SAP Material ManagementProcure to PayInventory Management

ContentsOverview and Org. StructureMaterial MasterPurchasing Master DataProcurementInventory Management/ ValuationInvoice Verification/Valuation

Topics

Overview and Organizational Structure

Inventory Management Org. Structure

Storage locationsPlants

Purchasing Org. StructurePlantsCompany (Group)Company codesPurchasingorganizations

Organizational Entities in PurchasingPlant 1Purchasing organizationPlant 2Plant 2Plant 10

Material Master

Material master recordWarehouse Manage- ment system data

Units of measureBase unit: PieceBox(unit of issue)Crate(order unit)Pallet(sales unit)41672

Material data maintenance: accounting

Maintenance of material dataMoving averageprice control:Final delivered price(such as purchaseorder price) influencesthe valuation priceV

Purchasing Master Data

Purchasing Master DataThe Vendor

The vendorBankInvoice verificationpurchase order

Organizational levels of vendor master record

Vendor master record

Purchasing Master DataInfo Record

Purchasing info records

Data in the purchasing info record

PricingRecords for condition type No valid record exists Valid record existsAccess sequence: PB01 1.Outline agreement 2.Vendor/material/ organizational level 3.Vendor/material group/ organizational level12345Scale

ConditionsGross price Discount % Net price: Fixed freightcharge + Effective price:PB00RA01FRA1Condition typeCalculation typeScale basisPrice/quantityscalePricing procedure

Procurement

ProcurementProcurement Environment

Purchasing documentsQuotationAQuotationB?

Procurement for stock

Procurement for consumption

Inventory Management/Valuation

Inventory ManagementGoods Movements

Inventory managementWarehouse 1Warehouse 2

ConsumptionScrappingTransfer posting

Documents for goods movementsGoods movementMaterialdocumentAccountingdocument

Inventory ManagementProcessing Goods Receipts with Purchase Order Reference

Stock types for goods receipt Account assignment object Goods receipt blocked stockWarehouseConsumptionVendor

Posting procedure for goods receipt (example) GR/IR clearing ( )( )

Inventory ManagementProcessing Goods Receipt w/o Reference

GR w/o Reference to Production OrderPreplanningwithout purchase order

without production orderInitial entry of stock balanceWithout purchase orderWithout production orderGoods receipt of by-productsDelivery free of chargeReturns from customer

Inventory ManagementProcessing Goods Issues

Goods issuesSamplingScrap

Posting method for goods issueStock accountStock value Consumption account

Invoice Verification / Valuation

----Invoice verification environmentPurchase order

Posting an invoice Material master Moving average price ValueGR/R account

Vendor account

Materials management is primarily concerned with the material flow in a company. For this purpose the production plants and locations with stocks of material must be represented in the system. This is done using plants and storage locations.A plant is an operating unit for production and material requirements planning or simply a grouping of one or several locations with stocks of material (storage locations) that are geographically close to one another.Stocks of a material at a storage location can be subdivided into batches.A purchasing organization is an organizational unit which procures materials and services and agrees on terms and conditions of purchase with vendors.The purchasing organization takes external legal responsibility for all purchasing transactions.In legal terms, each purchasing organization is allocated to a company code. This company code represents the company legally responsible for all purchasing activities of the purchasing organization. Invoice verification is carried out in this legally responsible company.A purchasing organization can carry out tasks for several different plants. At present, there is the restriction that these plants must belong to the company code of the purchasing organization.

The purchasing organization negotiates the pricing conditions and outline agreements with the vendor for the plants assigned to the purchasing organization.The individual activities in purchasing are carried out by purchasing groups (groups of buyers or even individuals). A purchasing group can carry out tasks for several purchasing organizations. The purchasing group is not assigned to a purchase organisation.Specific purchasing activities are assigned to individual purchasing groups e.g. via the material master.The material master is the central master record for logistics. For example, data for sales, production and procurement are stored in the same master record but can be related to differnt organizational units.The general data is valid for all clients (groups of companies).The description can be entered in as many languages as you wish.The sales-specific data can be entered dependent on sales organization and distribution channel.Most of the data relevant for purchasing and inventory management are related to a plant.For the Warehouse Management system, data can be entered by warehouse number as well as by storage type of a warehouse number.Base unit of measure: Unit in which stocks are managed. All quantities which you enter in other units of measure are converted into the base unit. For units of measure which cannot be converted on a standard basis, a conversion factor must be specified during material master record maintenance.Order unit (purchasing): Unit of measure in which the material is ordered. It is defaulted, and can be changed as desired, in purchasing functions.Sales unit: Unit in which the material is sold. It is defaulted, and can be changed, in the sales order.Unit of issue: Unit of measure in which the material is issued from the warehouse or stores. Goods issue and physical inventory transactions can be entered in this unit.Allocation of the material to a group of G/L accounts. The valuation class together with other factors determine the G/L accounts which are posted during a valuation-relevant transaction (for example, goods movement).The valuation classes allowed depend on the material type. By displaying the possible entries, you can see which valuation classes are allowed for the material type.Several valuation classes are allowed for one material type.One valuation class is allowed for several material types.The price control indicator determines whether the stock of the material is valuated at the standard price or the moving average price.For price control S, the valuation price must be entered in the "Standard price" field on the accounting screen. For price control V it must be entered in the" Moving price" field.Depending on the material type, one of these two procedures can be defaulted or even specified as a mandatory entry.A vendor master record is created for each business partner from whom you purchase goods and services.There are separate functions for entering information on the vendor:Maintenance of purchasing dataMaintenance of accounting dataThere are also central maintenance options.General data (valid for the entire group), purchasing organization data, and company code data can be maintained for each vendor.General data and purchasing organization data can be maintained by purchasing; general data and company code data can be maintained by the accounting department.The head office can maintain both purchasing and accounting data at purchasing organization and company code level.You can create list displays for vendor master records and display the changes made at the various organizational levels. You can also block vendors for purchasing or accounting.In addition to the manually maintained data, the system updates the following data:the monthly debits and credits per posting period (and possibly business area).the special G/L transactions (for example, down payments).the dunning/reminder data.Data which describes a supply relationship is stored in an info record.A master record must be created for the vendor.If a master record has been created for the material, it is a stock material info record, otherwise it is an info record for a material group (non-stock material).Info record data is proposed when purchasing transactions are entered.Analyses such as the following can be created on the basis of purchasing info recordswhich vendors offer a certain material?which materials does a certain vendor offer?In addition to general supply relationship data, an info record contains data which can be maintained on a purchasing organization and plant basis.When you enter purchase orders, the system automatically updates the order price history. The order price history can be displayed by a separate function (purchasing menu: Master data -> Info record -> List display > Order price history).The pricing procedure defines:which condition types are allowedin which sequence they are used for price determinationwhich condition types are used to obtain running totalsConditions can be maintained when quotations, info records, outline agreements and purchase orders are entered.For this purchasing data, pricing procedures are used to specify which conditions are allowed in each case and the sequence in which they are taken into account.The individual conditions are represented by condition types. Standard condition types include gross price, discounts, surcharges, freight charges, and cash discounts.An access sequence can be used to define how the value of a condition type is calculated.Purchase requisition informs purchasing of a requirement for a material or a service.Request for quotation (RFQ) requests potential vendors to submit a quotation.Quotation contains the vendor's terms and conditions and constitutes the basis for vendor selection.Purchase order is the buying party's formal and binding declaration of his intention to purchase a material or service.Contract is a type of outline agreement; the contract is the buying party's binding declaration of his intention to purchase a material or service within an agreed period.Scheduling agreement is a type of outline agreement; a delivery schedule issued under a scheduling agreement contains precisely defined dates on which deliveries are to be made (schedule lines).Procurement for stock is characterized by the fact that the material is stored after goods receipt, and the consumption of the material is entered in a separate step.If material is procured for stock, the warehouse stock level of the material is increased by entering goods receipt and reduced by entering goods issue. With each goods movement, the stock and consumption accounts are updated in financial accounting.When goods are issued, the consumption statistics are updated.In the case of procurement for consumption, the material is regarded as consumed at the time of goods receipt.If a material is procured for consumption, the consumption purpose is defined by purchasing (an account assignment category and further specifications such as cost center or project number are entered).If material is procured directly for consumption, no warehouse stock is created when goods receipt is entered (and the stock value is not increased) but the consumption statistics (and the consumption accounts in the accounting department) are updated directly. Exception: Material type has inventory management indicator M (in the standard system: Material type UNBW=non-valuated).Inventory management is concerned with the flow of materials within a company.Goods movements are divided into goods receipts, goods issues, and transfer postings.When you enter a goods movement, the stock situation is updated both on a quantity and value basis . In addition, documents are created to record each transaction.A material document and any relevant accounting documents are automatically created for a goods movement.The material document describes goods movement from the stores or warehouse view. All items in the material document refer to the same period, the same chart of accounts, and the same local currency; however, they can relate to different company codes (for example, in the case of transfer postings).You can specify whether a material document may be printed for individual types of goods movements. If printing is allowed, a material document can be printed at the time a goods movement is entered or later using a separate function. There are several print versions to choose from.The accounting document describes the goods movement from the accounting view. An accounting document always relates to a company code. For a goods movement, either no accounting document is issued or one or more documents are issued.You can branch to the display of the accounting document from the display of a material document .On goods receipt, a material can be placed in the unrestricted, valuated warehouse stock, in the blocked, valuated warehouse stock, into stock in quality inspection, or into GR blocked stock.If QM is active, you can specify that a material can be stored as stock in quality inspection.Stock in quality inspection is valuated but not as part of the unrestricted-use stock.GR blocked stock is neither valuated nor unrestricted. A goods receipt can, for example, be posted into GR blocked stock if you only accept the delivery with certain reservations. Goods receipts into GR blocked stock are displayed in the statistics for the order item.Transfer postings between these different stock types are possible as are returns deliveries to the vendor. If QM is active, transfer postings can be initiated by the usage decision.In case of consumption the item needs an account assignment object such as order or cost center. On goods receipt the stock account is debited and the goods/invoice receipt clearing account is credited.The item in the goods/invoice receipt clearing account is cleared by the invoice receipt.In addition, provisions can be made for freight charges or customs duty, for example, if delivery costs are planned in advance in the order item.Even if you are not using the Purchasing component, you canplan goods receipts via reservations,post goods receipts without referring to a purchase order (for example, data transfer).Goods issues can be both planned and unplanned.The data to be entered depends on the type of goods issue.You can define in Customizing whether the consumption account can/must be entered manually.In invoice verificationincoming invoices and credit memos are enteredinvoices are checked (factual accuracy, correct prices)The resulting account movements are postedmiscellaneous data is updated in the SAP system (for example, purchase order history, material prices...)Invoice verification accesses data from other application areas.An invoice document is created for each incoming invoice.Posting an invoice has the following effects:a document is created.postings are made to the G/L accounts of the individual document items .the material master is updatedthe purchase order history is updatedfurther accounting data (for example, cost centers, assets) is updated.