Lakshaya_MM_QADB_1.0

Tata BlueScope Steel Ltd Coated Steel Business

LAKSHYA Business Blueprint PROJECT: LAKSHYA

SAP IMPLEMENTATION (May ‘09 – Nov ‘09 – Feb ‘10)Doc. Name : Question & Answer Data Base Veer. No. 0.1 Effective : June 2009Division : Enterprise Solutions Document Category : General

BUSINESS BLUEPRINTQUESTION & ANSWER DATA BASE

of

PROJECT LAKSHYA(Leveraging Assets, Knowledge, Systems & Human-Resources

to Yield Agility)

SAP IMPLEMENTATION

ATTATA BLUESCOPE STEEL LTD.

COATED STEEL BUSINESS

BYTATA TECHNOLOGIES

In consultation withTATA STEEL

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Revision History

Version No.

Updated Date

By Whom Changes

1.0 Created Date XXX Created

1.1 Modified Date YYY

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Blueprint Contents

Organization

Cross-application/central organizational unitsMaterial Valuation Area

CI template:

1. General Explanation

The Material Valuation Area is the level at which materials maintain a value. The configuration options for Material Valuation Area include the company code level and the plant level. Configuring the Material Valuation Area at the company code will result in material values that are consistent across the company code. Configuring the Material Valuation Area at the plant level permits the setting of material values that are unique from plant to plant.

For TBSL-CSP, the Material Valuation Area will be configured at the plant level to facilitate inventory management at the plant level in the future.

In TBSL-CSP, Finished Goods and WIP will be valuated at standard price and remaining materials are valuated at moving average price.

2. Naming Convention

There is no naming convention associated with the Material Valuation Area. But for Plants, the first digit is for Country, The second digit is for Type (For manufacturing it is 1, for Mid Stream it will be 3 etc.,) and last two digits for serial number.

Naming convention for Jamshedpur Plant will be “1300”

3. Assignment of Organizational Units

The valuation area is at plant level for Tata Blue Scope.All the Plants are assigned to Company Code-1000.

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Questions:

Q: 1) Will you ever use Product Costing and/or Production Planning in R/3 for Jamshedpur Plant?

A: Yes.

ProcurementCI template:


Purchasing is a component of Materials Management (MM). The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management :- materials planning and control, purchasing, goods receiving, inventory management, and invoice verification.

The tasks of the MM Purchasing component are as follows:

External procurement of materials and services Determination of possible sources of supply for a requirement identified by

the materials planning and control system or arising directly within a user department

Monitoring of deliveries from vendors

Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly.

Purchasing GroupCI template:


The Purchasing Group is a key for a buyer or group of buyers responsible for certain purchasing activities.

The Purchasing Group is:

Internally responsible for the procurement of a material or a class of materials

Usually the principal channel for a company's dealings with its vendors.

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BUYER 1 - JSR (J01), BUYER 2 – JSR (J02) , BUYER 3 – JSR (J03).

3. Definition of Organizational Units

Purchasing Groups will be created for procurement of different types of materials within the organization. It is to be ensured that Purchasing Groups procure only for their designated areas of responsibility.


The Purchasing Groups are not assigned to any organizational unit.

Questions:

Q: 1) Shall purchasing groups represent individual buyers or groups of buyers? If Groups of buyers, provide a list of groups.

A: In TBSL-CSP, Purchase Groups will represent individual buyers.

Q: 2) Provide a list of buyer names.

A: BUYER 1, BUYER 2, BUYER 3.

Purchasing Organization

CI template:


The Purchasing Organization is an organizational unit within Logistics, subdividing an enterprise according to the requirements of Purchasing. A Purchasing Organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transactions.


In TBSL-CSP, procurement of all materials and services will be done by Central Purchase Department. Existing Central Purchase Organization will be used for TBSL-CSP also.


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The Central Purchasing organization will be responsible for purchase of materials and services for all units of TBSL-CSP.


The Central Purchasing Organization will be assigned to Plant (PLANT 1300).

5. Changes to existing Organization

None

6. Special Considerations

None

7. Project specific CI section

None

Questions:

Q: 1) Which purchasing departments exist in your enterprise?

A: In TBSL-CSP, Purchasing of all materials and services will be dealt by Purchase Department based at Jamshedpur.

Q: 2) If there is more than one department which handles all purchasing, specify which department(s) negotiate pricing terms and conditions with your suppliers.

A: Only Central Purchasing Organization will handle all the procurements.

Q: 3) Do you have departments outside your purchasing department, which handle purchasing? If so, list these departments and what they purchase.

A: No such department exists

Q: 4) How do the departments share the task of procuring the goods and services required by the organization?

A: According to purchasing group.

Q: 5) Where do you procure materials/services in your enterprise?

A: Materials and services will be purchased from Domestic as well as Foreign vendors.

Q: 6) Which material types/external services do you procure?

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Explanation: Examples of material types: Raw material Semi finished product Trading goods Empties Packaging

A: 1. Raw materials2. Spares3. Consumables (Operating supplies)4. Finished Goods5. Semi Finished Goods6. Packaging materials7. Services

Q: 7) For which enterprise entities do you procure materials/services? List these materials/services.

A: Materials/services are procured for TBSL-CSP.

Q: 8) Do you have corporate and localized purchasing functions?

A: No. We have only one Purchasing Function.

Q: 9) Do you negotiate vendor pricing at a corporate or local level?

A: The vendor pricing negotiations for all materials/services are done by Purchasing department at TBSL-CSP (local level).

Q: 10) For which enterprise areas do you procure materials/external services centrally? List these materials/services.

A: All the materials/services required for TBSL-CSP are procured by purchasing department at TBSL-CSP and transactions in SAP will be done for Central Purchasing Organization existing. Q: 11) For which materials/external services do you negotiate framework contracts?

A: Not used.

Q: 12) Which enterprise entities can release orders against contracts?

A: Release orders for some materials like stationery etc will be created by user departments. But for most of the materials release orders are created by the purchasing department.

Q: 13) Do you want to have procurement in particular enterprise areas/business areas or product groups separated?

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A: No, the procurement will not be separated for enterprise areas/business areas or product groups.

Inventory Management, Warehouse Management and Transportation

Storage location

CI template:


An organizational unit facilitating differentiation between the various stocks of a material within a plant.


Following storage locations will be created for TBSL-CSP

As per PP module and as decided in meeting held on 6 July, 2009.


The storage locations are created for TBSL-CSP plant. All the materials in plant will be stored in these storage locations.


Storage Locations are created for TBSL-CSP plant.

5. Changes to existing Organization

In addition to the existing storage locations at other plants, following storage locations will be created for TBSL-CSP plant.


None

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7. Project specific CI section

NoneQuestions:

Q: 1) List the storage locations that you will need for each Plant.

A: To be added by TTL

Q: 2) Will negative Stocks be allowed in any storage locations? If yes, specify the storage locations.

A: Negative stocks will be allowed in Company premises.

Q: 3) Are there any stocks in your company that you own, but that are not stored in your company physically?

A: No, all the stocks are maintained in the company premises only.

Q: 4) Do you need to check the capacity of your location?

A: In TBSL-CSP, capacity of the storage location is checked according to the space available.

Q: 5) Does each part have a unique location or can they be stored anywhere?

A: Normally each part will have a unique storage location. However, some materials can be stored at more than one storage locations.

Q: 6) EH&S: Are your hazardous substances stored in separate storage locations (i.e. does anything prevent you from storing them together)? How many hazardous substance warehouses are there in each plant?

A: No. There are no Hazardous materials stored at TBSL-CSP.

Q: 7) EH&S: Do you assign the hazardous substance warehouses their own picking areas if you distinguish between: - one hazardous substance warehouse, many storage locations, one picking area - many hazardous substance warehouses, many picking areas - other?

A: N.A.

General settings

Units of measurement

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CI template:

1. Requirements/Expectations

Units of measure are required to facilitate the procurement and management of various items in multiple order units.

2. General Explanations

The unit of measure is utilized to describe the unit in which items are procured or stored. There are over 220 different units of measure provided by SAP. It is possible to define different units of measure for sales and purchasing in the line item. The system automatically converts those units to the base unit of measure in the material master. You must maintain a unit conversion for each unit in the material master before you use those units.

3. System Configuration Considerations

Units of measure to be used must be entered in the Purchase Requisition, Purchase Order, Goods Receipt and Goods Issue in SAP.


Units of measures that are used at other plants of Blue Scope will be used at TBSL-CSP also. If new units of measures are required which do not exist in SAP will be configured in SAP.

Q: 1) Do you want to use any new Units of measure in TBSL-CSP, in addition to the UOMs provided in SAP? (list of UOMs available in standard SAP including UOM’s used by other plant are enclosed)

A: No. We do not require any new Units of Measurement.

Master Data

General Master RecordsMaterial Master

CI Template:


In Blue Scope the material has to be maintained for each plant and segregated

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according to the material type (e.g. ROH, FERT, HALB etc.). Item descriptions will default when the material number is entered on a Purchase Requisition or Purchase Order or Goods Movement Documents. Certain materials of all the Plants that are procured externally as well as manufactured internally have different prices and so they will be maintained in SAP through the concept of Split Valuation. After a certain process the materials are mixed and thus the value of the material thereafter will be that of the material that has more value (internal or external).


The material master contains information on all the materials that a company procures or produces, stores, and sells. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records. The material master is used by all components in the SAP Logistics System. The integration of all material data in a single database object eliminates redundant data storage. Since different departments in a company work with the same material, but each department uses different information on the material, user department subdivides the data in a material master record

3. Naming/Numbering ConventionsAll materials of TBSL-CSP are given number ranges according to material type. The number ranges for all material types are as follows:

Material Types Description

ZRMJ Raw materials for JSR

ZSFJ Semi finished for JSR

ZFGJ Finished Goods for JSR

ZCOJ Consumables

ZMSJ Maintenance Spares

ZPKJ Packaging material for JSR

ZPRO Project Materials

ZSCR Scrap Material

4. Description of Functional Deficits

In TBSL-CSP the materials are grouped according to material groups.


The material master creation screen will consist of the views relating to purchase, sales, production, accounting and costing.

6. Authorization and User Roles

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Maintenance of the material master will be limited to as few people as possible to avoid master data corruption. The members maintaining the master data should be from each section namely purchase, accounts, sales and production.

Questions:

Q: 1) Which departments/organizational units are responsible for maintaining the material data?

A: Required data will be given by the user departments and material master will be created in SAP by Central Team based in Pune.

Q: 2) Is master data common across all departments (common master data)?

A: Most of the materials required for TBSL-CSP are different from material master existing in SAP. However, some materials like consumables, spares etc may be common for all the plants.

Q: 3) What is the default sales unit in sales processing and what are alternative sales units?

A: Base Unit of Measure will be default sales unit

Q: 4) Do you group similar products together (for example, in divisions or material groups)?

A: The similar Materials are grouped according to material groups and divisions are used for finished products.

Q: 5) Do you maintain additional statuses for your materials (such as sales status)?

A: No

Q: 6) If you have multiple plants, is your material normally supplied by a specific plant?

A: Normally, materials required for TBSL-CSP are different from materials used kin other plants. However, if some common materials exist at multiple plants, they can be transferred from one plant to another plant.

Q: 7) Do you maintain additional types of grouping for other processes (for example, rebate, statistics, commission or pricing)?

A: N.A

Q: 8) Do you record a minimum delivery quantity on your materials? If so, what happens during sales order processing if a violation occurs?

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A: YES, Regarding Sales Order Processing Discuss with SD.

Q: 9) Are there materials that must be shipped in certain multiples (delivery units)?

A: Not Relevant to MM

Q: 10) Do you record information on competitor products (sales support)?

A: N.A

Q: 11) Can a material have different values in one plant? What are the criteria for the different values?

A: In Tata BlueScope Steel certain materials have different procurement types i.e. they are externally procured from domestic vendors as well as foreign vendors. These materials will have Moving average price.

Q: 12) According to which criteria, does your material master data let you select with regard to planned QM processes (for example, goods receipt inspection only for raw materials etc)?

A: N.A.

Q: 13) Do you maintain material-specific technical terms of delivery?

A: No material specific terms of delivery are maintained.

Q: 14) Are the technical delivery terms stored online, and will you print these terms with each purchase order?

A: No Q: 15) Do you require your vendors to provide quality certificates (certificates of conformance or certificates of analysis) either prior to or with material shipments? Describe the types of certificates you require.

A: Yes. Quality certificates are required from vendors along with the goods receipt. If quality certificate is not received the material may be sent to blocked stock until the quality certificate is received from the vendor. Test certificates are required from the vendor.

Q: 16) Do you require your vendors to provide samples for approval prior to actual delivery? Please describe.

A: Yes, This process will be carried out manually

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Q: 17) Do you block a vendor invoice for payment until the quality inspection has been successfully completed?

Explanation: Note: The block can be removed manually if required.

A: Yes, the vendor invoice is blocked until the quality inspection is completed.

Q: 18) Will you process recurring inspections for materials? (Note: This is only possible for batch-managed materials). Please provide an example.

A: No

Q: 19) How many different materials do you procure on a regular basis?

A: Approx. 10000 materials are procured on regular basis.

Q: 20) Do you want to maintain a source list for the material types you will procure?

A: Yes, source list will be maintained for some of the materials procured.

Q: 21) Do you value your materials using a standard price, a moving average price, or different valuation methods for different materials?

A: Raw materials, Spares and Consumables are valuated at moving average price and finished goods and semi finished goods are valuated at standard price.

Q: 22) Each material must belong to exactly one material group. Which material groups do you need to organize your materials?

A: As discussed on 06.07.2009 list has been provided to TTIL.

Q: 23) Will you need to run MRP?

A: Yes. However this will be decided by Production people.

Q: 24) Will you maintain specification data for your hazardous substances?

A: No hazardous materials are stocked at TBSL-CSP. Q: 25) Are separate material master records (perhaps with a separate material type or numbering system) used in the development and engineering/design processes? How and when are they converted to operational material number and type)?

A: No such materials are there.

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Q: 26) Do you use other systems (such as service management or costing) that need material master records from R/3 and therefore a permanent interface?

A: No.

Q: 27) Describe the structure and numbering system for material numbers (internal/external, specific to material type, other criteria).

A: Material type has been finalized and list has been given to TTIL

Q: 28) Which material types do you use (please complete): FERT, HALB, ROH, KMAT, HAWA, FMHI...

A: following material types are used at TBSL-CSP

Material Types DescriptionZRMJ Raw materials for JSRZSFJ Semi finished for JSRZFGJ Finished Goods for JSRZCOJ ConsumablesZMSJ Maintenance SparesZPKJ Packaging material for JSR

ZPRO Project MaterialsZSCR Scrap Material

Q: 29) Do you maintain multilingual descriptions for materials? Which languages are relevant? How and when are they translated?

A: No. Only English is used.

Q: 30) What types of texts do you maintain for your materials?

A: No texts are maintained in material master.

Q: 31) Please describe the process for creating and adding to material data. Include release procedure/status, important sequences, automatic notifications (workflow), responsibilities, authorizations, involved systems, and so on.

A: Authorization could be to Accounts, Purchasing, Stores, and Quality department depending on their functional views.

Q: 32) Which cross-plant and plant-specific material statuses are necessary?

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A: Cross plant and plant specific material status is not necessary.

Q: 33) Do you use classification for your material masters? For what reasons (storing addition information, search functionality, or variant configuration)?

A: Yes, if variant configuration required for PP Module otherwise not required

Q: 34) Do you have inventory valued in different currencies at the same facility?

A: No, inventory will be valued in one currency that is INR.

Q: 35) Are your materials taxable?

A: Raw Materials, Spares and Consumables are Excisable. VAT/CST is also applicable.

Vendor Master RecordCI Template:


Vendor master data is required for creating purchasing documents. Vendor master data is integrated with finance and material management modules. Single vendor master is used for procurement of material, services if he is supplying various materials or services. A onetime vendor account will be created for each domestic and import procurement.


A business partner can be a customer and a vendor at the same time if, for example, your customer also supplies goods to you or if a vendor is also one of your customers. In this case, you must create a customer master record and a vendor master record for the business partner. You can create a link between the two master records by entering the vendor number in the customer master record and the customer number in the vendor master record. You can create and change master records using groups of data that differ in the level of detail.

3. Naming/Numbering Conventions

The types of vendors will be broken down into categories called Account Groups. Each Account Group will be assigned a five (5) digit number range by which it can be identified.

4. Special Organizational Considerations

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The users responsible to maintain the vendor master data will need to be thoroughly trained to maintain the vendor master in SAP and they should be able to identify a currently existing vendor and how it is to be used and should be able to add a new vendor in SAP.

5. Changes to Existing Organization

N.A.

6. Description of Improvements

The Vendor Master will be controlled and managed by a small group of people. The Vendor Master will be easily found by Purchasing and Accounting personnel and duplications will be eliminated. The assignment of number ranges will assist the various departments in their ability to maintain and evaluate vendors.


None

8. Approaches to Covering Functional Deficits

N/A


Account Groups will be created to facilitate the different requirements of the different kinds of vendors. As discussed on 06.07.2009 list of account groups has been given to TTIL.


Users from purchasing and accounting division will maintain vendors.

Questions:

Q: 1) What types of vendors do you have? (Domestic, foreign, payment address, etc.)

A: In TBSL-CSP, we have domestic as well as foreign vendors.

Q: 2) How many active vendors do you want to transfer to R/3?

A: TBSL-CSP also will be using existing vendor master of Pune and other places. However, new vendors if any will be created in SAP.

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Q: 3) How do you want vendor numbers assigned in the R/3 System? Name your criteria for manual and automatic number assignment. Describe the format of manually assigned vendor numbers.

A: As discussed on 06.07.2009 external number ranges will be used for TBSL-CSP the number range logic has been given to TTIL. Q: 4) Do you employ different payment terms by facility?

A: Yes. Sometimes different payment terms are applicable, for example in case of shortages of certain items.

Q: 5) Are there any vendor-specific instructions or information that you want to include in purchasing documents?

A: Yes

Q: 6) Do your vendors offer discounts for prompt payment (for example, 1% cash discount within 10 days)? Provide a list of the payment terms you require.

A: Yes. A list of payment terms applicable for TBSL-CSP is being prepared.

Q: 7) Do you specify foreign-trade-specific information in your purchasing documents (such as CIF or FOB)?

A: Yes.

Source List

CI Template:

1. Requirement / Expectation

This master data is required To control procurement process, so that material is procured from approved

sources Assign the source of supply for/during MRP run to appropriate source.

2. General Explanations:

Before you create a source list, you must consider the following points:

Material and plant: In each source list, you must enter the material number and the relevant plant key for each source.

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Validity period: Consider for which period the source list is to be valid. You can define several validity periods.

Source list requirement for plant: If a source list requirement has been defined for a plant, you must maintain the source list for each material in the plant before a material can be procured for the plant.

Source list requirement for material: It may be necessary to include possible vendors of a material in the source list before the material can be ordered. The Source list requirement field in the purchasing data of the material master record indicates whether a source list requirement exists for a material.

3. Explanation of Function and events

First source list indicator is ticked in material master, purchase view at plant level.

Source list is maintained for each material and plant. Purchase department maintains source list. Details of source list will facilitate MRP run, which can generate schedules directly in the scheduling agreement during MRP run.

Questions:

Q: 1) Do you want to maintain a list of approved vendors? This means that if a material is subject to a source list requirement, it can only be procured from the vendors included on the source list.

A: Yes, a list of approved vendors will be maintained in SAP, for some materials

Q: 2) Do you need a source list for: (1) all materials (2) all materials of a plant (3) certain materials only? Please explain.

A: Source List will be maintained for only some materials

Q: 3) Is there a fixed vendor for some materials? (1) No. (1) Yes, in certain plants (specify) (2) Yes, across the entire enterprise (3) Yes, everywhere except in certain plants (specify).

A: No, in TBSL-CSP there are no fixed vendors for any material. In case of Contract the purchasing should be allowed only from that vendor under agreement within contract period.

Q: 4) Do some vendors cover certain geogr. regions? (1) No. (2) Yes. Warning if vendor does not cover relevant region. (3) Yes. Prevent issue of POs in latter case.

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Explanation: Are some of your suppliers specific to a geographic region? Are some of your suppliers specific to a geographic region? Example : ACME Widgets supplies plants in the western region; ABC Widgets supplies plants in the eastern region. A western plant should not order widgets from an eastern region supplier. not order widgets from an eastern region supplier. (1) Do not need this feature. (2) Want this feature, warning only if vendor does not cover the plant's region. (3) Want this feature, preventing orders from vendors that do not cover a plant's region. a plant's region. If you want to use this feature, indicate the region to which each of your plants belong.

A: No

Q: 5) Should it be possible to for purchase orders to be created automatically in the course of material requirements planning (MRP)?

A: NO

Q: 6) Should it be possible to for scheduling agreement schedule lines to be created automatically in the course of material requirements planning (MRP)?

A: NO

Vendor Evaluation

C I Template


In the SAP System, Vendor Evaluation is completely integrated into the MM Purchasing component within Materials Management. This means that information such as delivery dates, prices, and quantities can be taken from purchase orders.

The Vendor Evaluation component helps you select sources of supply and facilitates the continual monitoring of existing supply relationships. It provides you with accurate information on prices, and terms of payment and delivery. By evaluating vendors, you can improve your enterprise's competitiveness.

On the basis of detailed information, and in collaboration with the relevant vendors, you can quickly identify and resolve any procurement problems that may crop up from time to time.

The standard SAP System offers you a scoring range from 1 to 100 points, which is used to measure the performance of your vendors on the basis of five main criteria.

You can determine and compare the performance of your vendors by reference to their overall scores.

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The main criteria available in the standard system are: Price Quality Delivery General service/supportThese four main criteria serve as a basis for evaluating vendors from whom you procure materials. External service provision

This main criterion serves as a basis for evaluating those vendors you employ as external service providers.

The Vendor Evaluation System ensures that evaluation of vendors is objective, since all vendors are assessed according to uniform criteria and the scores are computed automatically.

The results of vendor evaluation are displayed in the form of analyses. For example, you can generate ranking lists of the best vendors according to their overall scores or ranking lists for specific materials.

Changes to evaluations are recorded in logs, and you have the option of printing out evaluation sheets.

Organizational Level of Blue Scope for Vendor Evaluation

The organizational level for Vendor Evaluation in Blue scope will be the purchasing organization:

The purchasing organization evaluates the vendors that have been assigned to it.

The SAP system does not support a comparison of Vendor Evaluations at the higher company code level.

Vendor Evaluation uses the following master data: Vendor master record Material master record Purchasing info record

The most important elements of vendor evaluation are: Overall Score

The overall score represents the general evaluation of a vendor. It is a combination of the scores the vendor has achieved for all the main criteria. You can compare different vendors on the basis of their overall scores without generating a detailed analysis of their evaluations.

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Main Criterion

The main criteria form the basis for assessing the performance of a vendor. The system calculates the vendor's overall score from the scores achieved for the main criteria.

Sub criterion

Sub criteria are the smallest units for which scores are awarded in Vendor Evaluation.The system calculates a score for the relevant higher-level main criterion based on the scores a vendor receives for the various sub criteria.

Scoring Range

To compare the performance of one vendor with another, it is necessary to establish a range (or scale) of possible scores.You can define your own scoring range from the worst- to the best-possible achievable score.

Weighting of Scores

The scores a vendor is awarded for main criteria can be weighted differently to reflect differences in the significance of the criteria.

Q: 1) What criteria is to be considered for vendor evaluation in TBSL-CSP?

A: Vendor evaluation process will be as existing in the system at present. Quality related performance will be used after implementation of QM module for TBSL-CSP.

ProcurementCI Template:


The expectations of the R/3 system are fairly simple. The number of vendors is not large (approximately 1000) and Material Masters for all the material is being maintained in SAP.


The procurement master data is used to perform transactions with as little repetitive data entry as possible. By creating the organizational units and configuring the processes to be performed, data entry can be limited to only the specific items being

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procured.

3. Naming/Numbering Conventions

Many different groups in many different locations will create procurement documents. SAP will sequentially assign document numbers to prevent any of these groups from assigning duplicate document numbers.

4. Special Organizational Considerations

None.

5. Changes to Existing Organization

The processes and documents used to facilitate the procurement processes will be standardized. The documents currently used will be condensed into Purchase Requisitions, Purchase Orders, Request for Quotation's, Scheduling Agreements, Scheduling Lines and Contracts.

Release Strategies will be used for approval.

The information contained in the documents will determine the Release. The Release Strategy used will determine who needs to approve a document. Both Purchase Orders and Purchase Requisitions will be subject to Release Strategies. These Release Strategies will be used in conjunction with authorizations to limit releases to only those with signature authority.


The procurement processes will be Centralized.

The integration of the R/3 system will point out areas of functional deficiency. Data will freely and accurately flow between the areas of responsibility.


None

8. Notes on Further Improvements

None


To utilize the release strategies, several master data elements must be created prior to the configuration of the release strategies. Classes and Characteristics must be

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defined, created, and their relationships assigned before the configuration can be completed.


Authorizations and user roles will be complex. Authorizations will control which users have access to which data.

This is necessary to prevent unauthorized release or approval of requests or purchases.

In addition to the general display and reporting functionality provided to all users, the basic Purchasing Aide and Senior Officials of Blue Scope will have access to the following:

Create, Change, and Display access to all purchasing documents Vendor Master display Info Record create, change, and display RFQ create, change, and display Document printing Vendor Master creation and change General Reporting and Display Release Strategy approval. Material Master Creation, change, and display.

Purchasing Info Record

Conditions

Q: 1) Which price components do you use in purchasing documents (e.g. gross price, surcharges, discounts, freight, duty, import)?

A: Price components that are used in purchasing documents are Basic price, CST, Excise Duty, Special Excise Duty, Packaging & Forwarding, Discounts, Freight etc.

Q: 2) Do prices depend on the quantity ordered (e.g. quantity discounts or price scales)? If so, specify price components, quantity, and other factors.

A: Yes usually prices depend on the quantity ordered like tools quantity discount is applicable.

Q: 3) To which date does the price determination process relate? (E.g. delivery date, PO date, other.)

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A: PO Date

Q: 4) Do you manually change the price at header level for the entire purchasing document?

A: No, prices will be changed at item level only.

Q: 5) Do you allow changes to the gross price that is automatically determined by the SAP System?

A: Yes, price can be changed.

Q: 6) Does the vendor's price include value-added tax?

A: Yes, in some cases.

Q: 7) Is it possible to change pricing conditions after a PO has been created?

A: Yes, but release strategy will be reset.

Batch Management

C I TEMPLATE


The structure of the material master record allows you to manage stocks of a material by value at plant level or company-code level and by quantity down to storage-location level. Under certain conditions, you may need to make further subdivisions for a material and manage batches.

If a material is subject to management in batches, every quantity of that material must be assigned to a batch. Each batch of a material is identified by a unique batch number, under which it is managed. This number is either entered by the user (external number assignment) or assigned automatically by the system.

2. Structure of Batch Data

For every batch, there are two types of data:

General data on the batch (for example, shelf life expiry date, date of the last goods receipt), which is defined in the master batch. The master batch applies to all storage locations in which the batch is located. No stocks are managed at this level.

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Stock data, which is managed separately for every storage location in which the batch is located. For example, if the batch C1 of a material is spread across two different storage locations, the stock quantity is tracked for each storage location.

When you enter goods movements for materials handled in batches, you must enter the batch number in addition to the material number. If you do not know the batch number, you can search for the batch using the required characteristics.

Questions:

Q: 1) General: Do you manage your materials in batches? In what areas (inventory management, production, sales and distribution, warehouse management, quality management) do you use batches?

A: In TBSL-CSP only Raw Materials and finished goods are managed in Batches.

Business Processes

Procurement

Q: 1) How many different materials do you procure on a regular basis?

A: More than 10000 materials are procured on a regular basis.

Q: 2) How does material move between plants?

A: The materials move across the Plants by Stock Transfer Orders.

Procurement of Materials and External Services

Purchase Requisition

Purchase Requisition Process

CI Template:


This process is used to create the Purchase Requisitions required to initiate the procurement of materials and/or services.

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Purchase Requisitions can be converted to Purchase Orders, Request for Quotations, or Contracts. The information contained in the Requisition will be maintained or copied into the secondary document (PO, Contract, RFQ).


The Purchase Requisition is SAP's first step in the procurement process. It is at this step the item being requested is identified. The Purchasing Group enters the quantity to be ordered, to which plant it is to be delivered to and any additional internal notes or notes to be communicated to the proposed vendor.

3. Explanations of Functions and Events

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.

A purchase requisition consists of a number of items, for each of which a procurement type is defined. The following procurement types exist:

Standard Subcontracting Consignment Stock transfer External service

An item of a requisition contains the quantity and delivery date of the material to be supplied or the quantity of the service to be performed.

It is also at this time that any necessary approvals are determined based on the contents of the Requisition. After the proper Releases have been completed, the Requisition may be converted to a Purchase Order, Contract, or Request for Quotation.

4. Special Considerations and Changes to Existing Organization

New document types will be configured for TBSL-CSP the list has been given to TTIL.

5. Description of Functional Deficits - GAPS

None


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Authorizations will be created to allow individuals to create and maintain Purchase Requisitions. Only few users in TBSL-CSP will be authorized to create the purchase requisitions, once the requisitions are created these will have to be released by the authorized people so that it can be further processed by purchase department. The release procedure will be configured in SAP to remove the wet ink authorizations.

Questions:

Q: 1) How are purchase requisitions created in case of stock material, material for direct consumption, external services?

A: Initially, user departments will be authorized to create Purchase Requisitions for stock materials. After establishing data required for MRP, Purchase Requisitions for all stock materials will be created through planning run (MRP run only). Purchase Requisitions for non-stock materials and services will be created by user departments.

Q: 2) Will you use a purchase requisition to trigger creation of for a contract or scheduling agreement (Outline Agreement Request)?

A: Yes can be for some materials.

Q: 3) How many days does it take, typically, before a purchase requisition becomes demand in a purchasing document given to a supplier? Please indicate processing time per plant.

Explanation: This would be used by the system to calculate replenishment lead times. Example : In plant A, within two days the purchasing department will convert a requisition for widgets into a purchase order issued to a supoplier.Please indicate processing times per plant.

A: 15 days

Purchase Requisition Assignment

CI Template:


This process is used to create the Purchase Requisitions required to initiate the procurement of materials and/or services.

Purchase Requisitions can be converted to Purchase Orders, Request for Quotations, or Contracts. The information contained in the Requisition will be maintained or copied into the secondary document (PO, Contract, RFQ).

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This section describes how to search for sources of a requested material and how to assign the requisition to the desired source.


Using SAP's “Assign & Process” functionality, the vendor can be assigned to the requisition prior to the creation of the Purchase Order for those items that have Material Masters. The system maintains a procurement history and will suggest a vendor based on past purchases.



None.


None.

6. Approaches to covering Functional Deficits

N/A.

7. Conversion, Interface or Reporting Considerations

None.


Blue Scope will use standard SAP functionality. There is no configuration necessary for the assignment process.

Questions:

Q: 1) On the basis of which criteria are purchase requisitions assigned to a source of supply?

A: Source of supply may be assigned in purchase requisition according to the previous purchases made from that vendor that is through the purchase info records, it could also be assigned to a new vendor.

Q: 2) Are purchase requisitions converted into requests for quotations?

A: Purchase requisitions will be converted to requests for quotations when there is no source of supply for the material which is requested.

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Q: 3) Which sources of supply will you use for purchase requisitions? Are these sources of supply internal and/or external to your company?

A: External source of supplies will be used.

Release Purchase Requisition

CI Template:


All Purchase Requisitions will be blocked until they are approved by the required signatory authorities.


Using criteria found in the Purchase Requisition, the system will automatically determine if a Purchase Requisition needs to be approved by a higher authority. This authority can be sequential or in total.


The release of a Purchase Requisition serves several purposes in SAP. The release will be an approval by the respective department heads.

The Purchase Order can only be transferred or printed after all releases have been completed.


Existing release strategy is not sufficient for TBSL-CSP and new strategy is to be configured.


Electronic approval reduces the amount of time necessary to produce an approved document. In addition it eliminates the chance for a document to be lost or damaged in the physical tracking procedure.


None


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None


Existing release strategy for Purchase Requisitions needs to be changed. The approving levels should be determined based on the user creating PR at TBSL-CSP.

Questions:

Q: 1) Should requisitions be subject to approval by someone (or possibly several people) before the requisition can be processed into an RFQ and/or purchase order?

Explanation: Example: all requisitions for over $1000 must be approved by the purchasing department manager; all requisitions for over $10000 must be approved by the department manager and the chief financial officer. If yes, describe the approval process, and under what circumstances the approval process applies - for stock material - for consumable material - for external services

A: Existing release strategy for Purchase Requisitions needs to be changed. The approving levels should be determined based on the user creating PR at TBSL-CSP.

Q: 2) Are the purchase requisitions subject to a release strategy? If so, which criteria apply?

A: Yes. All the Purchase Requisitions except which are generated through MRP are subjected to Release Strategy.

Q: 3) How is the person responsible for releasing the purchase requisition to be notified?

A: [ ] Via workflow[ ] Other procedure[X ] Approver regularly checks R/3[ ] By telephone[ ] By e-mail

Purchasing

Purchase Order Processing

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CI Template:


Purchase Orders will be the primary documents sent to external vendors. Request or instruction from a purchasing organization to a vendor (external supplier) to deliver a certain quantity of material or to perform certain services at a certain point in time.


Purchase Orders will be used to procure materials and services. These will be expensed to a cost centre, project, or will be identified as assets.

The Purchase Order represents the formal, legal and final approval of a purchasing transaction with a vendor.

Purchase Orders will be mailed or faxed to the vendor after it has been printed out of SAP. Once the Vendor has acknowledged receipt of the order, the Order Acknowledgement flag will be set to record the vendor's acceptance.

New PO document types (New number ranges) are to be configured for TBSL-CSP. List of new document types has been finalized.


The Purchasing Groups will evaluate their queue of pending approved requisitions. Using the “Assign and Process” transaction (ME57) they will assign a vendor to the requisition and convert the Requisition to a Purchase Order.


None.


N/A.


Blue Scope will use standard SAP functionality.

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See Procurement of Materials and External Services

Questions:

Q: 1) How will purchase orders be created in your system?

A: Buyer in purchase department will create PO in SAP.

Q: 2) Do you want the system to check whether the purchase price is within a predefined tolerance in your system, compared with the material valuation price?

A: No, because in Tata BlueScope Steel no such tolerance will be configured.

Q: 3) Describe how the source of supply is determined for manually created purchase requisitions!

A: For manually created purchase requisitions source of supply will not be assigned. When these purchase requisitions will be converted to PO then the source of supply will be assigned.

Q: 4) Specify the consumption categories for which you will procure external services and material directly: Asset, cost center, production order, project, sales order, other (please specify).

A: Asset, cost center, production order, project.

Q: 5) Which types of purchase order will you use?

A: [X ] Standard[ ] Consignment[X ] Subcontracting[X ] Stock transfer

Q: 6) How do you transmit purchase orders to your vendors?

A: [X ] via mail[X ] via fax[ ] Other

Q: 7) Do you order material in a unit of measure that differs from the one used for stock keeping purposes?

A: Normally not. But it may happen in some cases.

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Q: 8) Do you pay for material in a different unit of measure than the one that is shown in the PO/and or used for stock putaway?

A: No, Same as PO

Q: 9) Is it necessary to track certificates of origin and/or customs reference numbers for materials produced in foreign countries?

A: No.

Q: 10) Will you be purchasing material imported from foreign vendors ?

A: Yes.

Q: 11) Are purchasing info records to be updated automatically with every purchase order?

Explanation: If updating is desired and you use rounding profiles in the case of stock transport orders, after the first purchase order created the logistic data on the article is no longer read for the rounding profile. Instead the newly created purchasing info records are read! profile. Instead the newly created purchasing info records are read!

A: Yes

Q: 12) Do you wish to analyze/evaluate purchase transactions according to the reasons for ordering?

A: No

Q: 13) Do you plan and enter freight costs in the PO? If yes, describe the basis of the costs. Also indicate if any types of costs can be determined automatically (for example, freight costs per piece, per unit of weight, as a percentage of the value).

A: Yes, Freight cost is not always planned and entered in purchase order

Q: 14) Do you sometimes order stock material directly for a cost center or another consumption category?

A: Yes

Q: 15) Do you have to declare your ordering activities to the authorities? If so, describe.

A: No

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Q: 16) Do you allow over deliveries? If so, specify the percentage variance for the individual materials/material types.

A: No. Over deliveries are not allowed in TBSL-CSP.

Q: 17) On the occasion that a vendor sent you less than the quantity ordered, would you ever want this shortfall to be considered an under delivery, with no further deliveries expected? Please list the values for each material/material group.

Explanation: In case of exceeding this value, it will be a partial delivery. In case the value stayed below, it will be an under delivery

A: If a vendor sends less than the quantity ordered then the system will receive the goods and expect the remaining material.

Q: 18) Can the materials you purchase be subject to different tax types? (For example, based upon the material purchased, based upon the plant for which the material is purchased, etc)?

A: Yes

Q: 19) Do your POs issued to vendors contain specific transport or packing instructions? Is vendors' compliance with the transport and packing instructions to be recorded when the goods are received ?

Explanation: e.g., full compliance, ignored instructions.

A: Transport or packing instructions are not mentioned on the purchase orders so the vendor compliance is not required, but in some special cases it may require.

Q: 20) Is it to be possible for purchase orders to be generated automatically following a goods receipt? Specify the criteria for this.

Explanation: Define the movement types for which this should be allowed.

A: No, All the goods receipt should be against PO only.

Release of Purchase Orders

CI Template:


The purchase orders created by the purchase department are required to be released by the purchase head of Blue Scope after checking the PO details.

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A Purchase Order is a legal document outlining what is to be provided, how many or how much, at what price, where it is to be provided, when, and under what conditions. SAP will be used to generate Purchase Orders for Blue Scope.You use this component if you wish to set up approval procedures for purchase orders. Under such a procedure, if a purchase order fulfills certain conditions (e.g. the total order value exceeds Rs.10,000), it has to be approved (by the department head, for instance) before it can be processed further. This process of approving a proposed item of expenditure is replicated in the SAP System by the "release procedure".

3. Business Model

All the purchase requisitions after approval(release) by the department head of respective department reaches to purchase department where it is converted to purchase order and released to be approved(released by purchase head of Blue Scope).


None


The process of release through SAP will decrease the time necessary to complete the procurement cycle.


None.


N/A


Any open Purchase Orders will need to be converted into SAP prior to go-live.


Blue Scope will use standard SAP functionality.


Authorizations will be created to allow individuals to release Purchase Orders.Page 36 of 63




Questions:

Q: 1) Are purchase documents to be approved by someone before being issued to vendors? Describe the approval procedure....

Explanation: Example: all purchase orders for over $100,000 must be approved by the purchasing department manager, all purchase orders over $1 million must be approved by the President. Describe the approval process, and under what circumstances the approval process applies. - for stock material - for consumable material - for external services

A: Yes In TBSL-CSP the purchase orders before being sent to vendors will be released by the Purchase head. For this, existing Release procedure used at other Plants will be sufficient for TBSL-CSP, If required new strategy will be configured.

Q: 2) How is the person responsible for approval to be notified? - Approver checks R/3 regularly, by phone, by e-mail, by workflow, other.

Explanation: Background: Workflow for release procedure Background: Workflow for release procedure

A: Approver checks SAP.

Transmission of Purchase Orders

Questions:

Q: 1) How do your vendors transmit shipping notifications?

A: [X ] Paper[ ] Telephone[X ] Fax[X ] E-mail

Q: 2) What information does the shipping notification contain?

A: BL number

Q: 3) How are your RFQs and rejection letters to your vendors to be transmitted?

A: [ ] Internet[ X] Paper[ ] Telephone

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[ ] Fax[X ] E-mail

Q: 4) How long after ordering and before the time of delivery should a shipping notification have been received?

A: 2 to 3 days from Date of BL

Q: 5) How will you transmit your purchasing documents to your vendors?

Explanation: If you are using EDI, note also the EDI process in the reference structure.

A:[ ] By telephone[X ] By e-mail[ ] By fax[X ] By post (in written form)

Q: 6) Do you wish to adopt vendors' own nomenclature for characteristics (color codes, etc.) on your order form?

A: No.

Q: 7) How are purchase orders to be transmitted?

A: [X ] Paper[ ] Telephone[ ] Fax[X ] E-mail

Source AdministrationRFQ/Quotation

Processing of Requests for Quotations

Q: 1) Do you generally request several vendors to submit prices, terms and conditions in the form of a tender/bid/quotation?

A: YesPage 38 of 63




Q: 2) Do you want to assign a collective number to the different quotations submitted by several vendors?

Explanation: Use of collective number. Use of collective number.

A: Yes

Transmission of RFQs

Questions:



A: [ ] Internet[ ] By telephone[X ] By e-mail[X] By fax[X] By post (in written form)

Q: 2) Will you send rejection letters to unsuccessful bidders? Indicate how such letters are to be transmitted to the vendor.

A: [ ] By post (in written form)[ ] By fax[ ] By e-mail[ ] Other (please specify)

Tata BlueScope Steel is not interested to send rejection letters to unsuccessful vendors.

Vendor Quotation Processing

Q: 1) Do you wish to have the system automatically analyze/evaluate quotations submitted by vendors?

A: Yes.

Q: 2) How do you receive the quotations?

A:[i ] By e-mail

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[ii ] By fax[iii] By post (in written form – sealed envelope)

Q: 3) Are the quotations submitted by vendors to be automatically compared by the system?

Explanation: Use of price comparison list! Use of price comparison list!

A: Yes, in some cases

Transmission of Rejections

Questions:



A: [i ] Internet[ii ] By e-mail[iii ] By fax[iv] By post (in written form)

Q: 2) Will you send rejection letters to unsuccessful bidders? Indicate how such letters are to be transmitted to the vendor.

A: [ ] By post (in written form)[ ] By fax[ ] By EDI[ ] By e-mail

Tata BlueScope Steel is not interested to send rejection letters to unsuccessful vendors.

Outline Purchase AgreementsContract Processing

Q: 1) Will you use contracts in SAP? If so, what will you use contracts for (e.g. stock materials, consumable materials, external services)?

A: Yes. Contracts are used for stock materials, consumable materials and for external services.

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Q: 2) Which types of contract do you need (e.g. value contracts, quantity contracts)?

A: Both Value and quantity contracts.

Q: 3) Are the contracts to be valid for: - more than one plant - more than one company code?

A: No. Contracts will be for TBSL-CSP only.

Q: 4) Do you also allow a consumption account in the case of contracts for stock materials?

A: No.

Scheduling Agreement Processing

Q: 1) Will you use scheduling agreements to procure materials from external suppliers or supplying plants? If so, which types of scheduling agreement will you use? Should these scheduling agreements be maintained centrally?

Explanation: Will you maintain scheduling agreements in SAP with either an external vendor or a plant supplying the materials? If yes, - what type of scheduling agreements are you maintaining? (for example, standard, subcontracting, consignment, stock transfer. - will any of these scheduling agreements reference a centrally maintained contract?

A: Not in use right now, may be used in future.

Q: 2) Do you want to reconcile the quantity requested and the quantity actually delivered with your vendor (monitoring function)? If so, how are the lines of the scheduling agreement delivery schedule generated: manually or via materials planning (MRP)?

A: Schedule lines can be generated through MRP or manually. If they are generated through MRP also, they should be editable.

Q: 3) Do you need release documents (e.g., call-offs) and master conditions to manage your scheduling lines? If yes, are any of these JIT delivery schedules?

A: No.

Q: 4) Do you sometimes assign a consumption category to scheduling agreements for stock materials?

A: No

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Release of Outline Agreements

Q: 1) Are purchase documents to be approved by someone before being issued to vendors? Describe the approval procedure....

Explanation: Example: all purchase orders for over $100,000 must be approved by the purchasing department manager, all purchase orders over $1 million must be approved by the President. Describe the approval process, and under what circumstances the approval process applies. - for stock material - for consumable material - for external services

A: Yes.

Q: 2) How is the person responsible for approval to be notified? - Approver checks R/3 regularly, by phone, by e-mail, by workflow, other.

Explanation: Background: Workflow for release procedure Background: Workflow for release procedure

A: Approver checks SAP regularly

Transmission of Contracts

Questions:



A: [ i] Internet[ ii] By telephone[ iii] By e-mail[ iv] By fax[v] By post (in written form)

Q: 2) Do you wish to adopt vendors' own nomenclature for characteristics (color codes, etc.) on your order form?

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A: No.

Q: 3) How will you transmit your contract release orders?

Explanation: Background: Setting up of message determination. E.g. notification by fax, EDI, ... fax, EDI, ...

A: [i] Paper[ii] Telephone[iii] Fax[iv ] E-mail

Q: 4) How do you wish to transmit your contracts to your vendors?

Explanation: Background: Setting up the message determination process.

A: [i] Paper[ii] Telephone[iii] Fax[iv ] E-mail

Scheduling Agreement Delivery Schedule

C I Template

General Explanations

A form of outline purchase agreement under which materials are procured on pre-determined dates within a certain time period.

Delivery of the total quantity of material specified in a scheduling agreement item is spread over a certain period in a delivery schedule, consisting of lines indicating the individual quantities with their corresponding planned delivery dates.

Working with scheduling agreements can shorten processing times and reduce the amount of paperwork you are faced with. One delivery schedule can replace a large number of discrete purchase orders or contract release orders.

Questions:

Q: 1) Are scheduling agreement delivery schedules/SA releases created in R/3 manually, with reference to requisitions and/or automatically? (Further details in sourcing administration scenario.)

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A: It will be decided when scheduling agreement comes in use.

Transmission of Scheduling Agreements

Questions:


A:[ii] By e-mail[iii] By fax[iv] By post, Courier (in written form)

Q: 2) How are scheduling agreement releases to be transmitted?

A:[ii] By e-mail[iii] By fax

Q: 3) Do you wish to adopt vendors' own nomenclature for characteristics (color codes etc.) on your order form?

A: Not required.

Q: 4) How do you wish to transmit scheduling agreements?

A: [ii] By e-mail[iii] By fax[iv] By post, Courier (in written form)

Inventory Management

Goods Receipt

CI Template:


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TBSL-CSP will receive goods with reference to a Purchase Order. The materials will be directly unloaded at the Storage locations specified. Vendor deliveries that are more or less than the open order quantity may be

accepted or rejected based on the tolerance levels. Tolerance levels will be defined for the materials for over-delivery and unlimited under-delivery. Therefore, partial deliveries are allowed but over-deliveries will be rejected.


SAP uses the three-way matching concept for the procurement cycle of materials. SAP verifies that receiving quantities match the ordered, and the invoiced value and quantity match the amounts ordered with consideration to the tolerances defined.

At the point of the goods receipt, a financial posting takes place to post a debit to the expense account denoted in the PO and a credit to the payable clearing account (GR/IR).

This financial posting takes place automatically when the quantity of the material being received is posted. The account assignment is taken from the Purchase Order.

A goods receipt should occur for all materials that are purchased using a Purchase Order.


A Purchase Order is issued to vendor. The items are delivered to designate receiving plants and storage location.

Items are inspected to verify material, quantity, and specification(s). Goods Receipt is posted in SAP.

There are three types of stock in Inventory Management. Each of these stock types indicates whether the material concerned can currently be used.

Unrestricted-use stock Quality inspection stock Blocked stock

4. Special Considerations and Changes to Existing Organization None.


Traceability of incoming materials from order to payment. Financial integration.

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None.


N/A.


Receiving authorizations will be defined to allow the receiving personnel to display Purchase Orders and perform material transactions. The person responsible for the postings of goods will also be authorized for the activities he is responsible for.

Reservation Processing

With this component, you make a request to the store to keep materials ready for withdrawal at a later date and for a certain purpose. This simplifies and accelerates the goods receipt process.

A reservation for goods issue can be requested by various departments for various account assignment objects (such as cost center, order etc.)The purpose of a reservation is to ensure that a material will be available when it is needed.

Questions:

Q: 1) Will you maintain specific material reservations (for sales, for production) for your stock materials?

A: Yes In TBSL-CSP, reservations will be created in SAP for all stock materials and material will be issued from warehouse only against these reservations.

Q: 2) How far in advance are materials to be allowed to be reserved?

A: In TBSL-CSP, materials to be allowed to be reserved One week before.

Q: 3) In which cases would you want to use manual reservations?

A: All reservations are created manually.

Q: 4) How long after the reservation date are open reservations canceled?Page 46 of 63




A: The reservation dates are open up to 3 months.

Goods Receipt Processing

You use this component to post the receipt of goods from an external vendor or from production. A goods receipt leads to an increase in warehouse stock.

Q: 1) The material stock balances shown in your legacy system are to be transferred to the R/3 System. Will the stocks be valuated at the prices specified in the R/3 e total value of the former system be taken over?

A: N.A

Q: 2) If you do not use the R/3 Purchasing functionality, describe the process of receiving goods from a vendor.

A: In TBSL-CSP, R/3 purchasing module is being used and all the goods receipt will be through the SAP system.

Q: 3) If you do not use production orders of the R/3 System, describe the process of receiving goods from production.

A: In TBSL-CSP, PP module is being used.

Q: 4) Should the person who posts a goods receipt be able to use a different account assignment than the one specified via the automatic account determination process?

A: No, the person who receives should not be able to change the account assignment than one specified.

Goods Receipt Processing with Reference

Since Blue Scope is using the MM Purchasing component, deliveries from vendors are most likely the result of purchase orders initiated by the purchasing department.

The purchase order is not only the document with which the purchasing department orders goods from the vendor; it is also an important planning and tracking tool for the following departments: Purchasing, Material Requirements Planning (MRP), Inventory Management, and Invoice Verification.

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If a material is delivered for a purchase order, it is important for all of the departments involved that the goods receipt entry in the system references this purchase order, for the following reasons:

Goods receiving can check whether the delivery actually corresponds to the order. The system can propose data from the purchase order during entry of the goods

receipt (for example, the material ordered, its quantity, and so on). This simplifies both data entry and checking (over deliveries and under deliveries).

The delivery is marked in the purchase order history. This allows the Purchasing department to monitor the purchase order history and initiate reminder procedures in the event of a late delivery.

The vendor invoice is checked against the ordered quantity and the delivered quantity.

The goods receipt is valuated on the basis of the purchase order price or the invoice price.

Questions:

Q: 1) Describe the process for receiving goods with reference to a purchase order.

Explanation: General introduction to the subject General introduction to the subject

A: For goods received against purchase order, in SAP first the purchase order will be selected as the reference document and the item details (like quantity etc.) of the purchase order proposed to goods receive screen.

Q: 2) Name the storage locations to which vendors deliver the goods.

A: Goods will be received at the storage locations designated for the materials.

Q: 3) How do you inform the Purchasing Department that goods have been received?

A: A copy of GRR (Goods Receipt Report), which is made when the material is received, is sent to the purchase department. In SAP the purchase department can check at any moment what are the goods received for the purchase orders.

Q: 4) Do you receive quantities less than the ordered quantity? If yes, is the purchase order considered complete then or do you receive the missing quantities later?

A: Sometimes quantities received are less than the quantities ordered. The purchase order is not considered closed and remaining quantity will be expected in the system.

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Q: 5) Do you physically store the goods you have received into "stock in quality inspection" at a different location than those posted to normal stock?

A: In TBSL-CSP, goods will be sent for manual quality inspection then the GRN will be posted to unrestricted use stock.

Q: 6) Do you allow every material to be stored at all storage locations? Please describe!

A: No. Materials are stored specific to storage location only. But in some cases, same materials can be stored at different storage locations.

Q: 7) Do the materials you receive have to be stored for a certain time before they can be used or do they have an expiration date that you want to keep in the system?

A: Yes for some items

Q: 8) Do you refuse to accept deliveries if the vendor has not complied with the shipping instructions? (Can be used to evaluate vendors.)

A: No

Q: 9) Which documents are generated with the goods receipt?Explanation: Note on design of SAP Script documents, message determination Note on design of SAP Script documents, message determination

A: [i] Goods receipt Note

Q: 10) Which documents are generated in connection with a goods receipt?Explanation: Note on design of SAP Script documents, message determination Note on design of SAP Script documents, message determination

A: Accounting Document

Q: 11) Will you inspect the material/article at the time of goods receipt? If so, do you enter the goods receipt and the inspection result or do you only enter the goods receipt after the inspection has been carried out?Explanation: QM module

A: Yes, in TBSL-CSP the goods received will be subjected to Quality Inspection. The goods will be posted to receipt store where it will undergo quality inspection and the quality pass goods are transfer posted to raw material store. But in SAP, this will be followed after implementation of QM module.

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Q: 12) If you are using batch management, how is the batch number determined at the time of goods receipt?Explanation: Batch management Batch management

A: It will be system generated Q: 13) Do you wish to print out the material document as evidence of a goods movement? Which information should be included in the printout?

A: Yes

Automatic Generation of Purchase Orders

Q: 1) Is it to be possible for purchase orders to be generated automatically following a goods receipt? Specify the criteria for this.

Explanation: Define the movement types for which this should be allowed.

A: No, it is not possible that purchase order will be generated automatically following a goods receipt. Although it is possible in SAP, but management wants to avoid the usage of this procedure.

Stores

Stock Placement Processing

Questions:

Q: 1) Can goods be issued directly from the goods receipt area?

A: There is no specific goods receipts area in TBSL. The material will be directly unloaded at respective storage locations.

Q: 2) Do you post your materials to "blocked stock"?

A: Yes, if the goods do not meet the quality requirements but these are posted to blocked stock.

Return Delivery

CI Template


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If you want to return delivered goods to the vendor for some reason (for example, due to poor quality or because they are damaged), you can use this function to return the goods, even if you have already posted the goods receipt.

If the vendor sends you a substitute delivery after you have returned goods, you can reference the return delivery when you post the goods receipt.

When you enter a return delivery, you should reference the purchase order or the material document, so that the system can:

Suggest data to simplify data input (for example, the storage location) Check that the returned quantity does not exceed the delivered quantity Reduce the quantity delivered to date Reverse other updates that occurred (for example, for a goods receipt into

consumption) when the goods receipt was entered

Before you enter a return delivery with reference to a purchase order, you have to determine whether the goods were posted to stock or to consumption, or whether they were posted into goods receipt blocked stock. If you posted the goods to a particular stock type at goods receipt (for example, quality inspection stock), you have to return them from the same stock type.

The following illustration shows all the types of returns possible in the SAP System:

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Questions:

Q: 1) Will you create action plans/tasks for this defective material?

A: No, this can be covered in QM Module.

Q: 2) Do you enter data (for example, defects, characteristic results, specific findings) on the defective material found in the stockroom or on the shop floor?

A: No, this can be covered in QM Module

Q: 3) Do you have to inspect/re-inspect defective material found in your stockroom or on the production floor?

A: No

Q: 4) Which documentation should accompany the goods that are returned to the vendor?

A: The documents that accompany the return material are reason for rejection, non returnable gate pass and excise invoice in case of excisable material.

Inventory ManagementGoods Movements

Goods Issue

Using this component, you can post a material withdrawal, a material issue. A goods issue leads to a reduction in warehouse stock.

The Inventory Management system supports the following types of goods issues: Withdrawal of material for production orders Scrapping and withdrawal of material for sampling Return deliveries to vendors Other types of internal staging of material

Goods Issue Processing

CI Template


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Before entering a goods issue, you have to find out whether any reference document or data exists in the system.

When you enter a goods issue, you can reference: Reservations Production orders Bills of material

If a reference document (reservation/order) exists, it is important to enter the goods issue with reference to this document, for the following reasons: The goods issuing department can check whether what was requested is actually issued. During entry of goods issue, the system can suggest data from the reference document (for example, account assignment, requested material, quantity, etc.). This simplifies both data entry and checking (over deliveries and under deliveries) when entering a goods issue. After a withdrawal, the quantity withdrawn is updated in the reference document and the reserved quantity is reduced accordingly. Thus, Inventory Management can monitor the withdrawal process and Materials Planning can update the stock/requirements list.

A goods issue has the following results in the system: Material document is created Accounting document is created Goods receipt/issue slip is created Stock update Update of G/L accounts Consumption update Reservation update Order update Inspection lot is created when QM is connected

Questions:

Q: 1) How much time elapses between the actual goods issue and its posting in the system?

A: There will be some time gap.

Q: 2) Is the posting made online or in batch mode?

A: The postings will be made online.

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Physical Inventory & Cycle CountingPhysical Inventory

CI Template


This component allows you to carry out a physical inventory of your company’s warehouse stocks for balance sheet purposes. Various procedures can be implemented for this.

In the R/3 System, physical inventory can be carried out both for a company’s own stock and for special stock. Inventory for a company’s stock and for special stocks (such as, consignment stock at customer, external consignment stock from vendor or returnable packaging) must be taken separately (in different physical inventory documents), however.

Furthermore, the stock can be divided into stock types. In the standard system, a physical inventory can be carried out for the following stock types: Unrestricted-use stock in the warehouse Quality inspection stock Blocked stock

2. Requirements

In Blue Scope the physical inventory will be carried out for the materials based on their A, B or C category. All the material for which physical inventory is to be carried out will be divided into A, B and C category. For the A category items the cyclic counting will be carried out every month and for B and C category material the inventory will be taken once at the end of the year. The difference will be posted at the end of the year.

Determination of Scope for Periodic and Continuous Inventory

Questions:

Q: 1) Do you block the relevant stock during the physical inventory count?

A: Yes, all the goods movement should be blocked at the time of physical inventory taking.

Q: 2) Do you conduct a physical inventory for:

A: [i] Unrestricted-use material[ii] Blocked stock

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[iii] Consignment stock at customer[iv ] Vendor consignment stock

Q: 3) Which types of physical inventory do you wish to use to count the materials in your stores?

A: [i] Annual (periodic) inventory[ii] Continuous inventory[iii] Cycle counting inventory

Inventory Count

Questions:

Q: 1) How do you carry out the physical inventory count (e.g. manually, using bar code scanners)?

A: In TBSL, physical inventory count will be carried out manually and using barcode as well.

Invoice Verification

Invoice Processing with Reference

CI Template:


Blue Scope will do Invoice Verification is done by Stores with reference to a Purchase Order.

Vendor deliveries that are more or less than the open order quantity may be accepted or rejected based on the tolerance levels. Tolerance levels will be defined for the materials for over-delivery and unlimited under-delivery. Therefore, partial deliveries are allowed but over-deliveries will be rejected.

Invoice is done for the accepted quantity only.


SAP uses the three-way matching concept for the procurement cycle of materials. SAP verifies that receiving quantities match the ordered, and the

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invoiced value and quantity match the amounts ordered with consideration to the tolerances defined.

At the point of the invoice verification, a financial posting takes place to post a debit to the payable clearing account (GR/IR) and credit to the Vendor Account.

This financial posting takes place automatically when the invoice is posted. The account assignment is taken from the Purchase Order and Goods Receipt..


A Purchase Order is issued to vendor. The items are delivered to designate receiving plants and storage location.

Items are inspected to verify material, quantity, and specification(s). Goods Receipt is posted in SAP.

There are three types of stock in Inventory Management. Each of these stock types indicates whether the material concerned can currently be used.

Unrestricted-use stock Quality inspection stock Blocked stock

Invoice verification is done in the SAP against the vendor invoice.



Traceability of incoming materials from order to payment. Financial integration.


None.


N/A.


Invoice verification authorizations will be defined to allow the Invoice Verification personnel to display Purchase Orders and perform material transactions. The person responsible for the postings of invoice will also be authorized for the activities he is responsible for.

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Questions:

Q: 1) Do you reduce the amount of your vendors' invoices automatically in the event of variances?

A: No, Payment is made as per Purchase order.

Q: 2) Name the types of tax that might appear on a vendor's invoice.

A: BED, VAT/LST, Service Tax, CST, Octroi, TOT E-Cess, WCT, Entry tax CVD, BCD, Anti dumping duty, Add. Duty of customs etc.

Q: 3) List the types of tax that are generally applicable and should therefore be automatically suggested in the standard system when an invoice is entered.

A: BED, VAT/LST, Service Tax, CST, Octroi, TOT E-Cess, WCT, Entry tax CVD, BCD, Anti dumping duty, Add. Duty of customs etc.

Q: 4) If there are different types of tax, can groups of these tax types occur together under certain circumstances?

A: N.A

Q: 5) How do you treat unplanned delivery costs included in an invoice?

Explanation: Notes: Delivery costs are additional costs such as for express delivery.

A: Unplanned Delivery costs are to be post to materials.

Q: 6) Do you sometimes have to change the account assignment for a certain purchase order at the time of invoice verification?

A: No

Q: 7) Is a goods receipt always necessary for invoice verification purposes? If so, do you allow reversal of the goods issue after the invoice has been posted or has been entered?

A: Yes

Q: 10) Do you wish to notify Purchasing if the invoice price varies from the purchase order price?

A: Yes. If any variation is there invoice is send back with out payment

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Q: 11) Do you receive invoices with a large volume of data for which no checking is necessary?

Explanation: Check whether it is possible to switch to ERS.

A: No

Q: 12) Do you receive invoices relating to transactions that are not administered in the system?

A: Yes (Freight at actual)

CIN (COUNTRY INDIA VERSION) CI Template


This is designed for use by businesses with operations in India. As well as the generic SAP System functions, it comprises functions designed for laws and business practices particular to India.

Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as follows: Excise duty and the central value-added tax system (CENVAT) Withholding tax (also known as tax deducted at source) Sales tax Maintenance and printing of statutory excise registers

The Materials Management (MM) component covers the most important laws and business practices specific to India.

Country Version India comes with functions for calculating, posting, remitting, and reporting excise duty, and for handling incoming and outgoing excise invoices.

For these purposes, extra fields are available in the vendor master data and material master data for information required in India only.

Country Version India offers two ways of calculating excise duty, a condition-based method and a formula-based method.

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You can enter incoming excise invoices in the R/3 System for goods receipts arising from external procurement, subcontracting, and stock transfer. Excise clerks can capture incoming excise invoices using a dedicated transaction, or, alternatively, warehousemen can capture them in the standard Goods Movement transaction, MIGO, when they enter a goods receipt.

Finally, you can prepare copies of all excise registers for submission to the excise authorities.

The R/3 System automatically calculates excise duties in Materials Management (MM) and in Sales and Distribution (SD), and posts them in Financial Accounting (FI).

The system covers all types of excise duty, all of which need to be calculated and reported separately: Basic excise duty (BED)The main type of excise duty in India.It is levied on a wide range of products, for example, foodstuffs, metals, jewellery, leather goods, and machinery. Special excise duty (SED) A form of excise duty in India on a limited number of goods, mostly luxury goods, including pan masala, sparkling waters, furs, and yachts. Additional excise duty (AED) A form of excise duty, in India, levied on a select range of products, for the most part, textiles.

CessIn India, a tax on the manufacture of certain products, mostly foodstuffs.

In Blue Scope, BED is applicable for Incoming Excise material and BED and SED is applicable for Imports material.

In addition, the system allows you to prepare printouts of the various excise registers for the tax authorities

The excise authorities require you to maintain a number of registers relating to excise duty. They have to be printed out monthly and shown to the authorities in the event of an audit. The R/3 System makes all the entries for these registers automatically, and you can prepare copies of them as and when necessary.

The SAP System handles the following excise registers: Register RG 1 Register RG 23A and 23C, Parts I and II Register RG 23D Personal Ledger Account (PLA)

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This is the bank account from which you transfer any money owing to the excise authorities. For Blue Scope, Register RG 1, Register RG 23A and 23C, Parts I and II and Personal Ledger Account (PLA) will be maintained.--

You can calculate how much excise duty you must remit to the authorities. Legislation requires you to remit excise duty once a month: Before the 5 th of every month, you are allowed five days to remit the excise duty.

Once the report has determined how much you have to pay, it allows you to specify where the money should be paid from – whether it should be deducted from the CENVAT credits that you have accumulated, or whether it should be deducted from the personal ledger account (PLA).

In Blue Scope, the Excise and Imports is applicable for the all Plants and so the functionality of subcontracting of excisable goods also holds for all plants.

Excise Invoice (Incoming)A business document, in India, that your vendor sends you when it delivers excisable goods. It lists the goods and states how much excise duty applies on them. Your use the excise invoice to claim back the excise that you have paid from the excise authorities.

When you procure goods externally, each delivery that your vendors make is accompanied by an excise invoice. You have to post these in the system. This document is required as proof of the excise duty that you have paid, so that you can then offset the duty against the excise duty that you levy on outputs.

In the R/3 System, the excise invoice consists of header data and line items.The header data comprises: An internal number The excise invoice number The date of the excise invoice The details of the original vendor who generated the excise invoice, if your vendor purchased the goods from another vendor and was merely selling them on to you

At line item level, the excise invoice lists the materials on the excise invoice, showing the following information: Chapter ID Quantity of materials Excise duty base amount Rates of excise duty Amount of duty paid

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External Procurement (Domestic)

This process illustrates how manufacturing plants can use the R/3 System to procure excisable goods.

In addition to the standard procedure, you also have to capture and post the incoming excise invoice, and the system creates the appropriate entries in the excise registers.

The process flow for the procurement of excisable material is as follows :Process Flow1. You create a purchase order for the goods you want and send it to the vendor. After a few days, the vendor sends you the goods together with an excise invoice.2. When the goods arrive at your company, the warehouseman enters the goods receipt.The system: Creates a material document to record the goods receipt Creates an accounting document to debit the inventory account and credit the GR/IR clearing account: Creates a Part I entry in register RG 23A or 23C3. The excise clerk captures the excise invoice.4. The excise supervisor checks the excise invoice captured by the clerk, makes any changes necessary, and posts it. The system automatically debits the excise duty to the excise duty accounts and credits the CENVAT clearing account:5. It then creates a Part II entry in register RG 23A or 23C to record this posting.

You enter the vendor's invoice, following the standard procedure.

If the excise supervisor has reduced the amount of excise duty that is to be credited to the CENVAT account, the system adds the difference to the material price.

The system also creates an accounting document. The document contains debit postings to clear the clearing accounts for goods receipts and CENVAT; and a credit posting to create an open item on the vendor's account.

Subcontracting Excisable Materials

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If you work with subcontractors, there are two ways of handling the excise invoice on the goods that you provide them with: Subcontracting without payment of excise duty Subcontracting under full payment of dutyCountry Version India supports both of these approaches.

In Blue Scope, Subcontracting without payment of excise duty will be used.

When you issue materials to a subcontractor, you need to keep track of what materials you have issued and when they have to be returned by.The reason for this close monitoring has to do with India’s tax law. Under excise law 57AC, when you send materials to a subcontractor for processing, you are not required to pay any excise duty, even though the materials have left your premises. However, if the materials have not been returned to you within a given length of time specified by the law (in 2000, 180 days), you will have to reverse any excise credit that you posted when you purchased the materials

ImportsThis process shows you how to handle the countervailing duty (CVD) on imports, which is levied in place of excise duty. Unlike other forms of customs duties, such as basic customs duty or special customs duty, you can credit CVD paid on imports to your CENVAT account.

PrerequisitesVendor Master Record for Customs OfficeCreate a vendor master record for the customs office, so that you can create liabilities for the CVD (see step 3 in the process flow).Condition Type for CVDThe system handles CVD using a condition type for planned delivery costs.

The process flow for materials imported will be as follows :Process Flow1. You create a purchase order for the goods that you want and sent it to the

vendor. 2. For each material that you will have to pay CVD on when it comes through

customs, you enter the CVD as a pricing condition.3. The vendor ships the goods to you. 4. When the goods arrive in India, they go through customs. The customs

officers issue a bill of entry for the goods, which is in effect an invoice for the CVD on the goods. Once they have inspected the goods, they send them on to you.

5. The goods arrive at your plant, together with the bill of entry. In order to record the bill of entry in the system:

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6. The excise clerk enters an invoice for the bill of entry 7. In Accounts Payable (FI-AP), the system creates a new vendor item for the

CVD at the customs office. The item is offset to the CVD clearing account.8. He then captures an excise invoice for the bill of entry9. The warehouseman posts the goods receipt.10. The excise supervisor posts the excise invoice. 11. The excise clerk enters the vendor invoice for the materials, following the

standard procedure.

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