Material Management Business Blueprint: Document Approvals

DOCUMENT APPROVALS
Material Management
Business Blueprint
Submitted to
TABLE OF CONTENTS
1 EXECUTIVE SUMMARY......................................................................6
1.1 BACKGROUND...................................................................................6
1.2 BUSINESS BLUEPRINT OVERVIEW......................................................7
1.3 MODULE DETAILS..............................................................................8
1.4 MODULE INTEGRATION....................................................................11
2 ORGANIZATION STRUCTURE...........................................................11
2.1 Plant..............................................................................................11
2.2 Storage Locations............................................................................12
2.3 Purchasing Organization...................................................................14
2.4 Purchase Group...............................................................................15
3 MASTER DATA................................................................................16
3.1 Material Master................................................................................16
3.2 Vendor Master.................................................................................23
3.3 Service Master................................................................................26
3.4 Purchasing Info record......................................................................26
3.5 Source List......................................................................................27
4 BUSINESS PROCESSES....................................................................27
4.1 Configuration Settings......................................................................27
4.2 Consumption based planning.............................................................27
4.2.1 Purpose...............................................................................................29
4.2.2 Master Data.........................................................................................29
4.2.3 Features with respect to Janki Corp Ltd...................................................29
4.2.4 Business Process..................................................................................30
4.3 Purchasing......................................................................................33
4.3.1 Purpose...............................................................................................36
4.3.2 Master Data.........................................................................................36
4.3.4 Country Version India...........................................................................37
MM Business Blueprint

4.4 Inventory management....................................................................52
4.4.1 Purpose...............................................................................................52
4.4.2 Master Data.........................................................................................53
4.5 Physical Inventory...........................................................................60
4.5.1 Purpose...............................................................................................61
4.5.2 Master Data.........................................................................................61
4.6 Material Valuation............................................................................63
4.6.1 Master Data.........................................................................................65
4.7 Logistics Invoice Verification..............................................................66
4.7.1 Purpose...............................................................................................68
4.7.2 Master Data.........................................................................................68
5 INTERFACE REQUIREMENT..............................................................70
6 STANDARD INFORMATION SYSTEM..................................................70
7 ANNEXURES..................................................................................72
7.1 Annexure 1 – GAPS..........................................................................72
7.2 Annexure 2- FRICE requirements.......................................................72
7.3 Annexure 3- BBP Workshop ………………………………………………………………………72
Wipro Ltd. Page 2 of 68

© Wipro Limited, 2010, All Rights Reserved.
This document is proprietary to Wipro Infotech, a division of Wipro Limited.
You may not modify, copy, reproduce, republish, upload, post, transmit or distribute any material from this document, in
any form or by any means, nor may you modify or create derivative works based on the text of any file, or any part
thereof for public, private or commercial use, without prior written permission from Wipro Limited.
1 EXECUTIVE SUMMARY
1.1 BACKGROUND
Janki Corp Limited (JCL) was originally incorporated in the year 1993 as a
public limited company under the name Janki Processors Limited. It was set up
for carrying out the business of a textile process house in Bhilwara, Rajasthan.
Later the name of the Company was changed to Janki Corp Ltd. w.e.f December
31, 2003. Since inception, the company has been growing by leaps and bounds
and now enjoys the reputation of being one of the biggest processing houses in
India.
In JCL there is two Business processes
 Sponge Iron Business

 Textile Business
SAP implementation is for Sponge Iron Business (Steel Plant)
The details of activities presently being carried on by the Company are as under:
 Business Segment – Sponge Iron
 Business Segment – Power
 Business Segment - Pellet
The company has undertaken manufacturing sponge iron as the nucleus for
setting up a wholly Integrated Steel Plant. The setting up of integrated steel
plant will make the company gain cost competitiveness. The sponge iron plant
has a capacity of 1,80,000 MT per annum and is setup at Sidiginamola village,
Bellary District, Karnataka. Our senior management team has more than 300
years of collective work experience.

1.2 BUSINESS BLUEPRINT OVERVIEW
The following activities have been covered in the business blueprint phase:
1. Organization structure finalization pertaining to this module
2. FSBP processes definition and identification wrt CSBP processes (Pls. attach a matrix
of CSBP vis-à-vis FSBP Mapping with the final FSBP Code and names of processes)
Description
S.No. Attachment
1 CSBP-FSBP Link
C:\Documents and
Settings\wipro\Desktop\FSBP-CSBP.xls
3. FSBP discussion along with changes in existing Organization structure, standard

reports available in SAP
4. Online review of FSBPs by Infosys with comments and check points to be
incorporated
5. Incorporation of JCL comments wherever justified and applicable and closure of other
comments with reasoning in the FSBP Tracker
6. Discussion of FSBP with BPOs and incorporation of their review comments
7. Final release of FSBPs for purpose of sign-off
8. Gap discussion with CTMs
9. Review of Gaps by JCL and incorporation of review comments in Gap document to be
released to BPOs
10. Gap discussion with BPOs
11. FRICE requirements discussion, prioritization and finalization
12. Review of FRICE requirements by Infosys and incorporation of review comments to
be released to BPOs
13. Peer review of FSBPs by WIPRO Sr. Consultants
14. Incorporation of peer review remarks wherever justified and applicable in FSBP
15. Discussion of configurational values applicable to each FSBP and documenting them
in business blueprint document
16. Review of BBP document by JCL and incorporation of review comments for release to
BPOs
17. Discussion of BBP with BPOs
18. Joint BBP Presentation preparation and workshop with Sr. management

The Objective of this document is:
1. To identify and document the configurational values applicable FSBP wise post
discussion with CTMs
2. Have one comprehensive document wrt capturing of Gaps and FRICE requirements
3. Brief about the module’s standard functionalities, it’s integration with other modules,
master data requirements and relevant organization structure
Note: The configurational values given in the document is not an exhaustive list but can be
said as almost 80-90% final; the range may vary from module to module. The remaining
configurational values will emerge during the Baseline Unit testing and testing prior to Final
configuration.
1.3 MODULE DETAILS
Materials Managements module is used for mapping the Business process used in Janki
Corp Ltd….., for Planning, Procurement, Receipts, Issues, Transfer Posting, Physical
Inventory, Valuation of materials & Invoice verification.
It is sub divided into
 Consumption-based planning
 Purchasing
 Inventory Management
 Valuation
 Logistics Invoice Verification
Consumption-based planning:
The central role of MRP is to monitor stocks and in particular, to automatically create
procurement proposals for purchasing (purchase requisitions). This target is achieved by
using various materials planning methods which each cover different procedures.
In consumption-based planning, the following MRP procedures are available:
 Re-order point planning
 Forecast based planning
 Time phased planning
Following values are important for defining reorder point
 Safety stock
 Average consumption
 Replenishment lead time
At Janki Corp Ltd. Indirect materials will be procured externally with manual re-order point
with Replenishment up to Maximum stock level, fixed lot size or lot to lot size.
Purchasing:

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 and payments to vendors.
Good communication between all participants in the procurement process is necessary for
Purchasing to function smoothly.
The typical procurement cycle for a service or material consists of the following phases:
1. Determination of Requirements
Materials requirements are identified either in the user departments or via materials
planning and control. (This can cover both MRP proper and the demand-based approach to
inventory control. The regular checking of stock levels of materials defined by master
records, use of the order-point method, and forecasting on the basis of past usage are
important aspects of the latter.) You can enter purchase requisitions yourself, or they can
be generated automatically by the materials planning and control system.
2. Source Determination
The Purchasing component helps you identify potential sources of supply based on past
orders and existing longer-term purchase agreements. This speeds the process of creating
requests for quotation (RFQ’s), which can be sent to vendors electronically via SAP EDI, if
desired.
3. Vendor Selection and Comparison of Quotations
The system is capable of simulating pricing scenarios, allowing you to compare a number of
different quotations. Rejection letters can be sent automatically.
4. Purchase Order Processing
The Purchasing system adopts information from the requisition and the quotation to help
you create a purchase order. As with purchase requisitions, you can generate PO’s yourself
or have the system generate them automatically. Vendor scheduling agreements and
contracts (in the SAP System, types of longer-term purchase agreement) are also
supported.
5. Purchase Order Follow-Up
The system checks the reminder periods you have specified and - if necessary -
automatically prints reminders or expediters at the predefined intervals. It also provides you
with an up-to-date status of all purchase requisitions, quotations, and purchase orders.
6. Goods Receiving and Inventory Management

Goods receiving personnel can confirm the receipt of goods simply by entering the PO
number. By specifying permissible tolerances, buyers can limit over- and under deliveries of
ordered goods.
7. Invoice Verification
The system supports the checking and matching of invoices. The accounts payable is
notified of quantity and price variances because the system has access to PO and goods
receipt data. This speeds the process of auditing and clearing invoices for payment.
8. Payment
Payments are processed in FI in accounts payable.
Inventory Management:
This component deals with the following tasks.
 Management of material stocks on quantity and value basis.

 Planning, Entry, and Documentation of all Goods Movements.
 Carrying out the Physical Inventory.
Stock of materials that must be managed separately for reasons of ownership or location.
Material is procured from external or internal sources on the basis of the requirements
determined by Material Requirements Planning. The delivery is entered in Inventory
Management as a goods receipt. The material is stored (and managed under Inventory
Management) until it is delivered to customers (Sales & Distribution), or is used for internal
purposes (for example, for production).
During all transactions, Inventory Management accesses both master data (such as material
master data) and transaction data (such as purchasing documents) shared by all Logistics
components.
Material Valuation:
This includes the following application areas:
 Purchasing.
 Inventory Management.
 Logistics Invoice Verification.
Material Valuation determines or records the stock value of a material. The stock value is
calculated using the formula:
Stock value = stock quantity x material price
Thus, if the stock quantity or the material price changes, the stock value changes.

Material Valuation serves the following purposes:
 Adjusting material price to market price.

 Performing Revaluation
 Balance sheet valuation
Logistics Invoice Verification:

It is carried out at the end of the logistics supply chain that includes Purchasing, Inventory
Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming
Invoices are verified in terms of their content, prices and arithmetic. When the invoice is
posted, the invoice data is saved in the system. The system updates the data saved in the
invoice documents in Materials Management and Financial Accounting.
You receive an invoice and enter the information contained in it in the system, comparing
the data (such as quantities and values) suggested by the system with that in the invoice
and making any necessary corrections. You then post the invoice.
1.4 MODULE INTEGRATION
Materials Management is integrated with all relevant modules.
 Sales & Distribution –Delivery, availability check, Stock transfers etc.

 Finance/Controlling – Material Valuation, Vendor payments, Material costing etc.
2 ORGANIZATION STRUCTURE
2.1 Plant
Plant is an organizational unit within Logistics, serving to subdivide an enterprise according

to procurement, maintenance, and materials planning. A plant is a place where either
material is produced, or goods and services are provided. Material stocks are valued at the
plant level.
Plants defined for Janki Corp Ltd
Plant (max 4 char) Name1 (max 30 char)

1100 Spongy Iron Plant
1200 Power Plant
1300 Pellet Plant

Plants created for India are attached to Company code 1000 JCL
Attachment
S.No. Description
1 G:\All doc\Plant
Plant Address
Template.xls
2.2 Storage Locations
A Storage location is the place where stocks are physically kept within a plant. Stocks are
managed only on a quantity basis and not on a value basis at storage location level.
Physical inventories are carried out at storage location level. Storage locations are always
created for a plant. The Storage locations defined for various plants are as follows:
Storage Locations –Spongy Iron Plant -1100
Plant Sloc Description

Spongy Iron 1101 Mechanical
Plant(1100) 1102 Electrical
1103 Automobile
1104 Labortory
1105 Administration
1106 Process
1107 Project
1108 Accounts
1109 Purchase
1110 Safety & Security
1111 Marketing
1112 Stores
1113 Q&A
1114 Safe Custody
1115 Repaired
1116 Scrap
1117 Instrumentation
Storage Locations –Power Plant 1200


Power 1201 Mechanical
Plant(1200) 1202 Electrical
1203 Automobile
1204 Labortory
1205 Administration
1206 Process
1207 Project
1208 Accounts
1209 Purchase
1211 Marketing
1212 Stores
1213 Q&A
1214 Safe Custody
1215 Repaired
1216 Scrap
Storage Locations – Pellet Plant 1300

Pellet 1301 Mechanical
Plant 1302 Electrical
(1300) 1303 Automobile
1304 Labortory
1305 Administration
1306 Process
1307 Project
1308 Accounts
1309 Purchase
1311 Marketing
1312 Stores
1313 Q&A
1314 Safe Custody
1315 Repaired
1316 Scrap
Additional storage locations will be added if required.

2.3 Purchasing Organization

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.
Master data: For every new Purchasing Organization created, a new set of master data at
the Purchasing Organizational level will have to be created for vendor masters, purchasing
information records, source lists, and pricing information.
Maintenance of purchasing documents: Many purchasing documents are purchasing

Organization-specific. This is because the Purchasing Organization is a header field in the
following SAP transaction documents - Purchase order, Contract.
Pricing Flexibility: The Purchasing Organization is one of the influencing factors in

determination of pricing schemes. Purchasing Organizations within JCL may choose to allow
different types of prices, discounts, surcharges, delivery costs, etc.
Reporting Flexibility: In any business function, reporting is one of the basic business
requirements. The choice of the Purchasing Organization will influence the ease with which
reports are being generated. In particular, reports that provide information on collective
activities/transactions will be greatly affected by this decision. With multiple Purchasing
Organizations, consolidating of information by plant will be more straightforward as
Purchasing Organizations are used as selection criteria.
Authorisation Control: The Purchasing Organization is one of the authorisation objects in

SAP. The adoption of multiple Purchasing Organizations implies that authorisation can be
enforced via the Purchasing Organization. If this is not the case, authorisation may have to
be enforced via other alternatives such as Purchasing Groups.
Purchasing Organization (max Pur. Organization description (max 20 char)

4 char)
1000 Purchasing Organization

Purchase Purchasing Organization

organization (1000)
Plants
1100 1200 1300
Spongy Iron Power Pellet Plant

Plant Plant
2.4 Purchasing group

Purchasing Group is a buyer or a group of buyers’ responsible for certain purchasing
activities. It is also being used for configuring release strategies. The Purchasing Groups
defined for Janki Corp Ltd. are:
Plant Purchasing Groups PGP Description

Purchase 101 S.Vijay Kumar
102 Suneel Kumar Prasad
Spongy Iron Plant (1100) 103
Power Plant (1200) Ajit Kumar
Pellet Plant (1300) 104 R.Pavan Sudhir
chowdary
105 Kiran Kumar.B
106 R.L.Seetharam Shetty
3 MASTER DATA

3.1 Material Master
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. A material master
record contains data of a descriptive nature (such as size, dimension and weight) and data
with a control function (such as Material type, MRP type and price control, Purchase group,
Profit center etc.). Description of the material is at Client level. In addition to this data,
which can be directly maintained by the user, it also contains data that is automatically
updated by the system (such as stock levels).
The material master is used by all components in SAP logistics. The integration of all
material data in single database object eliminates redundant data storage.
In the SAP Logistics System, the data contained in the material master is required, for
example, for the following functions:
 In Purchasing for ordering.

 In Inventory Management for goods movement postings and physical inventory.
 In Invoice Verification for posting vendor invoices.
 In Sales and Distribution for sales order processing.
Master data is common across all plants. There are no multi-lingual descriptions for the
materials. In addition to the basic description, Purchase Order Text will be maintained for
the materials. All the existing materials will be loaded to the SAP system; to avoid
duplication of master data a central department will create new materials. Janki Corp Ltd.
will be operating in a multi-plant environment in SAP R/3. For common materials, master
data in more than one plant will have to be maintained on an ongoing basis. The ownership
and corresponding process for maintenance of these master data has to be finalized by
Janki Corp Ltd., in the Realization Phase and documented.
When we create a material master record, it is required to classify the material according to
industry sector and material type.
Industry
It is a factor determining the screen sequence and field selection in a material master
record. Once assigned an industry sector to a material, it cannot change the industry sector
again afterwards.

Material Type
Material type groups’ together material with the same basic attributes, for example, raw
materials, semi-finished products, or finished products. When creating a material master
record, materials are assigned to a material type. Material type determines whether the
material number can be assigned internally or externally and the number range from
which the material number is drawn.
When a material master record is created, the material type determines:
 Whether the material is intended for a specific purpose, for example, as a process
material.
 Whether the material number can be assigned internally or externally.
 The number range from which the material number is taken.
 Which screens appear and in what sequence.
 Which departmental data is allowed to enter?
 What procurement type the material has; that is, whether it is manufactured in-
house or procured externally, or both.

Together with the plant, the material type determines the material's inventory management
requirement; that is:
 Whether changes in quantity are updated in the material master record

 Whether changes in value are also updated in the stock accounts in financial
accounting.
In addition, the accounts affected by a material entering or leaving the Warehouse depend
on the material type.
In Janki Corp Ltd...., currently the Material Master or Item Master, as it is known, is
maintained independently at plant level and for the projects the materials are created as
and when required. The concept of material type is followed to distinguish the material.
The following Material types will be used in Janki Corp Ltd. Additional Material type can be
created in future.
Material Material Type Valuation

Type Description Class Valuation Class Description
ROH Raw Materials 3000 Raw Materials
ZCON Consumables 3001 Consumables
ZSAS Stores & Spares 3002 Stores & Spares
ZCSP Capital Spares 4000 Capital Spares
ZCAS Capital Assets 4100 Capital Assets
ZCCN Capital Consumables 4150 Capital Consumables
ZGEN General 4200 General
ZCPT Captive 4300 Captive
ZSRP Scrap 4400 Scrap
LEIH Returnable Packaging 3050 Returnable Packaging
FERT Finished Products 7920 Finished Products
Material Numbering
For every material a material master record in the material master must exit. A material
number uniquely identifies this record.
Material numbering will be *internally/externally generated according to the material type.

However the existing stock numbers in the legacy system will be transferred to SAP as an
Old material number in the material master record. The maximum number of characters will
be *18. In the case of external if the number of characters is less, then the leading zeros
will not be displayed and for internal number assignment system will use the number from
the range allocated.

Mat type From number (max To number Internal (I) or

18 char) (max 18 char) External (E)
MAT_CODIFICATION
.xlsx
Material Group
A key that is used to group together several materials or services with same attributes.
Each material can belong to only one material group. Material groups can be used to restrict
the scope of analysis and search specifically for material master records via search helps.
Material groups can access necessary reports. Additional Material groups and Series group
will be added in future.
Material Group Material Group Description

M001 Mechanical
M002 Electrical
M003 Field Machinery
M004 Instrumentataion
M005 Laboratory
M006 Administrative
M007 Construction/Civil
M008 Structural
M009 Tools & Tackles
Service
Group Sevice Group description
S001 Civil -C
S002 Civil- R
S003 Structurel -C
S004 Structurel -R
S005 Fabrication/Erection/Commission/Testing -C
S006 Fabrication/Erection/Commission/Testing -R
S007 Manpower supply - C
S008 Manpower supply - R
S009 Hiring of Vehical -C
S010 Hiring of Vehical -R
S011 Rent - C

S012 Rent - R
S013 Repair -C
S014 Repair -R
S015 Installation -C
S016 Installation -R
S017 Plantation -C
S018 Plantation -R
S019 Supply - C
S020 Supply - R
S021 Grouting
S022 Consultancy services
S023 Miscellaneous - C
S024 Miscellaneous - R
Unit of measure
The R/3 System distinguishes between the following units of measure:
 Base unit of measure

This is the unit of measure in which the stocks of a material are managed. The
system converts all quantities entered in other units to the base unit of measure.
 Alternative units of measure

Individual departments may have their own units of measure. For example,
Purchasing may use a different unit than Sales or Warehouse Management (WM). All
units of measure other than the base unit of measure are referred to as alternative
units of measure. The R/3 System supports the following alternative units of
measure:
o Order unit
Allows a material to be ordered in a unit differing from the base unit of
measure. The order unit is proposed automatically in purchasing functions,
where it can be changed.
o Sales unit
Allows a material to be sold in a unit differing from the base unit of measure.
The sales unit is proposed automatically in the sales order, where it can be
changed.
o Unit of issue
Unit of measure is the unit in which the material is issued from the
Warehouse. It allows consumption, stock transfers, transfer postings, and
physical inventories to be recorded in a unit differing from the base unit of
measure and from the stockkeeping unit.

The relationship between the base unit of measure and alternative units of measure
Basic Unit of Measure Description

NO NUMBERS
KG KILOGRAM
ROL ROLL
L LITRE
M METER
BAG BAG
M2 SQUARE METER
FT2 SQUARE FEET
FT RUNNING FEET
FT3 CUBIC FEET
FT FEET
SET SET
M METER
G GRAM
BTL BOTTLE
PAC PACKET
SET PAIRS
BDL BUNDLE
TIN TINS
LOT LOT
BOX BOX
M3 CUBIC METER
TUB TUBE
LBS POUND

SPL SPOOL
CAN CAN
T METRIC TONE
BAND BAND
SHT SHEET
CY CYLINDER
Material Valuation
Material valuation is the determination of the value of a stock of materials. The valuation
relevant data on a material include:
a) Valuation price.
b) Assignment to a valuation class, Valuation class is used to determine the G/ L account

during the material movement.
c) Selection of the valuation method using the price control indicator, S – Standard Price ,
V – Moving Average Price.
The materials will be valuated at Standard Price and Moving average price. For Standard
Price Control indicator will be S and Moving average price control indicator will be V. The
Standard / moving average price should be entered at the time of creation of the Material
Master. Standard cost estimate can be carried out in SAP to arrive at the standard price and
can automatically update the current standard price of the material. Also the standard price
can be changed manually through the price change functionality in SAP. Necessary
authorization control will be put in place to restrict unauthorized change in the standard
price.
Semi finish & Finish Material will have Standard Price all other Material type will Moving
Average Price.
Period end closing has to be carried out in Materials Management at the end of each period
to allow goods movement in the next period. This is required as the price; stock value and
quantity are managed period wise in the system.
3.2 Vendor Master
Vendor master record is the data record containing all the information necessary for any
contact with a certain vendor, in particular for carrying out business transactions. Data in
the vendor master record is organized under general data, company code data and
purchasing organization data.
Vendor master records have the following structures:

It consists of data like Vendor name, address, reconciliation account, payment terms,
Schema group etc. The vendor master will be created centrally and the required purchasing
data will be maintained in the respective purchasing organization level. The order currency
and the terms of payment will be in the display field in the purchasing organization data. If
the master data currency differs from the purchasing currency it can be changed in the
Purchase order.
Business partners have a number of different functions, described as partner functions, in

connection with your company. You use partner functions to define the rights and
responsibilities of each partner type in a business transaction. When you sell or order goods,
for example, your business partners can assume partner functions such as: Ordering
Address, Goods supplier, Alternate payee.
Vendor Account Group
Vendor account group is a classifying feature within vendor master records that determines:
 The type of number assignment, internal or external.

 A number range for assigning account numbers.
 Which fields are displayed and whether their entry is optional or required (field
status) when you enter or change vendor master data.
 Whether the account is for one-time vendors.
To create a master record, an account group must be specified. The account group cannot
be changed after you create the master record.
The following account groups will be created for Janki Corp Ltd..
Account Group Account Description From number To number

ZIRO JCL-Iron Ore 100000 199999
ZCOL JCL-Coal 200000 250000
ZORM JCL-Other Raw Materials 300000 399999
ZASS JCL-Assets 400000 499999
ZSSC JCL-Stores, Spares & 500000 599999
Consumables

ZTRP JCL-Transporters 600000 699999

ZTRS JCL-Trade Services 700000 600000
ZSAD JCL-Commission 800000 825000
agent(S&D)
ZCSS JCL-Capital Services 900000 999999

ZIMP JCL-Overseas(Imported) 825001 850000
ZCSR JCL-Capital Spares 850001 875000
ZGEN JCL-General 875001 899999
ZOTV JCL-One Time 250001 299999
 Vendor Purchasing Organization data
Vendors can be maintained for each company code and for a purchasing organization.
Wherever a Vendor exists in both a Company Code and a Purchasing Organization, the
vendor master data can be copied to the other Purchasing Organizations or Company
Codes.
If required, default data for the material master like the planned delivery time, purchasing
groups, etc. can be maintained at the vendor level in the vendor master. The data
maintained in the vendor master will be defaulted and can be changed when purchasing.
Janki Corp Ltd., Payment terms are on credit as well as on delivery & against advance.
These terms will be maintained in the system along with the standard SAP payment terms
as below:
S No Description
001 100% Against Proforma invoice
002 85% Against Proforma invoice , 15% Payment Released along with order
70% Against Proforma invoice , 25% advance against Bank Gurantee , 5% against
003 performance bank gurantee for the period of 12 months
004 50% Against Proforma invoice , 50% Payment Released along with order
005 100% Payment Released along with order
20% Payment Released along with order , 80% Payment Relased within 10 days
006 from the date of receipt of material at our end
007 100% Payment shall be releeased against COD basis
100% Payment Relased within 5 days from the date of receipt of material at our
008 end
009 end
010 100% Payment Relased within 10 days from the date of receipt of material at our

end
011 end
012 end
013 end
end
014
Incoterm is international commercial terms negotiated with vendor.
The following Incoterm will be maintained in the SAP system.
Incoterm Description
FOR FOR Destination
EXW EX- works
FOB Free on Board (FOB)
CIF Cost Insurance & Freight (CIF)
CFR Cost and Freight (CFR)
Pricing Schema
Pricing Schema Description

Z1 Raw material
Z2 Imports
Z3 Domestic / Service
3.3 Service Master
Services that are procured on a regular basis can be created as a service master. In the
service master service specifications will be maintained.
A service master record contains the following principal information for the unique
description of a service:
 Service number
 Service category
 Descriptive texts (short and long text)
 Base unit of measure
 Material group
 Valuation class

Service masters can be referenced at the time of creation of the Purchase requisition and all
the Purchasing documents. The Service Number will have External Number Range.
Service Service Category Valuation

Category Description Class Valuation Class Description
SMEC Mechanical A001 Mechanical
SELE Electrical A002 Electrical
SINS Instrumentation A003 Instrumentation
SCIV Civil A004 Civil
3.4 Purchasing Info record
Purchasing info record contains concise information about a material and a vendor supplying
that material. Information like price, lead times, reminders, etc. can be stored in the info
record. An info record thus represents a material-vendor relationship. Info records can be
created for different procurement types (standard, sub-contracting and consignment). Info
records can be created with material master. New data will be maintained on line in the info
record prior to purchasing. Automatically it will be updated during the quotation process.
The number range will be ten digits and will be system generated.
Info records can be created From To Number Internal (I) /

with or without a material number Max 10 External(E)
master record. Max 10 digits
digits
Info record with material master 5300000000 5399999999 I
record
3.5 Source List
A Source list specifies the allowed and disallowed sources of a material for a certain plant
within a predefined period. Each source is defined by means of a source list. A Source list is
also used to define a source as fixed for a period. In this case the system takes this source
as a preferred source over that period. It is also used to define a vendor/source as blocked
over a period of time; it can also be used as an aid in an optimized purchase.
In Janki Corp Ltd.. the source list will be used to maintain the preferred vendor list. If a
contract exists it will be maintained in the Source list.

Currently in some of the plants preferred vendors exist for supplying certain parts, these
will be maintained in the source list in SAP
No restriction will be placed initially for procurement only from the vendors maintained in
the source list. There is no requirement to restrict suppliers according to their region.
4 BUSINESS PROCESSES
4.1 Configuration Settings

Configuration
Sr.No.
Setting
1 C:\Documents and
Settings\wipro\Desktop\MM_BBP1\SAN_BBP_MM_CON_SET_0.1.xls
4.2 Consumption based planning
Consumption-based planning is based on past consumption values and uses the

forecast or other statistical procedures to determine future requirements. The procedures in
consumption-based planning do not refer to the master production schedule. That is, the
net requirements calculation is not triggered either by planned independent requirements or
dependent requirement. Instead, it is triggered when stock levels fall below a predefined
reorder point or by forecast requirements calculated using past consumption values.
In consumption-based planning, the following MRP procedures are available:
 Reorder point procedure

 Forecast-based planning
 Time-phased materials planning
In the planning run, the system carries out the following processes:
1. The system checks the planning file entries. Here, the system checks to see whether
a material has been changed in some way relevant to MRP and should therefore be
included in the planning run.
2. The system carries out a net requirements calculation for every material. Here, the
system checks to see whether the requirement quantity is covered by available
Warehouse stock and fixed receipts from Purchasing or production. If the
requirement quantity is not covered, the system creates a procurement proposal.
3. Then the system carries out the lot-sizing calculation. Here, the system takes the lot-
sizing procedure and, if necessary, the rounding up or down values into account.
4. The system carries out scheduling to calculate the start and finish dates of the
procurement proposals.

5. The system determines the type of procurement proposals. Depending on the

settings, the system creates planned orders, purchase requisitions or schedule lines
for a material (see determining the Procurement Proposal). If you have maintained
the necessary specifications for procurement, the system determines the source of
supply which it assigns to the procurement proposal.
6. The system recognizes critical situations, which the planner has to processes
manually in the planning results. For this purpose, the system creates exception
messages and carries out a rescheduling check.
7. It also calculates the actual days’ supply and the receipt days’ supply.
MRP Procedures
 Creation of procurement proposals
The type of procurement proposal to be created automatically in the planning run depends
on the procurement type of the material. For in-house production, the system always
creates a planned order. For external procurement, the MRP controller can choose between
a planned order and a purchase requisition. If the MRP controller chooses a planned order, it
then has to be converted into a purchase requisition in a separate step so that it is made
available to Purchasing.
The advantage of creating a planned order is that the MRP controller has more control over
the procurement proposals. The purchasing department cannot order the material until the
MRP controller has checked and converted the order proposal. If a purchase requisition is
created, it is immediately available to the purchasing department, which then takes over the
responsibility for material availability and Warehouse stocks.
 Planning at plant level or for MRP areas

As materials planning are usually carried out at plant level, all available stock in the plant
(from now on described as available Warehouse stock) is taken into account during
planning. However, stocks from individual storage locations can be excluded from
requirements planning or they can be planned independently. These stocks are then not
included in material requirements planning at plant level. On the other hand, consignment
stocks from the vendor are always included in MRP.
You can also carry out MRP for individual MRP areas. You can define the MRP areas. This
means, for example, that you can group several storage locations into one MRP area and
carry out MRP for this MRP area.
 Lot-sizing procedures
The standard lot-sizing procedures are available in the R/3 System. However, you can quite
easily integrate your own formulas without much effort.
 Automatic planning run
The automatic planning run determines shortages and creates the appropriate procurement
elements. The system creates notes for critical parts and exceptional situations providing
you with the necessary information for processing the planning results.

4.2.1 Purpose
The central role of MRP is to monitor stocks and in particular, to automatically create
procurement proposals for purchasing and production (planned orders, purchase requisitions
or delivery schedules). This target is achieved by using various materials planning methods
which each cover different procedures.
In Janki Corp Ltd. Indirect materials are planned on re-order point basis. Re-order point will
be defined for each & every material in material master at plant level. MRP will calculate net
requirement for each material, plant based on re-order point, lead time, stocks, expected
receipts, expected Issues. MRP output will give planned order/ Purchase requisitions based
on planning parameters. This output can be converted Purchase orders & send to vendors
for supply of materials. The whole process is online having effective planning.
4.2.2 Master Data

The master data in the area of consumption-based planning includes:
 Material Master
 Vendor master
 Source List
4.2.3 Features with respect to JCL
In Janki Corp Ltd. Business
 Direct materials will be planned based on report provided for stock level and
consumption for each unit.
 Manuals re-order point planning will plan indirect materials based on manual re-order
point.
 As a result of materials planning the identification of exact requirement is possible based
on, lead time, stocks, Expected receipt, expected issues planned independent
requirement/ re-order point.
 It ensures optimum inventory at minimum procurement cost.
 Plant dependent planning will be very easy.
4.2.4 Business Process
In SAP, a material master for the stock material should exist in the system. No stock can be
maintained without a material master.
In the material master Re-order levels can be maintained. Whenever the stock goes below
this re-order level a Purchase requisition will be generated through Material Requirements
Plans. If there is preferred vendor for the requirement created, MRP will create a PR with
Vendor assigned. Creating a purchase requisition can create requirements for stock material
on line.

Manual re-order planning is used to achieve the functionality of requirement calculation &
generation of purchase requisitions.
The reorder point should cover the average material requirements expected during the
replenishment lead time.
The safety stock exists to cover both excess material consumption within the replenishment
lead time and any additional requirements that may occur due to delivery delays. Therefore,
the safety stock is included in the reorder level.
The following values are important for defining the reorder point:
 Safety stock.
 Average consumption.
 Replenishment lead time.
The following values are important for defining the safety stock:
 Past consumption values (historical data) or future requirements.

 Vendor/production delivery timelines.
 Service level to be achieved.
 Forecast error, that is, the deviation from the expected requirements.
Re-order point planning process flow will be:
1. The continuous monitoring of available Warehouse stock within reorder point

planning is carried out in Inventory Management.

o Every time a material is withdrawn from the Warehouse, the system checks
whether this withdrawal has caused stock levels to fall below the reorder
level. If this is the case, the system makes an entry in the planning file for
the next planning run
o If a material is returned to the Warehouse, the system checks in exactly the

same way whether the available Warehouse stock exceeds the reorder level
again. If this is the case, an entry is made in the planning file, which acts as
an indicator for the planning run to delete any unnecessary procurement
proposals.
o If planned receipts are no longer required due to material returns, for

example, then the system will suggest that these receipts should be
cancelled. In this case, the MRP controller in cooperation with Purchasing or
Production must check whether the purchase order or the production order
can be cancelled.
2. The system then calculates the net requirements. The system compares the available
stock at plant level (including safety stock) plus the firmed receipts that have already
been planned (purchase orders, production orders, firmed purchase requisitions and so
on) with the reorder point. If the sum of the stock plus receipts is less than the reorder
point, a material shortage exists.
3. The system then calculates the procurement quantity according to the lot sizing
procedure defined in the material master.
For reorder point planning, the system supports the fixed lot size and Replenish up to
maximum stock level lot-sizing procedures.
4. The system then schedules the procurement proposal, that is, the system calculates
the dates, on which the purchase order has to be sent, or when production has to begin
and the date on which the vendor has to deliver the goods or by which production has to
have the goods ready.
Various control parameters are available for the total planning procedure and for single-item
planning, which you can set in the initial screen of the planning run.
You use these parameters to determine how the planning run is to be executed and which
results are to be produced.
The control parameters include:
 Planning run type

You can choose whether all materials are to be planned or only those with MRP
relevant changes.
 Creation indicator for procurement proposals for materials that are procured
externally
You can choose whether planned orders, purchase requisitions should be created for
materials that are procured externally.

 Creation indicator for MRP lists

You can define whether MRP lists are to be created.
 Planning mode
You can determine how the system is to deal with procurement proposals (panned
orders, purchase requisitions, scheduling agreement lines) from the last planning
run, which are not yet firmed, in the next planning run.
 Scheduling - You can choose basic date calculation or lead time scheduling.
Once MRP run is over, the following evaluations are available for evaluating the planning
results in consumption-based planning:
 MRP list
 Current stock/requirements list
Planned orders and purchase requisitions are internal planned elements that can be
changed, rescheduled or deleted at any time.
Generated planned orders can be converted to Purchase requisitions/Production orders

based on procurement type of the material. Direct generated purchase requisitions can be
converted to Purchase Orders/Contracts.
FSBP Link:
FSBP
S.No. Major Process Sub Process Minor Process
Document
Consumption Based
1 Procurement Planning
JCL_FSBP_MM_CBP_
0009_1.0.doc
4.3 Purchasing
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 and payments to vendors.

Good communication between all participants in the procurement process is necessary for
Purchasing to function smoothly.
Purchase requisitions are usually regarded as internal documents used within Purchasing.
Requisitions can be created either directly or indirectly.
S.No. Attachment Description
1 Tolerance Limit
C:\Documents and
Settings\wipro\Desktop\Tollerence limit.xls
"Directly" means that someone from the requesting department enters a purchase
requisition manually. The person creating the requisition determines what and how much to
order, and the delivery date.
"Indirectly" means that the purchase requisition is initiated via another SAP component.
There are primary two type of procurement in SAP
 Procurement for Stock
A stock material is a material that is kept in stock. Such materials are placed in storage
following a goods receipt. When goods are received by or issued from stores or the
Warehouse, the stock on hand is increased or reduced by the amount of the quantity
received or issued.
When you order a material for stock, the system does not require an account assignment.
This is because the posting to the appropriate stock and consumption accounts occurs
automatically after each goods movement (for example, after a material is received by the
stores or issued from stores). Furthermore, the value and the quantity of the stocked
material are updated in the material master record.
To order a material for stock, the material must have a master record.
 Procurement for Direct Consumption
When you procure for direct consumption, you specify the consumption purpose by entering
an account assignment (for example, a cost centre). On goods receipt, the material or
service counts as having been consumed. If a material is procured for direct consumption,
the consumption accounts in Financial Accounting are posted when the goods receipt is
entered. The total quantity and value of existing stocks of the material are not affected.
For spare parts under warranty the details will be captured through characteristics
maintained for the material master. During Goods Receipt the warranty details are entered
in the system.

The following list shows the various external purchasing documents available in the
standard SAP System.
Request for quotation (RFQ)

Transmits a requirement defined in a requisition for a material or service to potential
vendors.
Quotation
Contains a vendor's prices and conditions and is the basis for vendor selection.
Purchase order (PO)

The buying entity’s request or instruction to a vendor (external supplier) to supply certain
materials or render/perform certain services/works, formalizing a purchase transaction.
Purchase Value Key’s
Purchase Value
Key’s
1 C:\Documents and
Contract
In the SAP Purchasing component, a type of "outline agreement", or longer-term buying
arrangement. The contract is a binding commitment to procure a certain material or service
from a vendor over a certain period of time.
For each item of a purchasing document, specify whether procurement is for stock or for
direct consumption. In a purchasing document, can enter items with or without account
assignments.
If you order stock materials, the ordered material must have a material master record. If
order is for consumable materials, the ordered material may have a material master record.
`
Account assignments are possible for the following purchasing documents:
 Purchase requisitions
 Purchase orders
 Outline agreements
Contract and Release Orders:

For materials that are ordered regularly and in sufficient quantity, can negotiate longer-term
pricing and conditions with the vendor and record them in a contract. In the contract,
specify its validity period and the total target quantity or total INR value covered.

When creating a contract, we can reference an RFQ or another contract. The purchase
requisition (representing a request to set up a longer-term contract) can also simplify the
data entry process by serving as a reference document.
When creating the associated release orders, information is adopted from the contract.
Individual deliveries are affected on the basis of the release orders, which specify the exact
order quantity and the delivery date.
FSBP Link:
FSBP
Document
1 Procurement Contract JCL_FSBP_MM_PRM_

0007_1.0.doc
4.3.1 Purpose
Various activities are involved in Purchasing
 Requirements identification
 Source determination
 Vendor selection & comparison of quotations
 Ordering the requirements
 Purchaser order follow up
Every document stores the history & subsequent relevant flow to have traceability &
reporting purpose. Required purchasing documents will go through release strategy for
better control on purchasing.
MM External Services Management is an application component within the Materials
Management (MM) module. It supports the complete cycle of bid invitation, award/order
placement phase, and acceptance of services, as well as the invoice verification process.
4.3.2 Master Data
 Material master
 Vendor master
 Service master
 Purchasing info record
 Source list
 Conditions

4.3.3 Features with respect to JCL
In Janki Corp Ltd..
 For Direct materials PR will be converted to PO based on RFQ, Quotation,

comparison.
 For indirect materials PR will be converted to PO based on old PO or RFQ, Quotation,
comparison. .
 Online approval process will follow for Purchase order/Contracts/ and Purchase
requisitions on predefined Conditions.
 Document history with all reference is available.
 Reduction in purchase cycle time due to online across purchase organizations
visibility.
 Services will be coded & tracking will be simple.
 Pricing break up like discount, freight, packing, insurance etc will be available for
each every material ordered in every purchase order/contract.
 Central vendor master record avoids duplication of master data.
 Reporting will be very easy across JCL on procurement.
4.3.4 Country Version India

This country version is designed for use by businesses with operations in India. As well as
the generic SAP R/3 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 are covered
under CIN. 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
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.
Can enter incoming excise invoices in the R/3 System for goods receipts arising from
external procurement, subcontracting, and stock transfer. Excise department 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.
As per the statutory requirements, necessary registers need to be updated at the end of
each transaction and necessary registers can be generated.
 Utilization of CENVAT
 CENVAT Register – Monthly Return under rule 57AE of the Central Excise Rules

 Updation of RG1 / RG23A Part I / RG23C Part I Registers
 RG1 Register Extraction
Excise Registers
An entity in India that is entitled by law to produce any goods liable to excise. Each entity is
assigned its own excise registration number.Every factory that manufactures excisable
goods is required to register separately.
Details like ECC No, Excise Registration number, Excise Range, Excise Division , Excise
Commissionerate at the plant level will be maintained.
Attachment
S.No. Description
Excise
1 G:\All doc\Plant Registration
Template.xls
Excise Groups
A unit within an excise registration, in India, which keeps its own set of excise records.
Whereas the excise registration reports to the excise authorities, the excise group is a
purely internal organizational unit. Each excise group keeps records of all transactions that
have to be reported to the excise authorities. When the time comes to present these
records to the authorities, the excise registration compiles the information from all of its
excise groups.
Excise Groups will be finalized in detail during realization phase.

Excise
Grp Description Plant
E1 Excise Group for Spongy Iron Plant 1100

E2 Excise Group for Power plant 1200
E3 Excise Group for Pellet plant 1300
Series Groups
Different excise series groups are defined within the company. Series groups allow you to
maintain multiple number ranges for the outgoing excise documents.
Plant Series group Description

Series Groups will be finalized in detail during realization phase.

Master Data
Object Excise No Year From number To

Group number
RG23A1 E1 1 2011 100000 199999
RG23A2 E1 1 2011 200000 299999
RG23C1 E1 1 2011 300000 399999
RG23C2 E1 1 2011 400000 499999
RG23A1 E2 1 2011 500000 599999

RG23A2 E2 1 2011 600000 699999
RG23C1 E2 1 2011 700000 799999
RG23C2 E2 1 2011 800000 899999
RG23A1 E3 1 2011 900000 999999

RG23A2 E3 1 2011 1000000 1099999
RG23C1 E3 1 2011 1100000 1199999
RG23C2 E3 1 2011 1200000 1299999
Chapter ID:
 Define the Chapter IDs and corresponding descriptions as described in the excise
tariff structure.
 This information is used when you create excise invoices and is also shown in the
various excise registers.
Material Chapter ID combination:
 Define which chapter ID is relevant for the material (Plant specific)
 Whether the material can be sent to subcontractors.
 The material type (Raw material, RG1, asset or tools or etc).

Cenvat Determination:
 Specify which raw materials are used to produce which finished (or semi finished)
goods.
 This information is used to determine whether CENVAT credit can be claimed for a
material.
Vendor excise details:
 Enter the vendors' tax numbers such as, Excise registration number (and the range,
division, and collectorate in which this is located), Central sales tax (CST) number,
Local sales tax (LST) registration number, Permanent account number (PAN).
 Assign the excise duty indicator, which determines excise duty status of the vendor.

 Specify what type, the vendor is, for example, a manufacturer, first-stage dealer, or
importer, etc.
Excise indicator for Plant:
 Assign each of the plants an excise duty indicator; this determines how excise should
be handled for that particular plant.
Excise indicator for plant and vendor:
 Define the final excise duty indicator, which helps in the determination of excise duty
during excise transaction involving that plant and vendor.
Excise tax rates:

 Specify for each chapter ID every possible rate of excise duty that might apply for
each combination of plant and vendor.
 For each rate, specify the validity period.
Tax Codes
For condition based tax determination Input tax codes are created and entered in the
purchasing documents. The combinations of tax code can be maintained as follows
o Excise Duty
o Educational Cess
o VAT
o Local Sales Tax
o Central Sales Tax
o Surcharge
o Service Tax
o Educational Cess on Service Tax
o Resale Tax
Attachment
S.No. Description
1 Tax codes

G:\All doc\Tax
codes_0.2.xls
Period End Processing
Extraction and Printing of the Registers:
 The excise registers are not created until they are extracted. The extraction process
should be a routine procedure to ensure systematic updation of the registers.
 The print utility program will help in printing out the registers.
Updation of excise registers during consumption and other movements:

 The system does not automatically generate Part I entries for goods issues of
excisable materials.
 The missing entries have to be generated once a day using the Update of Registers
RG 23 (Part I) program for all goods issues involving excisable material.
 Ensure that the receipts are updated first before the issues, so that any updation of
incoming Part 1 entries, which were left out, gets updated and inconsistencies
between receipts and issues are thus prevented.
Adjustment Entry
Material write- off / Declared Non-productive:
 Issue the materials out to scrap.
 Create an Excise JV with reference to the material document. The excise duty
debited to the Cenvat account should be reversed.
 The excise duty to be reversed is calculated manually or using the get Excise invoice
functions.
 The debit account can be overwritten when the JV postings happen.
Additional Excise:
 This procedure is used when a vendor has increased the amount of excise duty that
it originally charged.
 The additional duty is debited to the Cenvat Account with reference to the vendor’s
invoice number.
 The Credit account can be changed at the posting the excise JV.
Other Adjustments:

 When there are any adjustments, which do not fall into any of the above-mentioned
category, then this function is used.
Cancel Excise invoice:
 This function can be used to cancel any out going invoice created through J1IS. It
reverses the excise duty accounted for.
FSBP Link:
FSBP
Document
GRN & Reversal

1 Goods Receipt JCL_FSBP_MM_GRN_
0011_1.0.doc
Identifying requirement
The task in purchasing starts from identifying the purchasing requirement, which could be
originated either by MRP or by manual. Manually created requisition will go through release
strategy & MRP outputted PR’s will go through release strategy. Several selection criteria

available to get list like PR MRP outputted PR, Manually crated PR, approved PR etc for
buyers as well as indenters.
In case of annual services, manual PR will be created with service numbers indicating
service wise qty & tentative rate will be paid for each service rendered.
Release strategy will be set up with pre requisites for requisitions that need to be fulfilled by
respective release code approver. This will ensure administrative control
as well as visibility across organization.
Release Strategy
Attachment
S.No. Description
Release
procedure for
po will be
1
decided later by
JCL
management.
Requirements processing
Request for Quotation (RFQ) will be raised in the system with reference to the PR.
In SAP the quotation number is generated internally for each vendor. All these quotations
can be linked through a collective number. The quotation can be sent electronically or can
be printed and the hard copy forwarded. . Vendor selection can be decided with the help of
the Info Record and the source list.
In SAP both the Requests for Quotation and the vendor’s response to the quotation
documents will be handled through the Request for Quotation function.
The vendors pricing and different conditions can be entered in the maintenance of the
quotation document. CST/LST/VAT, Excise can be maintained through the tax code.
History of all generated RFQ/quotations/Comparisons is available in the system for future

reference or any traceability. This will help for vendor selection for RFQ also.
Service also PR can be converted to RFQ, quotation, comparison in the same line as
material.
Purchase Requisition Types
An identifier allowing differentiation between the various forms of a document category. PR

types can be used to setup different number ranges and release strategies.

Version Management is activated for Purchase Requisition. When a purchasing document is

changed, the changes are recorded in a change document. Change documents from a
certain period are collected in a version and are then available for analyses.
Doc Type Description

ZCAP CAPITAL PR
ZREN REVENUE PR
ZRAW RAW MATERIAL PR
ZSER SERVICE PR
ZCCN CAPITAL CONSUMABLE
ZIMP IMPORT
FSBP Link:
FSBP
Document
1 Procurement Purchase Requisition JCL_FSBP_MM_PR_0

002_1.0.doc
Vendor selection & comparison of quote
Through the price comparison screen SAP ranks all the quotations based on the price. Price
comparison can have the break of pricing components like discount, packing, freight,
insurance etc. along with taxes. The other details such as delivery date and related
information is also displayed. The entire quotation of the vendors also can be viewed from
the same screen. If quotation is submitted in foreign currency it can be converted to local
currency.
The decision to select a vendor or a reject a vendor can be based on the price comparison
list generated by the system and by checking the vendors technical competency
(specifications, delivery terms), which will be done outside the system.
If vendors are negotiated, the same can be maintained with valid effective period & revised
comparison can be done against the same quotations.
Services will follow the same procedure.
Ordering the requirements

Purchase orders can be created with reference to the quotation. Contracts will be created if
there is a continuous requirement over a period of time. Normally contracts will be created
for direct materials & Purchase orders will be created for indirect materials. Contracts &
Purchase orders will go through release strategy for approval. Ordering can be done
different unit of measure than stock keeping unit.
If a contract is issued, a separate release order has to be issued with reference to the
contract. Contracts can be a value contract or a quantity contract. Contracts will have a
validity period and a price specified for this period and the price can be maintained against a
quantity scale.
Delivery schedules can be maintained in Purchase Order for every line item. The reference
document information is maintained in the consecutive document.
The necessary payment terms and the Inco terms are automatically copied from the
quotation and it can be changed in the purchase order if required. Purchase orders can be
raised in foreign currency, standard functionality is available to maintain the foreign
currency requirements.
In the purchase order delivery address, if there is a requirement to maintain delivery

addresses other than the ordering plant, then they can be maintained at item level.
If more than one delivery address is required to be maintained then the item has to be split
into more than one line item.
In the Purchase order/Contract apart from the material price, freight, Insurance, excise, tax
and other delivery charges can be maintained in the pricing condition.
These will be maintained through separate Condition types. Condition types are the various
elements in the pricing of the Purchase order. Different condition types will be defined to
meet the requirements of Import purchases and local purchases.
The other delivery charges can be maintained in the Header level i.e. applicable to the
whole Purchase order or in the item level of the Purchase order.
If the delivery charges are maintained at Purchase order level, then the system will treat
them as planned delivery costs. For freight and other delivery charges, if there is a different
vendor for the planned delivery costs, the vendor details can be maintained in the Purchase
order against each of the condition types. Vendor pricing schema will decide which pricing
procedure is applicable for the specific vendor.
The Purchase Order/Contract created will be subjected to an approval process. In the

approval process certain approving personnel can be maintained as mandatory and non
mandatory. If the person is not available alternative persons can be configured in the
system to approve the document.
Purchase Orders/Contracts will have a 10-digit number.

Order Types
Number ranges for PR,PO,RFQs are decided to be maintained at Document Type
Level
An identifier allowing differentiation between the various forms of a document category.

Order types can be used to setup different number ranges and release strategies.
Procurement types are primarily getting divided based on account assignment & Item
category given in the purchasing document. For all procurement types overall purchasing
cycle remains the same. Various types of Purchasing involved in Janki Corp Ltd. are:
Procurement for stock Material:

 All purchasing document having materials code & no account assignment, all such
materials receipts will go to inventory. It will be issued from inventory for usage.
Procurement of non-stock items:

 Materials with material type non-valuated or all purchasing document having account
assignment will get consumed on receipt. Such Purchasing documents need to have
consumption G/L account defined in the document. This will not update inventory nor for
qty nor for value.
Procurement of Capital items:

 Procurement of capital items will be carried out through Project Systems through WBS
element.
Item Categories:
Item Category defines the procurement of Materials and Services. Standard Item
categories are used for Janki Corp Ltd..
 Standard
 B Limit
 K Consignment
 L Subcontracting
 S Third-party
 T Text
 D Service
Account Assignment Categories:
 Account assignment categories define if accounting for a item is effected by a auxiliary

account. Standard Account assignment categories are used for Janki Corp Ltd.

 A Asset
 B MTS prod./sales ord.
 C Sales order
 D Indiv.cust./project
 E Ind. cust. w. KD-CO
 F Order
 G MTS prod./project
 K Cost center
 M Ind. cust. w/o KD-CO
 N Network
 P Project
 Q Proj. make-to-order
 T All new aux.acc.ass.
 U Unknown
 X All aux.acct.assgts.
External Procurement (Domestic):
 Create purchase orders with relevant tax codes

 The vendor supplies the material along with an excise invoice.
 Goods receipt is posted in the system and the excise invoice is captured. Here the
system gives three options.
 Two-step procedure: Involves capturing the excise invoice with reference to
the PO and then posting it after goods receipt.
 One-step procedure: The excise invoice is captured and posted in one shot
after goods receipt.
 Capture and post during GR: Capture and posting of excise invoice at the time
of Goods receipt itself.
 During the above process Part 1 & Part 2 Registers gets updated automatically for
the receipts. Cenvat Value if different from that proposed by the system this has to
be entered at the time of Capture of Excise Invoice.
Excise Invoice for Vendor returns
Excise Invoice will be created with the return Material document. Part 2 will be posted and
Part 1 will have to be updated.
 Procurement of non-stock items
 Materials with material type non-stock, non valuated or all purchasing document having
account assignment will get consumed on receipt. Such Purchasing documents need to
have consumption G/L account defined in the document. This will not update inventory
nor for qty nor for value.

Excise posting for materials procured for Direct consumption:
 In case of account assigned purchase orders, depending on the customizing settings

for the excise group, the consumption posting in part 1 can be updated automatically
at the time of goods receipt for the purchase order.
Rejection and Reversal of Excise Invoice:
Case I:
 Rejection of excise invoice occurs if the vendor sends an excise invoice, which cannot
be accepted.
 Capture the excise invoice with a rejection code.
 When the vendor sends the corrected excise invoice the same is re-processed after
removing the rejection code.
Case II
 Reversal happens, also when the material itself is rejected after the excise invoice
has been posted.
 For reversal of Cenvat postings, the material document is reversed first, and then
the excise invoice is cancelled.
FSBP Link:
FSBP
Document
Purchase of Stores
1 Procurement and Spares JCL_FSBP_MM_PSS_
0006_1.0.doc
Procurement of Raw Material.
 PO Will be created for the Raw Material for the agreed qty The PO will have all the pricing
condition including freight condition (how much feight we are paying to the transporter). The
Handling charges, Royality paid and other charges can be included in the PO line items. The tax
code will be used to get the right duties and VAT.
 The Entry would be made in Gate Entry for the Raw materials - The details captured in the
transaction screen - Truck No, LR No, LR Date, Transporter Number (Vendor Number), PO No,
PO Date, Entered by and automatically gate entry number will be generated. The same

 In case of multiple transporter known at the time of PO split the quantity into the condition types
and maintain the transporter othewise feed the transporter code manually in the gate entry
screen.
 In case of multiple transporter known at the time of PO split the quty nto the condition types and
maintain the transproter othewise feed the transporter code manually in the gate entry screenj.
 The option to change transporter name shall be given in GR before posting. IR can not be
processed for a transporter different from the GR transporter.
 At weigh bridge by using the weigh bridge vendor application the gross weight, tare weight and
net weight will be captured the moment the calculation done automatically by pressing the button
the data will be transferred to SAP at all the three quantiy fields. The Gate entry number has to be
entered to get all the other details from the gate entry table. The SAP will generate one unique
number automatically
 The automatic SAP Weighbridge entry number will be captured and LR NO, LR Date,
Transporter, PO No will be automatically captured. Only enter the Qty, Storage Location in GR
 if there is any difference the Delivery challan Qty and GR qty then first receive the material in GR
and then post the physical difference for the excess / shortage quantity
 The Gate Entry number will be called even in the MIRO to cross verify the duplicate payment of
the freight charges. Once the freight amount is paid automatically mark the line entry as paid in
the ztable of the Gate Entry screen
 The MIRO will be done against PO for the received qty. The vendor will be credited total amount
and debit to the GR/IR a/c (suspense a/c)
FSBP Link:
FSBP
Document
Purchase of Raw
1 Procurement Material JCL_FSBP_MM_PRM_
0007_1.0.doc
Flow- Procurement of Imported Materials
 Orders are placed in foreign currency; system calculates the net value based on
exchange rate updated in master. Exchange rate can be changed in PO based on the
requirement. Customs duty & CVD are the conditions maintained in pricing procedure.
Customs as a vendor needs be updated for each customs duty condition in PO/Contract.
This is only procurement type where GR based IV will not be used. Tax code should be
nil tax code. Import freight & local freight needs to maintained separate condition type.
After goods shipped by vendor, it will go through customs procedure. Customs will issue

bill of entry for the received material. Logistics invoice verifications will to be posted for
customs duty amount. Based on LIV Finance will release the payment to the customs.
Goods receipt & excise capturing will be done based on LIV document generated for
customs duty posting. After good receipt LIV will be done for material vendor & freight
vendor separately.
External Procurement (Import) :
 Create an imports purchase order with the necessary duties payable to the customs
(CVD, Customs duty, etc.) referencing the Purchase Requisitions.
 Enter the customs vendor, in the vendor field with the appropriate rates for these
duties.
 Custom duties in the Bill of Entry is captured as ‘planned delivery cost’ in LIV with
INR currency in the Header and reference to the imports purchase order.
 Capture the excise invoice with reference to the imports purchase order and enter
the commercial invoice number (LIV number representing the CVD portion of the
B/Entry) in the dialog box.
 Receive the goods through the standard procedure.
 Post the excise invoice, with reference to the commercial invoice and the system
updates the part 2 register.
 Invoice verification is done through Logistics Invoice Verification
FSBP Link:
FSBP
Document
Imported Purchase
1 Procurement JCL_FSBP_MM_PIM_
0013_1.0.doc
Procurement of Capital items
 Purchase orders will be created with reference to account assignment A. Incase

procurement against asset number account assignment will be A & incase of
procurement against internal order it will be F. All the procurement cost will be get
debited to asset & not to the inventory.
Capital Goods – Taking subsequent Credit:

 This functionality has provision to identify the capital goods for which credit is to be
taken in the subsequent year or for those of which the subsequent credit is to be
taken in the current year.
 This process can also be used to transfer the credit in the same year if necessary.

FSBP Link:
FSBP
Document
Purchase of
1 Procurement
Asset/Capital Goods JCL_FSBP_MM_PAC_
0005_1.0.docx
Procurement of External Services
The procurement of services may involve the following steps:

Determination and recording of requirements
A need for certain services can arise in a user department of your enterprise, within the
framework of a project (such as the translation of software) or with regard to regular
maintenance work (such as the outsourcing of routine electrical jobs) for instance. The user
department can either prepare a purchase requisition itself, or request Purchasing to do so.
In each case, the requisition is the trigger for procurement activities in MM Purchasing.
Determination of possible sources
In the source determination facility, an instrument for analysing this data, enabling to
establish whether suitable potential bidders exist for the requested services and whether
longer-term business relationships have already been set up with certain service providers
in the form of contracts. The price simulation function can help to choose the desired source
of supply from the sources suggested by the system. In this case, the requisition can then
be converted directly into a standard purchase order or a release order to be issued against
a contract that already exists with the service provider.
Bid invitation procedure
If a bid invitation process is to be initiated for services, an RFQ must be created.
Entry of data from quotations submitted by bidders
When quotations (bids) are received from bidders, the latter’s prices and conditions are
entered in the RFQs that already exist in the system. The status of the RFQs is then
changed: the RFQs in fact become quotations.
Comparison of quotations
When all quotations have been received and entered, the most favourable one is quickly
determined using the price comparison list. The price comparison list evaluates the
quotations for you at different levels. You can make your decision on the basis of list of all
quotations ranked by total value or compare the quotations at individual outline levels. The

system provides comparative data right down to the individual service (task or activity)
level if required.
Award phase (order placement)
The successful bidder receives either a standard purchase order or a release order issued
against an existing contract, either of which is created by conversion of the relevant
quotation.
Monitoring of purchase orders
During the phase of service performance, the cumulative "actual" values (for the services
actually performed) are continually updated in the underlying purchase order (standard PO
or contract release order).
Entry of services actually performed
You enter services that have actually been performed by means of service entry sheets with
reference the PO. Each individual service is recorded together with quantities and values.
Acceptance of services performed
After services have been performed for the firm it has to be recorded in the service entry
sheet, check & formally accept the services.
Verification of invoices for services
 At the conclusion of the procurement process, the service provider’s invoices are
checked for correctness. This involves comparing the value from the accepted entry
sheet with that shown in the invoice and checking that the tax amounts are correct.
FSBP Link:
FSBP
Document
Purchase of Service
1 Procurement JCL_FSBP_MM_PSR_
0008_1.0.doc
4.4 Inventory management
4.4.1 Purpose
o Material tracking with value or qty tracking is effectively achieved.

o Identification of Physical location of material stocks within location or across

locations by online is possible.
o Stocks status of the materials like under quality, blocked, In transit,
unrestricted can be easily tracked.
o Special stocks like material with sub-contractor, Returnable vendor packing
are tracked online.
4.4.2 Master Data
 Material master
.
4.4.3 Features with respect to Janki Corp Ltd.
 Transparency of stocks available, through common database, across

locations.
 Planning will be effective considering expected receipts, expected issues &
online correct stocks. Stock transfer activities are planned. Quantity and
Value updating on receipts/ issues is done.
 Forecast receipt can be planned due to availability of expected receipt online
in the system.
 Reduction in inventory holding cost.
 Availability checks on goods issue and stock transfers.
 Updating of consumption accounts and Inventory accounts online.
Excise related data online with inventory management transactions will be updated.
Material is procured from external or internal sources on the basis of the requirements
determined by Material Requirements Planning. The delivery is entered in Inventory
Management as a goods receipt. The material is stored (and managed under Inventory
Management) until it is delivered to customers (Sales & Distribution), or is used for internal
purposes (for example, for production).
During all transactions, Inventory Management accesses both master data (such as material
master data) and transaction data (such as purchasing documents) shared by all Logistics
components.
It involves
 Management of material stocks on a quantity and value basis

 Planning, Entry, and Documentation of all Goods Movements
All transactions that bring about a change in stock are entered in real time, and the stocks
are updated as a result of these changes. You can obtain an overview of the current stock
situation of any given material at any time. This, for example, applies to stocks that:
 Are located in the Warehouse

 Have already been ordered, but have not yet been received
 Are located in the Warehouse, but have already been reserved for production or a
customer

 Are in quality inspection and in blocked stock type.
If a further subdivision by lots is required for a material, one batch per lot is possible. These
batches are then managed individually in the stock.
Inventory Management can manage various types of a company’s own special stocks and
externally owned special stocks separately from standard stock.
The stocks are managed not only on a quantity basis but also by value. The system
automatically updates the following data each time there is a goods movement:
 Quantity and value for Inventory Management

 Account assignment for cost accounting
 G/L accounts for financial accounting via automatic account assignment
The valuation area is the organizational level at which a material's stock value is managed.
The valuation area can be plant level or company code level.
In Inventory Management, work is basically done at plant and storage location levels. When
you enter a goods movement, you only have to enter the plant and the storage location of
the goods. The system derives the company code from the plant via the valuation area.
When Good receipt for the purchase order is done system automatically updates stock
quantities & values including P&F, Freight, Delivery charges, incidental charges mentioned in
the PO. For PO’s having account assignment cost will be debited to relevant G/L account
indicated in PO.
Goods movements include both "external" movements (goods receipts from external
procurement, goods issues for sales orders) and "internal" movements (goods receipts from
production, withdrawals of material for internal purposes, stock transfers, and transfer
postings).
For each goods movement a document is created which is used by the system to update
quantities and values and serves as proof of goods movements.
Inventory management basically involves:
Goods receipt
A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or
from production is posted. A goods receipt leads to an increase in Warehouse stock.
The System distinguishes between the following types of goods receipts:
1. Goods receipts with reference to an order

2. Other goods receipts
Goods receipts

Goods receipts for Purchase Orders, goods receipts for production orders, subsequent
adjustment of subcontract orders, initial entry of stock balances in to SAP, vendor returns
and customer returns all will be treated as Goods receipt in SAP.
Material documents are generated when there is a goods movement registered in the
system. Numbering of these documents are based on the transaction / event types of the
transaction. Numbering is defined for a fiscal year and internal numbering has been defined
for a material document.
When Goods Movement transaction is run, the system displays an additional tab at header
level for the excise invoice header information, and one tab at item level for the excise
invoice line item information. Fill the data as required.
When save the goods receipt or goods issue, the system also saves the excise invoice
(either captured/created or posted). It creates all appropriate excise register entries,
material documents, and accounting documents
Goods receipt for purchase order process as follows:
1) Choose Goods movement ® Goods receipt ® For purchase order ® PO number

known or PO number unknown.
2) Enter the data on the initial screen:

a. Enter the header data.
b. Select the movement type.
3) If the quantity delivered is intended for the warehouse or for consumption/usage,
select Movement type ® PO to warehouse (Movement type 101 ).
a. Enter the purchase order number. In addition, we can enter the plant and a
purchase order item, in order to restrict selection of the purchase order items.
4) If you selected PO number not known, you can specify search criteria for the
purchase orders on the initial screen. The system then displays a list of purchase
orders. Select and copy the required purchase order items.
5) The item selection list is displayed. This list contains all of the purchase order items
that satisfy the criteria entered.
6) Select the purchase order items to be copied. If necessary, you can change data in
the selected items on this screen.
7) Copy (adopt) the selected items.
8) Post the document.
Excise capturing process during goods receipt as follows:
1. In the top line, enter the purchase order number and choose.
2. Enter header data as required, following the standard procedure.
In addition, on the Excise Invoice tab:
a. Set the excise action to Capture Excise Invoice or Capture & Post Excise
Invoice.
b. Enter the official excise invoice number and the excise invoice date.
4. Enter line item data as required, again, following the standard procedure.
In addition, on the Excise Item tab, change the data so that it matches the vendor's
excise invoice, if necessary.

5. Save the goods receipt.
We can also enter a freight supplier if the condition type for delivery costs allows to do.
FSBP Link:
FSBP
Document
GRN & Reversal

1 Procurement JCL_FSBP_MM_GRN_
0011_1.0.doc
Goods issue
A goods issue (GI) is a goods movement with which a material withdrawal or material issue,
a material consumption, or a shipment of goods to a customer is posted. A goods issue
leads to a reduction in Warehouse stock.
The Inventory Management system supports the following types of goods issues:
1. Issues to Plant for Consumption

2. Issues to Agencies on chargeable basis
3. Issues to Agencies on Returnable basis
4. Issues to Employees/departments on Returnable basis like Tools
5. Issue of LPG/Oxygen Cylinders
6. Scrapping and withdrawal of material for sampling
7. Return deliveries to vendors
FSBP Link:
FSBP
Document
Goods Issue Goods Issue

1 JCL_FSBP_MM_GIS_
0012_1.0.doc
Stock transfer

A stock transfer is the removal of material from one storage location and its transfer to
another storage location. Stock transfers can occur either within the same plant or between
two plants.
There are two methods of stock transfer.
One-Step Procedure:
 During a one-step stock transfer, the system creates issue of stock at sender plant &
receipt of stocks at receiver plant with in the same step.
Two-Step Procedure:
 During two step process, system transfers material from issuing plant to stock in
transit. At receiver plant after receipt document is posted stock in transit gets
transferred to receiver plant.
FSBP Link:
FSBP
Document
Stock Transport Order

1 Procurement JCL_FSBP_MM_STO_
0014_1.0.doc
Transfer posting
A transfer posting is a general term for stock transfers and changes in stock type or stock
category of a material. It is irrelevant whether the posting occurs in conjunction with a
physical movement or not.
Transfer posting process as follow:
1) Select Goods movement - Transfer posting.

2) Enter the data on the initial screen:
3) Enter the header data.
4) Select the movement type Transfer posting - Stock to stock or Reverse tfr. posting -
Stock to stock plus the required stock types.
5) Maintain the data on the collective entry screen:
6) Only enter a receiving storage location if the material should be stored in another
storage location.

7) Enter the items.

8) Check the data on the overview screen and post the document
All the transfer postings will be done in one step in Janki Corp Ltd.
Reservations
With this component, a request to the Warehouse to keep materials ready for withdrawal at
a later date and for a certain purpose can be made.
A reservation for goods issue can be requested by various departments for various account
assignment objects (such as cost centre, order, asset, etc.).
The purpose of a reservation is to ensure that a material will be available when it is needed.
It also serves to simplify and accelerate the goods issue process and prepare the tasks at
the point of goods issue. It is also important that Material Requirements Planning (MRP)
takes reservations into account. It means that required materials are procured in time if
they are out of stock.
In SAP the user department specifying where the material is required, what quantity is
required, and when it is required can create a Reservation. While running the material
planning, based on the Reservation, the system will generate a Purchase requisition
automatically, if there is no enough stock on the required day. Reservations do not block
the stock from being issued to any other requirement.
In SAP standard movement types are defined to differentiate between the various types of
goods movement described above. The following is the list of some of the commonly used
movement types that will be used in Janki Corp Ltd.
Movement type Description Remarks

101 GR goods receipt for Purchase A purchase Order reference is
Order (B) & Order (F) required
102 Reversal / Cancellation of GR for
Purchase Order (B) & Order (F)
122 / 123 Return delivery to supplier or to You can use this movement type
production to differentiate between
cancellations and return
201 /202 Goods Issue for a Cost centre
261 / 262 Goods issue to an order This refers to issue to all orders
like, maintenance order,
Production order. The movement
type will be picked automatically

when the concerned orders are

confirmed.
309 /310 Transfer Posting from material to This will be used when transfer of
material stock from one valuation to
another valuation type is required.
311 /312 Transfer Posting from Storage
location to storage location
351 / 352 Transfer Posting – Plant to Plant
(MM Route)
451/452 Returns from Customer(without This is used when returns are
shipping) posted without reference to a
return delivery.
501 / 502 Goods Receipt for Others
541 Transfer Posting unrestricted use

stock to Stock of material
provided to Subcontractor
542 Reversal of Transfer Posting
unrestricted use stock to Stock
of material provided to
Subcontractor
543 / 544 Consumption of Materials at
Subcontractor Stock
551/552 Scrapping from Unrestricted
stock
561/562 Initial entry of stock balances This movement type will be used
to migrate the opening stock
balance into SAP; there is a
provision to enter the value of the
goods movement.
701 phys.inv Used in Physical inventory

postings

phys.inv Used in Physical inventory

702
postings
4.5 Physical Inventory
In SAP R/3, 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. Note that the
blocked stock returns and the stock in transfer cannot be inventoried. If these stocks are
still to be counted in a physical inventory, these must be transfer posted to other stocks
capable of inclusion in a physical inventory.
The stock in a Warehouse can be divided into stock types. In the standard system, a
physical inventory can be carried out for the following stock types:
 Unrestricted-use
 Quality inspection stock
 Blocked stock
Inventory of all stock types mentioned can be taken in a single transaction. For the
materials to be inventoried, one item is created in the physical inventory document for
every stock type.
Physical inventory takes place at storage location level. A separate physical inventory
document is created for every storage location.
If a material does not exist in a storage location, this means that no goods movement has
ever taken place for the material in the storage location. The material, therefore, has never
had any stock in this storage location. The material does not exist at stock management
level in the storage location. It is therefore not possible to carry out a physical inventory for
the material in this storage location.
This is not to be confused with a material for which a goods movement has taken place and
for which the stock balance is currently zero. A physical inventory must be carried out in
this case, since storage location data is not deleted when the stock balance is zero.
SAP R/3 supports the following physical inventory procedures:
 Periodic inventory
 Continuous inventory
 Cycle counting
 Inventory sampling
Periodic Inventory

In a periodic inventory, all stocks of the company are physically counted on the balance
sheet key date. In this case, every material must be counted. During counting, the entire
Warehouse must be blocked for material movements.
Continuous Inventory
In the continuous inventory procedure, stocks are counted continuously during the entire
fiscal year. In this case, it is important to ensure that every material is physically counted at
least once during the year.
Cycle Counting
Cycle counting is a method of physical inventory where inventory is counted at regular
intervals within a fiscal year. These intervals (or cycles) depend on the cycle counting
indicator set for the materials. The Cycle Counting Method of Physical Inventory allows fast-
moving items to be counted more frequently than slow-moving items.
Inventory Sampling
In MM Inventory sampling randomly selected stocks of the company are physically counted
on the balance sheet key date. If the variances between the result of the count and the
book inventory balance are small enough, it is presumed that the book inventory balances
for the other stocks are correct.
4.5.1 Purpose
This component allows you to carry out a physical inventory of your company’s Warehouse
stocks for balance sheet purposes.
4.5.2 Master Data
 Material master
In Janki Corp Ltd, all stocks are physically counted on the balance sheet key date.
 Visibility of inventory differences with every inventory count across plants is
available.
 Inventory counting is done for every material, storage location in the plant.
 Posting of difference can be controlled through authorizations.
The physical inventory procedure is carried out in three steps:
1. Creating a Physical Inventory Document

2. Entering the Physical Inventory Count
3. Posting inventory differences

You can also group together individual phases and carry them out in a single step, as
follows:
 Posting the physical inventory count without reference to a physical inventory

document
In this step, the following are combined:

– A physical inventory document is created.
– The count is posted.
 Posting the physical inventory count and inventory differences
If a physical inventory document exists, the following are combined in this step:
– The count is posted.
– Any inventory differences are posted.
 Posting the physical inventory count without reference to a physical inventory
document
In this step, the following are combined:
– A physical inventory document is created

– The count is posted
 any inventory differences are posted
FSBP Link:
FSBP
Document
Physical
Inventory Physical Inventory
1
JCL_FSBP_MM_PIN_
0010_1.0.doc
4.6 Material Valuation
Material Valuation is not an independent application area, since most Material Valuation
functions take place automatically in the SAP System. Depending on how a company is
structured, tasks that have to be carried out manually belong to either Inventory
Management or Invoice Verification.
Material Valuation represents a link between Materials Management (MM) and Financial
Accounting (FI), since it updates the G/L accounts in Financial Accounting.
Material Valuation serves the following purposes:
 Adjusting material prices to market prices

 Performing revaluations
 Executing balance sheet valuation
Material Valuation is basically controlled by two factors:
 System settings
 Material master record
System setting
Plant level materials will be valuated.

Movement types will decide which are relevant for financial posting
Material Master Record
As a rule, a material master record is created for every material. The information contained
in this record includes valuation data for the material. When maintaining the material
master record, Must decide the following:
 Whether a particular material should be valuated at all
 Whether different sub-stocks of a material should be valuated differently
 Whether the stock of a material should be valuated at a constant price (standard

price) or whether the price should change in accordance with the delivered price
(moving average price)
 Which G/L account the stock value of a material should be managed in
The stock quantity and value of a material and the material price are also recorded in the
material master record.
In the SAP System, there are two types of price control:

 Standard price
 Moving average price
These two types of price control differ in how they handle price variances resulting from
goods receipts or invoice receipts.
Valuation using a standard price has the following features:

 All inventory postings are carried out at the standard price
 Variances are posted to price difference accounts
 Variances are updated
 Price changes can be monitored
Valuation using a moving average price results in the following:

 Goods receipts are posted at the goods receipt value.
 The price in the material master is adjusted to the delivered price.
 Price differences occur only in exceptional circumstances.
 Manual price changes are usually unnecessary. However, they are possible.
Data on a material is valuated using the following structure:

 Valuation area
Valuation area = one plant
The stocks of a particular material in this individual plant are valuated together. Stocks in
other plants are not included in this valuation area.
 Valuation class
You group together different materials with similar properties into valuation classes so that
you do not have to manage a separate stock account for every material.
Which valuation class a material can be assigned to depends on the material type. You can
define the following assignments in Customizing:
 All materials with the same material type are assigned to just one valuation class.
 Different materials with the same material type are assigned to different valuation
classes.
 Materials with different material types are assigned to a single valuation class.
A material is assigned to a valuation class in the material master record. The system checks
whether the material type allows the material to be assigned to the valuation class
specified.
The system refers to the valuation class of a material to determine which stock account to
post to when a posting is made for this material.
 Material type
You assign every material to a material type when you create it. Examples of material types
in the standard system include raw materials, operating supplies and finished products.
The material type controls the properties of a material and which data must be maintained
for the material. The following control features are important for valuation:
 Is the material managed by quantity?

 Is the material managed by value?
 Which price control type may be used for the material?
 Which valuation class can the material be assigned to?
 Movement type
For every material movement, there is a movement type in the SAP System. The movement
type controls the properties of the movement, for example, which entries you must make
when entering a material movement, and which updates are carried out when the
movement is posted. The following control features are important for valuation:
 Does the material movement cause the quantity to be updated?

 Does the material movement cause the value to be updated?
 Does the material movement lead to postings in Accounting?
 Is the material movement relevant for LIFO/FIFO valuation?

1. Reason for movement type field is used for addressing many issues-for
employees,contractors etc.since it is a configurational value, the same has to be
mentioned.
901 : New movement type for the issue of materials on chargeable basis
The Reason for movement will be used to identify that material is issued to agency on
chargeable basis.
4.6.1 Master Data
 Material master
4.6.2 Features with respect to Janki Corp Ltd..
In Janki Corp Ltd.
 All Materials will be valuated at moving average price.

 All stock valuation will be online across location at plant level.
Material Valuation is not an independent application area, since most Material Valuation
functions take place automatically in the SAP System.
 All the materials will be created in the system with accounting & costing views which
needs to be valuated either with price control S or V. Initial price will be updated in
material master while creation. Based on receipts value moving average price will keep
on getting updated online for every receipt. Material having standard price will have
moving average price updation only for statistical purpose. Every issue will be with
corresponding price in the material master with relevant financial posting.
4.7 Logistics Invoice Verification
In Materials Management, Logistics Invoice Verification has the following features:
 It completes the material procurement process, which has started with the purchase
requisition and resulted in a goods receipt.
 It allows invoices that do not originate in materials procurement (such as services,
expenses, course costs) to be processed.
 It allows credit memos to be processed, either as invoice reversals or return deliveries.

1 Tolerance limit
C:\Documents and
An invoice can be processed in Logistics Invoice Verification in various ways:
 Invoice Verification Online

You receive an invoice and enter the information contained in it in the system, comparing
the data (such as quantities and values) suggested by the system with that in the invoice
and making any necessary corrections. You then post the invoice. In the SAP R/3 System, a
distinction is made between the following types of invoices:
 Invoices with purchase order reference.
All the items in a purchase order can be settled. With purchase-order-based Invoice
Verification, all the items of a purchase order can be settled together, regardless of whether
an item has been received in several partial deliveries.
 Invoices with goods receipt reference.
Each goods receipt is settled separately.
 Invoices without purchase order reference.
Invoices can be posted directly to G/L accounts or material accounts.
 Document Parking
When company receives an invoice, enter the data in the system, and save the invoice
document. The system does not make any postings. Parked documents can be changed.
When finished changing the document, can post the parked document.
 Invoice Verification in the Background

When receive an invoice, only enter the total amount of the invoice and match the invoice
up with another system document. The system then checks the invoice in the background.
If no errors occur, the system posts the invoice in the background.
If errors do occur, the system saves the invoice and then has to process it in a separate
step.
An invoice contains various information, such as:
 Who issued the invoice?

 Which transaction does the invoice refer to?
 How much tax do you have to pay?
One of the basic questions is the invoice reference, which enables you to clearly allocate the
invoice to a business transaction. If such a reference exists, the system uses "knowledge"
that it already has and proposes the appropriate values when verifying the invoice, for
example:
 Agreed terms of payment

 Quantities to be invoiced

 Amounts expected for each item
If the vendor invoice contains different information, you can overwrite the data proposed.
The system checks whether your entries are allowed and display a warning or error
message if anything is incorrect.
Delivery costs are costs that are invoiced for a delivery over and above the value of the
delivery itself. This includes freight charges, customs duty, or other costs.
There are the following types of delivery costs:
 Planned Delivery Costs

Planned delivery costs are entered in the purchase order on an item basis. Provisions are
set up for the relevant costs at goods receipt. The delivery costs planned in the purchase
order are referenced when the invoice is entered. The provisions are cleared. The values
proposed for the items come from the purchase order history.
 Unplanned Delivery Costs

Unplanned delivery costs are only entered when the invoice is entered. No provision is made
at goods receipt.
Will be at Header Level.
Logistics invoice verification facilitates four different activities:
 Invoice
The vendor invoices for the goods that have ordered from the company. Passing the
same bill submitted by him.
 Credit memo
The vendor has invoiced too much for the last delivery, for example, less than the
agreed quantity was delivered and that at the agreed total price, or returned part of
a delivery to the vendor due to quality problems.
 Subsequent debit
Already received & posted an invoice from vendor for all the goods received.
Subsequently, freight costs are to be taken into account; however, the invoice
quantity remains the same.
 Subsequent credit
Already received a credit memo from vendor for all the goods received.
Subsequently, freight costs are to be credited to company; however, the credit
memo quantity remains the same.
In Logistics Invoice Verification – as in other applications – the SAP system often needs to
retrieve stored data at many points, change this data where necessary, or add new
information.
Depending on the type of information, the data in the SAP System is stored in different
master records, such as the material master record or the vendor master record. This
central data storage function avoids redundant data and ensures that the different
departments use the most up-to-date information from various departments (Material

Requirements Planning, Purchasing, Inventory Management, Quality Management, Logistics

Invoice Verification, and so on).
4.7.1 Purpose
Logistics Invoice Verification is situated at the end of the logistics supply chain that includes
Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice
Verification that Incoming Invoices are verified in terms of their content, prices and
arithmetic.
When the invoice is posted, the invoice data is saved in the system. The system updates the
data saved in the invoice documents in Materials Management and Financial Accounting.
Visibility across MM & FI module on the status of invoices is online. Material price changes
are adjusted in inventory valuation at the time of invoice posting. GR based invoice
verification ensures document flow & data consistency.
4.7.2 Master Data
 Material master
 Vendor master
 Accounting data
In Janki Corp Ltd.
 All the Purchase Orders, except import, will be created with GR based invoice
verification.
 Payments to the vendor will be exactly as per the pricing structure of the Purchasing
document.
 It will ensure multiple vendor payment for against same PO like material payment to
one vendor, freight payment to another vendor, loading charges to third vendor etc.
 Invoice posting can be online to ensure on time payment to vendors.
 Subsequent debit & Credits can be posted to vendor with reference already paid
invoices.
 Unplanned delivery cost can be posted to inventory to availability of stocks while
making the payment to vendor.
Receive an invoice from the vendor referring to a purchase order and a goods receipt, for
example. When first call up the application, enter the company code that work in. All further
transactions are then posted in this company code. If you want to switch to a different
company code, can do this during processing.
Entering a vendor invoice involves:

1. Choosing the Transaction.

2. Entering Document Header Data.
3. Allocating Invoices.
4. Processing Invoice Items.
The last step is not mandatory. If there is no balance or if the variances are within the
tolerance limits set, can post the invoice immediately after entering the allocation data. If
the system cannot post the invoice, can check the invoice items and change them. When
post without checking the invoice items, variances in individual items can cancel each other
out.
The following accounts are particularly important for Invoice Verification:
Vendor Accounts
There is a separate account in the sub-ledger for each vendor that all amounts concerning
this vendor are posted to. Making a posting to the vendor account is not the same as
making a payment; payment is only made when the Financial Accounting department posts
the vendor's payment to a bank account.
Stock Accounts
In the R/3 System, there is no separate account for each material. Instead, different
materials with similar features are grouped together in a common account (for example,
raw materials: acids). The account relevant for a material is defined in the material master
record when a material is created.
The system only posts to the stock account when a price difference occurs for an invoice.
GR/IR Clearing Accounts

The GR/IR clearing account is an "intermediate" account between the stock account and the
vendor account. At goods receipt, the net invoice amount expected is posted to the stock
account. The offsetting entry is posted to the GR/IR clearing account. This posting is then
cleared by an offsetting entry on the vendor account at invoice receipt.
Tax Accounts
The system makes postings to special tax accounts when invoices include tax.
Price Differences Accounts

Price differences have to be posted to a price difference s account if price differences have
occurred in an invoice and when invoices are posted net and no posting can be made to the
stock account.
Freight Clearing Account

The stock account is debited with the planned delivery costs at goods receipt and the
system makes the offsetting posting to a freight clearing account. This posting is then
cleared by an offsetting entry to the vendor account at invoice receipt.
This process in details is covered by FI blue print.

The parking of invoices is done by purchasing department.
Incoming Invoices are verified in terms of their content, prices and arithmetic by the
accounts department and then are posted in the system.
5 INTERFACE REQUIREMENT
Weigh Bridge Interface
Weigh Bridge interface is currently used for weighing of Raw materials and finished goods.
The Goods Receipt for Raw materials is carried out after approval of reading from Weigh
Bridge. Transport vendor wise goods receipt is carried out considering the allowed
tolerance.
Weigh Bridge interface requires development in SAP to record the readings from the
weighbridge which will be stored. Upon approval of these readings a goods receipt will be
posted in the system.
6 STANDARD INFORMATION SYSTEM
SAP as standard functionality offers various module wise reports for various analysis & help
in decision making for the business organization. List of such standard reports is given
below:
T Code Transaction code description

AC05 List Processing: Service Master
AC06 List Display: Service Master
MB03 Display Material Document
MB24 Reservation List
MB25 Reservation List
MB51 Material Doc. List
MB52 List of Warehouse Stocks on Hand
MB53 Display Plant Stock Availability
MB5B Stocks for Posting Date
MB5T Stock in transit CC
ME04 Changes to Source List
ME05 Generate Source List
ME06 Analyze Source List
ME1E Quotation Price History
ME1L Info Records Per Vendor
ME1M Info Records per Material
ME1P Purchase Order Price History
ME1W Info Records Per Material Group

ME2B POs by Requirement Tracking Number

ME2C Purchase Orders by Material Group
ME2J Purchase Orders for Project
ME2K Purch. Orders by Account Assignment
ME2L Purchase Orders by Vendor
ME2M Purchase Orders by Material
ME2N Purchase Orders by PO Number
ME2O SC Stock Monitoring (Vendor)
ME2S Services per Purchase Order
ME2V GR Forecast
ME2W Purchase Orders for Supplying Plant
ME5A Purchase Requisitions: List Display
ME5F Release Reminder: Purch. Requisition
ME5J Purchase Requisitions for Project
ME5K Requisitions by Account Assignment
ME80 Purchasing Reporting
ME81 Analysis of Order Values
ME82 Archived Purchasing Documents
MELB Purch. Transactions by Tracking No.
MI07 Process List of Differences
MI08 Create List of Differences with Doc.
MI20 Print List of Differences
MIBC ABC Analysis for Cycle Counting
MC.9 INVCO: Material Anal.Selection,Stoc
MC40 INVCO: ABC Analysis of Usage Values
MC41 INVCO: ABC Analysis of Reqmt Values
MC42 INVCO: Range of Coverage by Usg.Val.
MC43 INVCO: Range Of Coverage By Reqmts
MC44 INVCO: Analysis of Inventory Turnover
MC45 INVCO: Analysis of Usage Values
MC46 INVCO: Analysis of Slow-Moving Items
MC47 INVCO: Analysis of Reqmt Values
MC48 INVCO: Anal. of Current Stock Values
MC49 INVCO: Mean Stock Values
MC50 INVCO: Analysis of Dead Stock
7 ANNEXURES
7.1 Annexure 1 – GAPS

S.No. GAPS
1 JCL_MM_ISSUETRAC
KER_V1.0.xls
7.2 Annexure 2- FRICE requirements
During the discussions within Janki Corp Ltd, team attached a list of reports identified as
requirement.
S.No. Reports
1 JCL
DEVLOPMENT_LIST.xlsx
7.3 Annexure 3-BBP Workshop
1
MOM
1
FSBP Tracker


Material Management Business Blueprint: Document Approvals

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Material Management Business Blueprint: Document Approvals

Caricato da

Copyright:

Formati disponibili

DOCUMENT APPROVALS

4.3.5 Business Process..................................................................................42

Wipro Ltd. Page 2 of 68

In JCL there is two Business processes

 Sponge Iron Business

SAP implementation is for Sponge Iron Business (Steel Plant)

 Business Segment – Sponge Iron

 Business Segment – Power

 Business Segment - Pellet

Wipro Ltd. Page 3 of 68

1.2 BUSINESS BLUEPRINT OVERVIEW

3. FSBP discussion along with changes in existing Organization structure, standard

Wipro Ltd. Page 4 of 68

The Objective of this document is:

1.3 MODULE DETAILS

It is sub divided into

Following values are important for defining reorder point

Wipro Ltd. Page 5 of 68

The tasks of the MM Purchasing component are as follows:

 External procurement of materials and services.

3. Vendor Selection and Comparison of Quotations

4. Purchase Order Processing

5. Purchase Order Follow-Up

6. Goods Receiving and Inventory Management

Wipro Ltd. Page 6 of 68

Payments are processed in FI in accounts payable.

This component deals with the following tasks.

 Management of material stocks on quantity and value basis.

Stock value = stock quantity x material price

Wipro Ltd. Page 7 of 68

Material Valuation serves the following purposes:

 Adjusting material price to market price.

Logistics Invoice Verification:

1.4 MODULE INTEGRATION

Materials Management is integrated with all relevant modules.

 Sales & Distribution –Delivery, availability check, Stock transfers etc.

Plant is an organizational unit within Logistics, serving to subdivide an enterprise according

Plants defined for Janki Corp Ltd

Plant (max 4 char) Name1 (max 30 char)

Wipro Ltd. Page 8 of 68

2.2 Storage Locations

Storage Locations –Spongy Iron Plant -1100

Plant Sloc Description

Storage Locations –Power Plant 1200

Wipro Ltd. Page 9 of 68

Plant Sloc Description

Storage Locations – Pellet Plant 1300

Plant Sloc Description

Additional storage locations will be added if required.

Wipro Ltd. Page 10 of 68

2.3 Purchasing Organization

Maintenance of purchasing documents: Many purchasing documents are purchasing

Pricing Flexibility: The Purchasing Organization is one of the influencing factors in

Authorisation Control: The Purchasing Organization is one of the authorisation objects in

Purchasing Organization (max Pur. Organization description (max 20 char)

Wipro Ltd. Page 11 of 68

Purchase Purchasing Organization

1100 1200 1300

Spongy Iron Power Pellet Plant

2.4 Purchasing group

Plant Purchasing Groups PGP Description

Wipro Ltd. Page 12 of 68

3.1 Material Master