PROCUREMENT PROCESS

G / L: Consumption Raw 300 P/L Stock Raw 3000 Balance sheet Bank 3300

GR / IR
3300 3300

Reconciliation Vendor 3300 3300

Subledger Vendor 3300 3300

Material Management Integration: (FI) Financial Accounting: Purchasing and FI maintains data on the VENDOR master data (is a creditor account in FI) that contains account.+ procur. info (SD) Sales and Distribution: requirements that arrives to Sales can be passed on to Purchasing. when a P.Req. is created, it can be directly assigned to a Sales Order. Production Planning: and MM are linked through inventory needs. Inv. Mgt is responsible for assuring all components required for production. Plant Maintenance and MM are linked by BOM. Its possible to post a GR with ref to an equipment BOM and to withdraw part for maintenance orders too. Integration in Logistics: the Inv. Mgt system (manages Stock (Q) quantity + ($) value) can be extended by the WMS which manages storage (also Storage Bins)

Invoice Verification and Vendor Payment

Account Posting Good Receipt : Debit Stock, Credit GR/IR Invoice Receipt: Debit GR/IR, Credit Vendor (Recon.+Subledger) (=> acc. payable) Pay Vendor: Debit Vendor (Recon.+Subledger), Credit Bank/Cash
If there are variances between the PO or GR vs INVOICE, the system warns the user and blocks the invoice for payment. Posting the invoice completes the process of Invoice Verification. Types of Invoice Verification: Invoice items can be posted with reference to: Goods receipt based Invoice verification: invoices for quantities greater than the goods receipt cannot be posted. Purchase order based Invoice verification: you can settle all items, irrespective of whether there have been partial deliveries. The postings are automatically made to the corresponding G/L accounts. When an Invoice is posted, an open item is credited on the vendor account. Logistics: Invoice Verification: Effects FI - Accounting document is created PO History is updated Open Item is created in the vendors account
If invoice $ differs from the PO $, the stock value and the current moving price is recalculated and updated in the material master, for a material valuated with mov. aver. $.

Cost element

Vendor Account group

Info record

Material

Conditio n Condition types

Output Output types

Material type Industry sector

_ Account affected: .Provision in the GR/IR clearing account are reversed - debited .Reconc. Vendor is credited Account payable .Subledger Vendor is credited . NON Stock raw-consum. raw, Bank

Material Mgt, manages the procurement process until Invoice verif. Is an Internal document

Other Dpt (account) manage the payment and evaluation of invoices. Therefore, Inv. Verif. creates a link between Mat. Mgt and external (FI) or Internal account. (CO)

Manually by the Dep. Respons. Automatically by MRP

Purchase Requisition

Source of supply Info record Quotation Contract Source list

with / without reference

Purchase order
10
Org. level needed for a PO Plant Purch. Org. Vendor Storage loc not nec. until good
are not received.

Invoice/ Billing

Pay

10 20

Stock item Non-stock item Item Category

Header Data: Doc. # Date Vendor Terms of payment Currency

20
Item: Material # Delivery date Q, $, Text

MM Doc

FI Doc

FI Doc

Vendor (Recon.+Subledger) are debited, Bank/Cash is credited

Consumable Material: Are materials or services that are procured specifically for an account assignment object. (EX: office supplies; computer systems) Value is recorded in the cost element or asset accounts. When a material is procured directly for consumption, no material master record is necessary. In the case of consumable material with a master record: o Not subject to inventory management (on either quantity or value basis) o Subject to inventory management on a quantity, but not a value basis Account Assign. Objects A Asset C Cost Center P Project P Prod. Order S Sales Order

Item category: defines the process used to procure a material

or service.

Goods Receipt

S Standard: material procured externally S Stock transport order: mat. is transf. from 1 plant to another S Subcontracting: vendor manufacture a component C Consignment: Liability only when mat. is withdrawn from
consg. stock, no when the stock is placed in the consg. store

103

you enter goods receipt against production and purchase orders

101

Movement type: determines the kind of goods movements. What happens to the items, how they are handledkey to differentiate between goods movements (ex: GR, GI or transfer postings). (Inv. Mgt) Determines which stock or consumption accounts are updated (posted) in Financial Accounting. Determines the structure of the screen when entering documents and updating quantity fields.

T Third-party order: material order from a vendor with the

instruction to deliver the goods directly to a 3er party (customer)

Storage location Goods receipt area F - Unrestricted 105 Q Quality Insp. X Blocked Stock
Stock type

Documents generated

Posting a Goods Receipt by referencing to a Purchase Order has a 3 advantages: The goods receiving department can check whether the goods delivered are what was actually ordered. Data from PO is copied automatically to the GR transaction. PO history is updated upon GR creation.

MM Doc

MM Doc

FI Doc

CO Doc

When goods receipt to the warehouse is posted: A MM doc. is created: with info such as material delivered and quantity delivered; storage location and associated plant. An FI doc. is created: which record the effects the material movement has on the value of the stock.

Goods movements: A transaction that causes a stock change. Include both external and internal movements. You can distinguish between: Goods receipt (GR): is a goods movement in which the receipt of goods from both an external vendor and from production is posted. A GR leads to an increase of warehouse stock. Goods issue (GI): is a goods movement in which a material withdrawal, goods issue, material consumption, or goods shipment is posted to a customer. A GI leads to a decrease of warehouse stock. Stock trasfer: is removal of materials from particular storage location and placement into another storage location. Stock transfers can take place both within the same plant and between two plants. Transer posting: changes the stock identification or qualification of a material regardless of its a physical movement or not. (EX: release of the stock for quality inspection).

Effects of Goods Receipt: MM - Material document is created (quantity) FI - Accounting document is created (value) CO Cost Accounting document cost analysis purpose Material master is updated (here not in the inv. verif) _ Account affected: .Stock raw (+ Consumption Raw) is debited .Provision in the GR/IR is credited . NON Bank, Reconc. Vendor, Subdledger Vendor PO History for a PO items is updated (when a GR is
entered with reference to this item)

Quality Management (Inspection lot is created) Warehouse Management (Transfer Requir. is created) Output may be generated (GR slip)

Process of GR with Transfer Order GR posting is subject to WMS: checks for each PO item and generates: MM + FI docs for goods movt.: _MM doc.: Header + Item (q, descrip, stor.loc., plant), is identified by material document number and year. _FI doc.: Header + Item (G/L acc. #, $) records the effects of material movements on the accounts. Is identified by CC (of the plant); acc doc. #, fiscal year. Transfer requirement doc Incoming quantity of materials into the goods receiving area An Interim storage area in the receiving warehouse number A transfer order is used to move the items from the receiving area (in a put away process) the destination storage type, the storage section, storage bin are determined