SI0020
SAP Fundamental
Logistics - Procurement
Objectives
After completing this unit, you’ll be able to:
• Discuss the various key operational processes
• Illustrate the integration between the key operational
processes
• Outline the tasks associated within the procurement cycle
• Explain how SAP within mySAP ERP supports the key
processes in procurement
• Outline the tasks associated with sales order management
• Explain how SAP within mySAP ERP supports the key
processes in sales order management
• Outline the tasks associated with production planning and
manufacturing execution
• Explain how mySAP ERP supports key processes in production
Contents
• Logistics Overview
• Procurement
• Sales Order Management
• Production
Procurement
Procurement Process Overview
• Procurement in mySAP ERP covers not only traditional processes
such as requisitioning, purchase order management, and invoice
verification, but also catalog-based self-service requisitioning
for maintenance, repair, and operations (MRO) materials and
services.
• Procurement in mySAP ERP improves procurement processes
• Facilitates plan-driven and ad hoc purchasing, complete inventory
management, and intelligent reporting on all procurement activities.
• Enables supplier selection and qualification, contract negotiations, bid
invitations, and vendor evaluation.
• Support for process variant optimization allows individual categories
of material or services to be procured in the most appropriate way
• For example, the subcontracting process supports the delivery of components
required by outsourced manufacturing steps, and procurement through invoicing
plans helps improve rental and leasing processes.
Basic Procurement (Purchase to
Pay) Cycle
Basic Procurement (Purchase to
Pay) Cycle
1) Determination of Requirements
• Purchase requisitions (PRs) can be created manually or generated
automatically by the materials planning and control system.
• This can cover both the demand-based and material requirement
planning (MRP) approach to inventory control. The regular checking of
stock levels of materials defined by master records, use of the order-point
method, and forecasting on the basis of past usage are important aspects of
inventory control.
2) Source Determination
• Requests for quotation (RFQs) can be created manually or by referring to
PR, after PR approval.
• mySAP ERP helps identifying potential sources of supply based on past
orders and existing longer-term purchase agreements.
• This speeds the process of creating RFQ, which can be sent to vendors
electronically via EDI, if desired.
Basic Procurement (Purchase to
Pay) Cycle
3) Vendor Selection and Comparison of Quotations
• mySAP ERP is capable of simulating pricing scenarios, allowing user to
compare a number of different quotations. Rejection letters can be sent
automatically.
4) Purchase Order Creation
• Purchase order (PO) can be created with reference to PR, RFQ, contract,
and material record; by user or automatically by system.
5) Purchase Order Follow-Up
• The status about the delivery date and quantity to be delivered can be
monitored.
• After issuing PO to the vendor, the system will check the reminder periods
specified before and, if necessary, automatically print reminders or
expediter at the predefined intervals, also provide an up-to-date status of all
PRs, quotations, and POs.
Basic Procurement (Purchase to
Pay) Cycle
6) Goods Receiving and Inventory Management
• Goods receipt (GR) can be confirmed simply by entering the PO number
(PO status will be updated). Goods can be received without the PO.
• GR will create material document.
• By specifying permissible tolerances, buyers can limit over- and under-
deliveries of ordered goods.
7) Invoice Verification
• Invoice can be posted before or after GR.
• SAP use goodreceipt/invoice receipt (GR/IR) clearing account
• The system supports the checking and matching of invoices. The accounts
payable (AP) clerk is notified of quantity and price variances because the
system has access to PO and GR data. This speeds the process of auditing and
clearing invoices for payment.
Purchase Orders
• PO is a formal request to a vendor to supply certain goods or services
under the stated conditions.
• PO can be created without reference, or with reference to a PR, a
RFQ, or another PO.
• When entering the purchase order data, the system suggests default
values. For examples:
• The system suggests the ordering address, terms of payment, and freight
(incoterms) from the vendor master record, as well as the material short text,
the material group, and unit of measure from the material master.
• If a purchasing info record already exists in the system, the system copies a
price proposal to the PO.
• Procurement staff can either send the PO to a vendor or carry out
a stock transport order in another plant. In both cases, user can
include the associated freight costs in the purchase order.
Purchase Order
• While creating a purchase order, procurement staff have to enter the
company code, purchasing organization, purchasing group, and also
plant.
Purchasing Organization &
Purchasing Group
• A purchasing organization is the unit within an enterprise that
performs strategic activities related to purchasing for one or more
plants.
• It evaluates and identifies vendors, negotiates contracts and agreements, pricing,
and other terms. An enterprise may have one or more purchasing organizations.
• Typically, there are three models of purchasing organizations: enterprise level,
company level, and plant level.
• A purchasing group is an individual or a group of individuals who
are responsible for purchasing activities for a material or a group of
materials.
• Whereas purchasing organizations are responsible for the strategic aspects of
purchasing, such as negotiating contracts with vendors, purchasing groups carry
out the day-to-day purchasing activities.
• These activities include planning, creating PRs, requesting quotations from
vendors, and creating and monitoring POs.
• The purchasing group also serves as the main point of contact with vendors.
Self-Service Procurement
• Self-service requisitioning means purchasing non-strategic goods,
that is, goods not directly linked to the value chain (often called MRO
items), like: office materials, work clothes, and IT equipment.
• The self-service procurement (SSP)
empowers employees to easily
procure needed materials using
a Web-based shopping cart.
• This shopping cart enforces
compliance with corporate
purchasing policies.
• SSP reduce administrative burden of purchasing professionals (the
procurement process will be faster and more responsive) and allow
them to focus on managing relationships instead of working
exclusively on transaction
Inventory Management
• GR is the next step after issuing
PO to the vendor
• During GR, the staff need to check
various things, such as the right
material has been delivered or not,
whether the right quantity has
been delivered or whether there
has been over or under delivery,
whether perishable goods are within their minimum shelf life.
• Several GR items can be entered against a PO item in one operation.
Inventory Management
Advantages of posting a GR to stock with reference to a PO:
• The goods receiving point can check whether the delivery is the same as the
PO data, that is, whether the goods that were ordered have been delivered.
• The system suggests data from the PO when user enter the GR (e.g., items
and quantities). This makes it easier to enter the GR and check over- or
under-deliveries when goods arrive.
• The PO history is automatically updated as a result of the deliveries. The
purchasing department can send a reminder about late deliveries.
• When user post a GR to the warehouse, the system creates a material
document containing information such as the material delivered and the
quantity delivered. The system also records the storage location for the
materials user place into stock in the plant.
• In transactions relevant for material valuation, the system creates at least
one accounting document that records the effects of the goods movement on
the value of the stock.
Invoice Verification
• The procurement process is concluded by the invoice verification
process, during which invoices and credit memos are entered and
the contents and prices are checked for accuracy.
• Note that payment and evaluation of invoices is not involved in this process. The
actual payment is handled by the accounting department.
• Invoice verification creates a link between Procurement and Accounting.
• When user enter an invoice with reference to a PO, the system
suggests data from the PO and the GR for the PO (for example,
vendor, material, quantity still to be invoiced, terms of payment, and
so on).
• If there are discrepancies between the PO or GR and the invoice, the
system warns the user and, depending on the system configuration,
blocks the invoice for payment.
Invoice Verification
• The posting of the invoice completes the invoice verification process.
The system updates the PO history and Financial Accounting initiates
payment for the open invoice items.
Messages
• All purchasing documents can be issued as messages.
• Each time user create an RFQ, PO, contract, or scheduling agreement, the system can
create a message from the document affected. This message is then placed in the
message queue.
• Two options to issue the message (by printing, e-mail, fax, or EDI) :
• Issue immediately: Issue the messages directly from the queue.
• Issue later: Either schedule a background job that processes the message queue in
determined intervals, or start the issue directly from the purchasing menu.
• For the message issue, user can specify which header texts and item-
based texts the system issues.
• The header text is printed at the top of the PO and contains general information.
• Item texts describe a PO item in more detail.
• User can also include and issue standard texts.
References
• SAP01 – SAP Overview Participant Handbook,
Course Version: 2006 Q2.
