch. order 4500019324

57 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Contracts (cont.)

Create a contract
You can create a contract using ME31K, for creating the contract you need to have the vendor details, if
its a new vendor you need to create a vendor first using transaction code XK01

Enter the following details:


Vendor
Agreement type
Agreement date
Purchasing organization
Purchasing group
Company code

58 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create a contract

Enter the validity to date

59 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Create purchase order against contract

Purchase Orders can be created by entering Contract number on PO Item line.


All the information from Contract would be copied into purchase order.
Contract status gets updated with PO Number

60 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor evaluation

Vendor evaluation supports you in procuring both materials and external services, by making use of
data from MM, from the Logistics Information System (LIS info structure S013), and from quality
management.
An enterprise will want to evaluate it's vendors based on different criteria. This evaluation may be useful
in negotiations with the vendor.
Vendor Evaluation will enable you to choose the most appropriate vendor for a specific requirement,
and supports you in the continuous monitoring of existing supply relationships.
A precondition for the use of vendor evaluation is that you previously specify in customizing the criteria
by which your vendors are to be evaluated, and how which aspects of their performance are to be rated.
Vendor evaluation is always evaluated for:
Purchasing organization
Vendor
Each time an evaluation is processed, the vendor gets an overall score, which is determined from the
scores of the Main Criteria with the application of a weighting key.

61 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor evaluation (cont.)

Scoring levels and weighting keys


You can use weighting keys to determine what share of the overall score is made up by each
main criteria.
All weightings must be defined as weighting keys in customizing for each purchasing org.
When vendor evaluation run for the first time, must assign a weighting key to each vendor.

62 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor evaluation (cont.)

Main criteria
The type and number of main criteria can be specified on an enterprise-specific basis.
The system supports a maximum of 99 main criteria.
For each purchasing organization, it has to be decided which main criteria are to comprise the basis for
the overall score. The following main criteria are provided in standard:
Price
Quality
Delivery
Service
External Service Provision (new erp2005)
Invoice Verification (new erp2005)

63 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release strategy for PO/RFQs

Release procedure
Release procedure is the electronic approval process for releasing/approving any purchase document in
SAP. It can be used to release internal documents such as purchase requisition or external documents
such as purchase order, contract, and scheduling agreement.
Release procedure can be defined in the following documents:
Purchase requisition
Purchase order
Scheduling and contract agreement
Service entry sheet
Two different procedures are available for purchase requisition:
Without classification
With classification

64 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure with classification

Create characteristics for each chosen field. To do so, choose Logistics Central functions
Classification Characteristic Create. You have a free choice of names for the characteristic

Grouping the
Creation of Defining the Definition of
characteristics in
characteristics release procedure release group
a class

Defining the
Definition of Definition of Creation of
release
release codes release indicator release strategies
prerequisites

Specify the release


Simulation of
status for each Classification
release strategy
release code

65 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure with classification (cont.)

Characteristics
Characteristics are the criteria upon which release conditions are satisfied
If the criteria of a release condition are satisfied, the associated release strategy is assigned to the
purchasing document
Example: Release condition for release strategy BA

Characteristic Characteristic value


Total value of requisition Above $10,000

If the total value of a purchase requisition exceeds $10,000, release strategy BA is assigned to
the requisition.

Class
Class is used to group together characteristics that are used to constitute a release condition for
release strategy
The class is assigned to the release procedure

66 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure with classification (cont.)

Release group
It is the grouping of one or more release strategies. This permits multiple usage using the same
release key
Example:
Release group 01 is defined for purchase requisitions.
Release group 02 is defined for purchase orders.
You can define release strategy S3 for both purchase requisitions and purchase orders.

Release code/point
It is a two-character ID given to a person to release (approve) a purchasing document.
Example:
01,02, or AA, AB,
EN for Engineer, MG for Manager, etc.

67 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure with classification (cont.)

Release status/indicator
It is a code that represents a release status.
The release status is the current standing of the item or the purchase document.
Example
If the proper approval has not yet been received, the release status would display as blocked
The status tells the system what is allowed for the item or document

Release prerequisite
It indicates the order in which individual release codes may release the purchasing document
Example:
01, 02, 03 are release codes
03 has prerequisite of codes 02 and 01
This means 03 can release the document only if 01 and 02 have released it

68 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure without classification (cont.)

Release procedure without classification can be used only for purchase requisitions.
This procedure has four preset characteristics, namely:

A/c Purchase
Material
Assignment Plant requisition
group
group value

69 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure without classification (cont.)

In order for release procedure without classification to be configured, the following must be defined:

Assignment of
Release
Release codes release
indicators
indicators

Determination of Release
release strategy prerequisites

70 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor invoice processing

Receive invoice
from vendor

Enter invoice

Invoice Yes
verification Post invoice Invoice payment
successful

No

Hold or park Accounting


invoice document

No

Issue Yes Invoice document


resolved

71 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor invoice processing (cont.)

Enter invoice Manual


Transaction code: MIRO

72 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor invoice processing (cont.)

Enter invoice GR based Inv.


This controls restricts invoice
creation for all the POs without any GR recorded
Invoice verification happens between PO, GR
and Invoice
It can be enabled for a vendor in vendor
master data
If GR based Inv. is selected, Invoice can be
created with reference to either PO or a material
document or delivery note
Without GR based Inv., the invoice can be
created but will be blocked for payment

To enable GR based Inv., Vendor


master record needs to be updated
with the setting as depicted here

73 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor invoice processing (cont.)

Enter invoice Automatic ERS (Evaluated Receipt Settlement)


When automatic Invoicing is enabled for a vendor, the system creates an invoice when it identifies a GR
or material document has been created wrt PO
ERS tcode checks the actual quantity delivered and creates invoice for the same
Transaction code: MRRL
Here, you do not receive any invoices from your vendors, but post them yourself based on information
contained in purchase orders and goods receipts.
GR based Inv. should be enabled

74 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor invoice processing (cont.)

Enter invoice Automatic ERS (evaluated receipt settlement)

To enable ERS, vendor master


record needs to be updated with the
setting as depicted here

Enter invoice without PO


Invoices can be posted directly to G/L accounts or material accounts

75 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Invoice verification

Automatic and runs in background when invoice is entered.


Two way match
The Invoice document entered is verified with reference to PO
Three way match
The Invoice entered is verified with reference to GR and PO
GR based IV needs to be enabled

The three way match

Master data

Invoice
Invoice verification document
Invoice Payment program

Check discrepancies

Purchase Goods
order receipt

76 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Invoice verification (cont.)

Invoice blocks Status of invoices


System blocks the invoices on Park
below reasons Information required to post the invoice is incomplete
Quantity variance Access to post invoice is missing
Price variance Any user can retrieve and change the parked invoice
Date variance The date of invoice entry is before Hold
the delivery date agreed in the purchase order
Same as parked
The invoices will be blocked for payment if the Same user can retrieve and change
allowed tolerance limits are exceeded the document
Complete
Invoice entered is successfully posted

77 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Invoice verification (cont.)

Payment block key Status of invoices


System blocks the invoices on Park
below reasons Information required to post the invoice is incomplete
Quantity variance Access to post invoice is missing
Price variance Any user can retrieve and change the parked invoice
Date variance The date of invoice entry is before Hold
the delivery date agreed in the purchase order
Same as parked
The invoices will be blocked for payment if the Same user can retrieve and change
allowed tolerance limits are exceeded the document
Complete
Invoice entered is successfully posted

78 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process

The payment process

Invoices are entered

Open invoices are analyzed for due date

Invoices due for payment are prepared for review

Payments are approved and/or modified

Invoices are paid

79 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Manual outgoing payment (F-53)


A manual payment is a transaction that clears an open item, typically an invoice, by manually
allocating an offsetting amount to the open item
An outgoing payment used in Accounts Payable, clears an open credit amount
A manual payment is processed in three steps:
Document header information is filled out
Open items are selected to be cleared
The transaction is saved
SAP Menu Accounting Financial Accounting Accounts Payable Document entry Outgoing
Payment Post (F-53)

Document header
1. Payment header
2. Bank data
3. Open item selection Process open items
1. Activate items
2. Activate cash discount Post
1. Overview details
2. Post

80 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Automatic payment processing


To pay invoice the status of invoice should be green
Before every payment run, you need to specify which company codes, account types, and
accounts to include in the payment run. Furthermore, you have to enter the desired
posting date, the possible payment methods, and the date of the next payment run. There
are also some other optional specifications that you can make.
Main steps in Automatic Payment processing
Payment Proposal
This proposes all the open vendor payments
Edit proposal
Payment run
Make payment after confirming edit payment proposal
Payment Proposal
Tcode F110
Enter proposal run date
Select company code and vendor in parameter tab for which payment proposal needs to be run
Save the entries and return back
In F110 home page click on Proposal button

81 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Automatic payment processing

Accounts Documents
Data on Open
business part. items
Payment
program
1 Proposal run
Proposal list

Payment
2 Payment run program

Docs.
Payment
data

Generation of Payment
3
pyt. trsfr. med. program

Forms
Check
management

Lists

82 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Automatic payment processing

1 2 3 4 5

Maintain Schedule Edit Schedule Schedule


parameters proposal proposal payments printing

Parameters are Payment proposals Payment proposals Payment run is


entered are created are edited carried out

Master data Invoice

Address, bank details, Cash discounts,


payment terms methods payment terms,
and blocks withholding tax

Payment program
Payment date, select Select items, banks,
amounts, company codes, payment method,
next payment date minimum amount

Online parameters Selection parameters

83 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Maintaining payment parameters

Identifies each
individual payment run

Status of the
payment run

84 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Payment program parameters

Which company codes


are included?

When is the next run?

Who is being paid?

85 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Payment program parameters

86 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Proposal list

Vendors included in the run

Payment Method

Bank Details

Line Items Currency

87 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process

Edit proposal Payment run


Review the payment proposal by System Once Payment proposal is accepted, payment
Make changes as required run can be performed

88 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
The payment process (cont.)

Payment block key


Specifies why a document is blocked for payment
The following payment blocks exist
Manual payment block
If you manually select a payment block from the list field to block an invoice for payment, the payment block field in
the header of the invoice document is marked with the appropriate indicator
Blocked due to differences
If invoices are to be blocked automatically due to differences in the invoice items, the system enters the payment
block R in the vendor line of the Accounting document. The field in the header of the invoice document
remains empty
Random payment block
Invoices that do not show any other blocking reason, can be blocked in accordance with the random principle. In
Customizing for the Logistics invoice verification, you can set the probability for the block. The indicator for the
logistical payment block is entered in the header of the invoice document

89 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Open item clearing

Open items are incomplete transactions, such as a vendor invoice which has not been paid.
In order for an open item transaction to be considered complete, the transaction must have been
cleared. A transaction is considered cleared when an offset value is posted to an item or group of items,
so that the resulting balance of the items is zero.
Documents with open items cannot be archived and stay in the system until all open items are cleared.
An example of posting with clearing:
An invoice posted to a vendors account.
This invoice is regarded as an open item because at this point it is unpaid. The company pays the invoice and the
payment is allocated to it. The invoice is cleared with the payment and the resulting balance is zero.

90 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Open item clearing (cont.)

2 1
Open item account

2,000 5,000
3,000

Invoice Payment document

Can be cleared

Clearing an account Post with clearing


3

91 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Configurations
Customizing settings in PO

Document type

For each document category (requisitions, RFQs, POs, contracts, and scheduling agreements) in
purchasing, you can define several document types. Document type determines:
Allowed item categories
Number range and the type of number assignment (internal/external)
Field selection
Linkage between PR document types and purchasing document types

The definition of new document type is carried out in three steps:


Define new document type.
Assign item categories: Which categories may be used for particular document type.
Requisition document linkage: All combinations of document type and item category that can serve as a
basis for converting a requisition into a purchase order must be listed.

93 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Setting number range

Menu path: SPRO Materials management Purchasing purchase order Define Number ranges

94 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Setting number range

Click on the Interval Button to add interval

No. identifying the interval

Identifies whether the range is internal or external

Current No. + 1 will be assigned to the


next PO for the selected internal range

Lower and upper limit for the range

95 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Setting number range

Check this checkbox to make


the number range as External

Click this button to save


the new number range

96 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Menu path: SPRO Materials management Purchasing purchase order Define number ranges

97 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Determines which attributes the fields of


the purchasing document are to have

Number identifying External Number


Range for the document type

Number identifying Internal Number


Range for the document type

Click on New Entries to Click on Allowed Item Categories button to view


add new document type allowed item categories for the selected document type

98 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Click on Link Purchase requisition-document


type to view doc. type for the purchase requisition

99 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Menu path: SPRO Materials management Purchasing purchase order Define screen layout at
doc level

100 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Click on New Entries to


add new screen Layout

Enter the name and short description for


the new Field Selection Key and click Save

101 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Click on Details to modify


the settings for the layout

Double click the Field Selection Group you want to modify. All
the fields belonging to the group will be displayed

102 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Customizing settings in PO (cont.)

Define document type

Click on these buttons to


move to the previous or
next Selection Group

Modify the fields to make them mandatory, optional, or


display only by checking the respective check boxes.

103 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor evaluation

Evaluation of vendor on the basis of certain various performance business criteria for both materials
and services.
Supports you in selecting sources of supply and in the ongoing monitoring of existing supplier
relationships. This evaluation may be helpful in negotiations with the vendor.
Complete integration with purchasing as part of materials management. This means that the data such
as delivery date, prices and quantities are picked from purchase order.
Accesses basic data from materials management, Logistics Invoice Verification, Inventory Management
and Quality Management.
Organization level at which vendors are evaluated is purchasing organization; each purchasing
organization evaluates the vendor assigned to it. A system supported comparison of vendor evaluations
at company code or plant level is not possible in the standard system.

104 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Vendor evaluation analysis

1. General evaluation (hit list)

Total Price Qual. Del. Service


Vendor B 90 92 90 93 85
Vendor A 84 75 92 88 81
Vendor C 81 90 76 74 84

2. Evaluation material XY

Total Price Qual. Del. Service


Vendor B 92 95 89 94 90
Vendor A 80 70 91 79 80
Vendor C 86 88 78 87 81

3. Evaluation comparison

Total Price Qual. Del. Service


General vendor evaluation
Vendor A 84 75 92 88 81
Evaluation for material XY
Vendor A 80 70 91 79 80

105 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Score and evaluation criteria

Total score

Weighted

Main criterion
scores

Weighted

Subcriterion
scores

Individual scores
per material

Scoring Levels in Vendor Evaluation

For each purchasing organization, it has to be decided which and how many criteria are to comprise
the basis for overall score.
You can use a weighing system to assign greater or lesser influence to certain main criteria when the
overall score is calculated.

106 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Score and evaluation criteria Main criterion

In order for a particular vendors performance to be assessed in comparison with that of others, a
scoring range must be used. SAP provides a scoring range from 1 to 100 points.
Main criteria constitute the basis for assessing a vendors performance. The following five main criteria
are provided in the standard system:
Price
Quality
Delivery
Service
External Service Provision
System supports a maximum of 99 main criteria.
System computes a vendors overall score from the scores of main criteria. This overall score can then
be used to compare various vendors with each other.

107 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Score and evaluation criteria Sub-criterion

Each main criterion is subdivided into several sub-criteria. Sub-criteria are the smallest units in vendor
evaluation for which scores are awarded. The system determines the score for superordinate main
criterion from the scores a vendor obtained for various sub-criteria. e.g. for criterion price, price
level and price history are system defined sub-criteria.
You can also define your own sub-criteria apart from the system defined sub-criteria. The system
supports a maximum of 20 sub-criteria for each main criterion. You can define different weightings for
individual sub-criteria for each purchasing organization in customizing.
There are three types of sub-criteria:
Automatic: System determines score from data entered at other points (e.g. at time of GR)
Manual: Score has to be entered manually
Semi-automatic: Scores are calculated from the master data entered for a material at info record level (e.g. price
level).

108 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Score and evaluation criteria Sub-criterion (cont.)

In the standard system, two automatic sub-criteria are available for main criterion price, three for main
criterion quality and four for main criterion delivery
Main criterion price
Price level: Evaluates relationship of vendors price to market price.
Price history: Evaluates how a vendors price has changed over time in comparison with development of market price.
Main criterion quality
GR lots: Evaluates quality of materials supplied by a vendor.
Quality audit: Assesses the effectiveness of the QA system employed by an enterprise in manufacturing of its product.
Complaints level: Assesses whether, if after passing QC on GR, materials delivered by vendor proved unusable during
the subsequent manufacturing process.

109 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Score and evaluation criteria Sub-criterion (cont.)

Main criterion delivery


On-time delivery performance: Assesses the extent to which vendor delivers goods punctually.
Quantity reliability: Evaluates the extent to which vendor delivers the quantity mentioned in PO
Compliance with shipping instructions: Assesses how closely vendor complies with the instructions he is given with
regard to the shipping or packing of the ordered material.
Shipping notification reliability: Assesses whether a vendor adheres to the delivery date promised in his confirmation,
that is, whether goods actually arrive on the confirmed date.

110 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo: Configuration for vendor evaluation

Navigation Path: SAP Easy Access SPRO Materials Management Purchasing


Vendor Evaluation

Define Weighting Keys

111 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo: Configuration for vendor evaluation (cont.)

Define criteria

Define sub-criteria

112 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo: Configuration for vendor evaluation (cont.)

Maintain purchasing organization data

113 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo: Configuration for vendor evaluation (cont.)

Maintain purchasing organization data

114 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo: Configuration for vendor evaluation (cont.)

Maintain purchasing organization data

115 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo Maintain vendor evaluation

Navigation Path: SAP Menu Logistics Materials Management Purchasing Master Data
Vendor Evaluation

1. On the initial screen for vendor


evaluation maintenance, enter
the P Org and vendor.

The overview of the main criteria that


are valid for this P Org appears.
2. Enter the desired weighting key.
3. If manual main criteria are used for
evaluation, award the relevant scores.

116 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo Maintain vendor evaluation (cont.)

4. Choose Edit Auto. New Evaluation to


have system calculate the scores for
automatic and semi-automatic criteria,
then the scores for main criteria and then
the overall score for the vendor.

5. After selecting the relevant main criterion, choose Main Criterion


Details. If manual sub-criteria is used, award the scores for these criteria.

117 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
System demo Maintain vendor evaluation (cont.)

118 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure Configuration steps

Menu path for Release procedure

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Release procedure SAP demo

Characteristics CT04

Interval vals allowed Defines whether


you can enter an interval as a value

Negative vals allowed Defines whether


negative values can be assigned

Restrictable This indicator shows that


the allowed values of this characteristic can
be restricted

120 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure SAP demo (cont.)

Characteristics CT04

121 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure SAP demo (cont.)

Class CL02

122 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Release procedure SAP demo (cont.)

Class CL02

Indicates whether it is required to


assign a value to a characteristic

Overwriting Characteristic or its values can be


changed for this class, if indicator is checked.

Inherited If this indicator is set, the characteristics


was inherited from a superior class.

Print/Search/Display/Index Relevant (If set) can be


used to query this indicator internally in the program.

123 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure

Grouping the
Creation of Defining the release Definition of
characteristics in
characteristics procedure release group
a class

Definition of Definition of Creation of Defining the


release codes release indicator release strategies release prerequisites

Specify the release status Simulation of


Classification
for each release code release strategy

124 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release groups

When set, the items in a purchase requisition are all


released at the same time (rather than individually).
No such indicator for a purchase order, i.e., all items
in PO are released at once.

Rel Object = 1 for PREQ


Rel Object = 2 for PO

125 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release codes

The maximum number of codes that


can be defined for a group = 8

126 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release indicator

Indicates whether RFQs and


Quot may be processed with the
relevant release indicator.

Indicates whether POs may be


issued with the relevant
release indicator

Key that determines whether a field


must be maintained/can be maintained,
is suppressed, or is only displayed

127 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release strategies

Here we define:

128 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release strategies

Prerequisites Release statuses

129 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Defining the release procedure (cont.)

Release strategies

Release simulation

130 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Movement type concept

Movement types differentiate among the following stock transactions:


Goods receipt
Goods issue
Stock transfer

Movement type determines which:


Quantity fields are updated
Stock types are updated
General ledger stock or consumption accounts are updated
Fields are displayed during document entry

A three-digit code identifies the particular movement to be performed (e.g., 101 = purchase order receipt).

131 SAP procure to pay business process Copyright 2013 Deloitte Development LLC. All rights reserved.
Movement type

When you enter a goods movement, you must always enter the movement type. The movement type has
important control functions in inventory management.

It is essential for:

Selection of
Updating the
the fields Printing
Updating the stock and
used for goods receipt/
quantity fields consumption
entering issue slips
accounts
documents

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IM Configurations for movement types (OMJJ)

Spro Display IMG Materials Management Inventory Management and physical inventory
Movement Types Copy, Change Movement types

Display IMG

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OMJJ transaction

Enter into OMJJ transaction and select movement type and enter the movement type which you want to
check or edit.

Change View Movement Type: Overview

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Allowed transactions for a movement type

Select one movement type from the previous screen and click on Allowed Transactions. Here we can see
the various allowed transactions where selected movement type 101 can be used.

Change View Allowed Transactions: Overview

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Update control/WM movement types

Change View Update control/WM movement types: Overview

With the combination of the above seven parameters, the value string is determined.

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Account grouping

Change View Account Grouping: Overview

Minimum two counters per value string are generated.


One transaction event key is generated per counter.
These events trigger the various accounts and indicate what documents need to be updated.

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Reversal/follow-on movement types

Change View Reversal/follow-on movement types: Overview

This shows the reversal movement types associated with various movement types.

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Reason for movement

Change View Reason for Movement: Overview

Here we can see the various reasons associated with


a movement type for the movement of goods.

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Deactivate QM inspection/delivery category

Change View Deactivate QM inspection/delivery category: Overview

QM inspection indicator indicates whether the goods movement


with the selected movement will undergo quality check or not.

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Stock types

Stock type is the subdivision of inventory at a storage location based on the use of that inventory.
Used in the determination of available stock of a material.

In SAP, there are many kinds of stock types:

Valuated stocks

Nonvaluated stocks

Special stocks

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Account groups Configuration

Spro Display IMG Financial Accounting Accounts Receivable and accounts payable Vendor
Accounts Master data Define Account groups with screen layout vendor

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Account groups Configuration (cont.)

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Account groups Configuration (cont.)

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Account groups Configuration (cont.)

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Interaction with other modules
Integration between MM and other SAP Modules

Material valuation
Finance and
Controlling Vendor payments
(FICO) Material costing

Plant
Sales and
Maintenance order Maintenance
Distribution (SD)
(PM)

MM
Delivery
Availability check
Stock transfer requirements

Material requirement planning


Quality inspection at Quality
Production Receipts/issues against
goods receipt Management
Planning (PP)
(QM) production orders
In process inspection
Availability check for stocks

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Integration between MM and other SAP Modules (cont.)

MM and FICO
Inventory posting transactions directly updates GL accounts
Goods receipt transactions creates GL transactions on the asset account of the organization and the
liability account of the vendor
Inventory posting transaction results in a corresponding CO document to update profit
center accounting
Procurement of capital items can be related to a fixed asset
Prepayments made against a given purchase order will get automatically adjusted

Material valuation
The stock value deviations (due to difference in standard and invoice price) automatically posted to a
price difference account
Goods receipts posted using a price that differs from the moving average price, the differences are
posted to the stock account

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Integration between MM and other SAP Modules (cont.)

MM and SD
Sales Order creation, can initiate a dynamic availability check of on-hand stock
Delivery creation marks the quantity to be delivered as Scheduled for delivery so that the on-hand
inventory is updated accordingly
Purchase order can be directly converted to delivery for a stock transfer requirement

MM and PP
Material Requirement Planning (MRP) schedule is created based on Stocks, expected receipts,
expected issues
MRP creates planned order or purchase requisition which can then be turned into a PO/Contract
Inventory Management stages the components required for production orders
Finished products received in the Warehouse are posted in Inventory Management

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Integration between MM and other SAP Modules (cont.)

MM and QM
During movement of goods, if an inspection is required then an activity is initiated in the Quality
Management system

MM and PM
When a material/service requirement is mentioned in Maintenance order it results in the generation of a
requisition which then follows the procurement cycle and the material/service is delivered to PM

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Key transactions
Key Transactions

MRP Run PR Manually


ME51N
ME47 ME49

Individual Quotation
Departments ME41 RFQ Quotation
Comparison
(PM, PS)
ME31K

ME21N Purchase Order Contracts


Release Order

Scheduling
MIGO Goods Receipt
Agreement

ME31L

MIRO
MRRL Invoice Receipt
MRKO

F-53/F110 Payment

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Questions

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Copyright 2013 Deloitte Development LLC. All rights reserved.


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