Egn 5620 enterprise_sys_procurement process fall 2012

Procurement Procurement Processes Processes

EGN 5620 Enterprise Systems Configuration EGN 5620 Enterprise Systems Configuration Fall, 2012 Fall, 2012

Procurement ProcessesProcurement Processes

SAP Implementation SAP Implementation

EGN 5620 Enterprise Systems Configuration EGN 5620 Enterprise Systems Configuration Fall, 2012Fall, 2012

January 2008January 2008

© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All The Rushmore Group, LLC 2008. All rights reserved. rights reserved. 33

Business Process IntegrationBusiness Process Integration

FI

MM

SD

Rules

FI

MM

SD

Master D

ata

FI

MM

SD

FI SDMM



Business Process IntegrationBusiness Process Integration

Purchase Process



Rules (review)Rules (review)

Rules define the parameters for Master Data and Transactions

Rules determine functionality for Master Data and Transactions

Rules are relatively fixedRules change, when corporate policy

changes


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Rules (review)Rules (review)

Material Management• Fiscal Periods• Account Groups• Material Types• Plant Parameters• Purc./Rec./Inv.

Tolerances • Automatic Account

Assignment• Reservations• Material Group• Loading Group



Transaction Data (review)Transaction Data (review)

Transaction data are application data; each transaction is dynamic and unique, unlike master data and organization data which do not change very often.

Transaction data use (is comprised of) organization data, master data, and rules

Transaction data includes internal and external exchanges that describe business activities



Purchasing in SAP R/3 (review)Purchasing in SAP R/3 (review)The purchasing process resides in the Materials

Management (MM) module of SAP R/3 as well as the Finance (FI) module

Master data for the purchasing process exists in the (MM) and (FI) modules

The purchasing process may interface with the modules below:◦ Production Planning (to plan for production), ◦ Quality Management (to check quality at receipt), and ◦ Warehouse Management (to put away)

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Procurement Process (Procure-to-Pay)

Purchase Requisition

Paymentto Vendor

Notify Vendor

VendorShipment

InvoiceReceipt

GoodsReceipt

Purchase Order

3-WayMatch

Create & Save Purchase OrderCreate & Save Purchase Order

Purchase Purchase Order in SAPOrder in SAP

Three sections in a purchase order:◦ Header◦ Item overview◦ Line item

Purchase Order StructurePurchase Order Structure

PurchaseOrder

45......01

Header

Vendor CompanyPurch. Org. DatePurch. Org. group PO Price

Item Overview

Materials Price/UofMQuantities CurrencyDelivery Date Plant

Line Item

PO History TolerancesLine Price StorageDelivery Schedule



Purchase Order Structure:Purchase Order Structure:HeaderHeader

Header - information specific to the entire purchase order◦Vendor◦Purchase organization data◦Condition (total purchase price)◦Partner◦Payment process◦Status



Purchase Order Structure:Purchase Order Structure:Line ItemsLine Items

Line item – purchasing information required for the item◦Item category◦Material id and description◦Materials or services quantity◦Delivery date◦Net price◦Currency◦Plant◦Storage location◦Measurement unit



Purchase Order Structure:Purchase Order Structure:Item DetailsItem Details

◦Material data for the item◦Quantities/weights◦Delivery schedule◦Invoice◦Conditions (Purchasing price for the item)◦Delivery address◦Confirmation◦Condition control◦Subcontracting



Purchase Order: Output FormatPurchase Order: Output Format

Printed and mailedE-mailElectronic Data Interchange (EDI)Faxed (hardcopy or electronic)eXtensible Markup Language (XML)



Search Purchase OrdersSearch Purchase OrdersYou can search for the purchase order

number with◦Material number, ◦Vendor number, etc.

MM: Goods ReceiptMM: Goods Receipt

PurchaseOrder

45......01

Vendor

Notify Vendor

ShipmentReceipt



Goods Receipt – Movement TypesGoods Receipt – Movement Types

Movement types - stock transactions◦Goods receipt◦Goods issue◦Stock transfer

Movement type determines which◦Quantity fields are updated◦Stock types are updated◦General Ledger (G/L) stock or consumption

accounts are updated◦Fields are displayed during document entry

Material MovementsMaterial MovementsWhen a goods movement takes place it is

represented by a Movement Type◦Movement types are three-digit keys used to

represent a movement of goods101 – goods receipt into warehouse102 - reversal of goods receipt for purchase

order into warehouse/stores103 – goods receipt into GR blocked stock122 – return delivery to vendor501 - receipt w/o purchase order into

unrestricted-use stock

Goods ReceiptGoods ReceiptGoods receipt is a goods movement

activity in which we accept goods into our system.

If materials are delivered against a purchase order we will reference that order and SAP can ◦ retrieve data from the PO for us to verify:

material, quantity, and so on◦ Update inventory G/L account automatically◦ Update purchase order history with the receipt◦ Update physical inventory



Goods Receipt – DestinationsGoods Receipt – Destinations

Goods receipt into (destined for) the warehouse◦ SAP increases total valuated stock by the delivered quantity. ◦ SAP updates the stock value at the same time.

Goods receipt into consumption◦ SAP only updates the consumption statistics in the material

master record◦ SAP does not update the consumption statistics if the goods

movement posting uses the special stock types: sales order stock type and project stock.

Goods receipt posted into blocked stock◦ SAP maintains the same stock level. ◦ SAP only records it in good receipt block stock of the purchase

order history.Note:

◦ If goods receipt is being posted into a storage location where data does not yet exist for the material, SAP automatically creates a storage location data in the material master record.



Goods Receipt – EffectsGoods Receipt – Effects

Purchase Order (PO) history and Purchase Order (PO) updated

Material Master - stock and value updatedNotification of goods receipt issued

(optional)Transfer request to the Warehouse

Management module (if active)



Goods Receipt – Effects Goods Receipt – Effects (continued)(continued)

Material and financial documents created and/or updated

Stock and consumption accounts updatedInspection notification in the Quality

Management (QM) module - if active



Goods Receipt – Account PostingsGoods Receipt – Account Postings

Inventory account is debited at standard price

Goods Receipt/Inventory Receipt (GR/IR) clearing account is credited at purchase order price

Price difference account is debited (credited) with difference between standard price and purchase order price

Goods Receipt – Account postingGoods Receipt – Account posting

Purchase requisition

Purchase orderMaterials Management (MM) and Financial Accounting (FI)

via automatic account assignment

Goods receipt

No impact onFinancial Accounting (FI)



Invoice Receipt ProcessInvoice Receipt ProcessTasks:Engage in 3-way match to validate the invoice.Enter PO number to retrieve the PO and view

(verify) ◦ Open dollar amount. ◦ Quantity, ◦ Price, ◦ receiving date, ◦ Vendor name

Enter the invoice number and the dollar amount to be paid

Simulate invoice postingPost the invoice in SAP



3-Way Match for Payment3-Way Match for Payment

PurchaseOrder

GoodsReceipt

InvoiceReceipt

Debit Credit

PaymentProgram

Verification

Invoice Processing - 3-Way MatchInvoice Processing - 3-Way MatchIncoming Invoices are reference against a Purchase Order to

verify their content, prices, and arithmetic.If discrepancies arise between the purchase order or goods

receipt and the invoice the system with generate a warning or an error◦ Depending on system configuration the difference could cause the

system to Block the Invoice

Purchase order- Target quantity -

- Target price -

Goods receipt - Actual quantity -

Invoice receipt- Actual price -



Invoice Verification - 3-way matchInvoice Verification - 3-way match

Matches the vendor’s invoice to the purchase order and the goods receipt (3rd part of 3-way match)

Matches price and quantityUpdates the purchase order and its

historyUpdates accounting information

Financial effects of Invoice PostingFinancial effects of Invoice Posting

When an invoice is posted, SAP shifts the liability ◦From the Goods Receipt/Invoice Receipt

account (for the purchase order) ◦To the vendor account

Upon posting, SAP:◦Updates the Purchase Order◦Updates the Material Master◦Creates an Accounting Document◦Initiates the payment process within

Financial Accounting

Invoice Receipt Reconciliation Invoice Receipt Reconciliation AccountAccount

Amount owed isassigned and transferred to

vendor account payableInvoice receipt



Invoice PaymentInvoice Payment

Selects invoices for payment based on the payment terms in the vendor master or purchase order

Generates payment for released invoicesUpdates accounting information



Accounts Payable Settlement Accounts Payable Settlement ProcessProcess

Determines:◦Which open items to be paid◦When they will be paid◦Which bank to make payment◦Payment medium◦Who will get paid

Payment process creates a financial accounting document to record the transaction

Payment to VendorPayment to VendorCan be done automatically or manually

◦Post Outgoing Payment vs. Payment ProgramElements of the Payment Transaction:

◦Payment Method◦Bank from which they get paid◦Items to be Paid◦Calculate Payment Amount◦Print Payment Medium

Process will create a financial accounting document to record the transaction

Vendor PaymentVendor Payment

Amount owed is paid tovendor and account payable

is reducedBank

PEN, Inc. PEN, Inc.

EGN 5620 Enterprise Systems Configuration EGN 5620 Enterprise Systems Configuration Fall, 2012 Fall, 2012

Procurement Processes

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C_ _ _

P_ _ _

P_ _ _ xxx

Check PO History (ME23)Check PO History (ME23)



Check PO History (continued)Check PO History (continued)



Check InventoryCheck Inventory



Exercises: Exercises: (Due date 10/15/2012)(Due date 10/15/2012)

100. Create a Purchase order for Slick Pens101. Create a purchase order for premier pens102. Create a purchase order for Promotions Ltd.103. Create receipts for the purchase orders104. Create an invoice receipts from vendors105. Post payments to vendors106. Display vendor line items107. Create purchase outline agreement (contract) for Stock item

Small Business & Entrepreneurship

Egn 5620 enterprise_sys_procurement process fall 2012