BUSINESS BLUEPRINT - MM - SJCL - Version 1.0

SAP IMPLEMENTATION PROJECT
DOCUMENTATION FOR
SREE JAYAJOTHI CEMENT LTD
BUSINESS BLUE PRINT

MM MODULE
LEADSOFT SOLUTIONS PVT LTD

T.N. Jayaraman K.N. Odaiyappan
B. Rajendra Prasad Leadsoft Solutions
Leadsoft Solutions
Prepared by Reviewed by Approved by Released to
5
4
3
2
1 1.0 For Comments/Approval
# Document No. Version No. Date of issue Comments
Document Numbering convention

>>>>>>> SJCL-01 T PR MI GE I 1
V Lead Soft Nature of Project Document Module Purpose of Running
V Project No. Document Phase Type Document number
Lead Soft Assigned Project number
Project No.
Nature of C - Commercial, T – Technical
Document
Project PR - Project preparation, BB - Business Blue Print, RE – Realization, FP - Final Preparation, GL - Go Live
Phase
Document MI - Management Information, FU – Functional, TE – Technical, DE – Development
Type
Module GE – General, SD - Sales and Distribution, MM - Materials Management, WM - Warehouse Management, FICO -
Financial Accounting and Controlling, PP - Production Planning, QM - Quality Management, PM - Plant
Maintenance, HR - Human Resources, EP - Enterprise Portal, ABAP - ABAP Development
Purpose of A - Approved document, C - For Comments / Approval, I - For Information
Document
Running Serial number
Number
Page 1
Project Documentation is restricted information for use of project members of project implementation partner - Leadsoft Solution
Pvt. Ltd. (Leadsoft) and owner - Sree Jayajothi Cement Ltd. (SJCL)
TABLE OF CONTENTS
1. INTRODUCTION ..................................... 16
1.1. Objective of this Report ................................. 16

1.2. Structure of the Report.................................. 17
2. ORGANISATIONAL OVERVIEW................ 17
2.1. Executive Summary ....................................... 17
3. SAP ORGANIZATION STRUCTURE ........... 18
3.1. Materials Management ................................. 18

3.1.1. Plant........................................................................... 18
3.1.1.1. SAP Definition .........................................................................18
3.1.1.2. Design Rationale .....................................................................19
3.1.1.3. Assignments............................................................................19
3.1.2. Storage Location ........................................................ 20
3.1.2.1. SAP Definition .........................................................................20
3.1.3. Purchasing Organization ............................................ 20
3.1.3.1. SAP Definition .........................................................................20
3.1.3.3. Assignments............................................................................21
3.1.4. Purchasing Group ...................................................... 22
3.1.4.1. SAP Definition .........................................................................22
4. Material Master .................................... 23
BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 2

4.1. Overview ....................................................... 23
4.1.1. General ...................................................................... 23
4.1.2. Important fields in Material Master ...................... 23
4.1.3. Material Type ............................................................. 24
4.1.4. Material Group .......................................................... 25
4.2. Configuration Design ..................................... 25
4.2.1. Material Types ........................................................... 25
4.2.2. Other important fields in Material Master................. 26
4.3. Specific Requirements ................................... 27
4.4. Key Business Decision .................................... 27
4.5. Key Meetings................................................. 27
4.6. Integration .................................................... 27
4.6.1. Finance Module: ........................................................ 27
4.7. Authorization Matrix ..................................... 28
4.8. Roles & Responsibilities ................................. 28
4.9. Open Issues ................................................... 28
5. Vendor Master ...................................... 29
5.1. Overview ....................................................... 29

5.1.1. General ...................................................................... 29
5.1.2. Vendor Account Groups ............................................. 29
5.1.3. Vendor Partner Functions .......................................... 30
5.1.4. Vendor Blocking ......................................................... 30
5.1.5. Vendor Other Fields ................................................... 30
5.2.1. Vendor Account Groups ............................................. 31
5.2.2. Vendor Partner Functions .......................................... 32
5.2.3. Vendor Blocking ......................................................... 32

5.2.4. Other Fields in Vendor Master ................................... 32
5.5. Key Meetings................................................. 33
5.6. Integration .................................................... 33
5.9. Open Issues ................................................... 34
6. Purchase Information Records ............... 35
6.1. Overview ....................................................... 35

6.1.1. General ...................................................................... 35
6.1.2. Types of Purchase Information Records .................... 35
6.1.3. Fields in Purchase Information record ....................... 35
6.2.1. Purchase Information Record .................................... 36
6.5. Key Meetings................................................. 36
6.6. Integration .................................................... 37
6.9. Open Issues ................................................... 37
7. Source List ............................................. 38
7.1. Overview ....................................................... 38

7.1.1. General ...................................................................... 38
7.2.1. Source List .................................................................. 38
7.5. Key Meetings................................................. 38
7.6. Integration .................................................... 39
7.9. Open Issues ................................................... 39
8. Conditions ............................................. 40
8.1. Overview ....................................................... 40

8.1.1. General ...................................................................... 40
8.2.1. Conditions .................................................................. 40
8.5. Key Meetings................................................. 42
8.6. Integration .................................................... 42
8.9. Open Issues ................................................... 42
9. Service Masters ..................................... 43
9.1. Overview ....................................................... 43

9.1.1. General ...................................................................... 43

9.2.1. Service Master ........................................................... 43
9.5. Key Meetings................................................. 44
9.6. Integration .................................................... 44
9.9. Open Issues ................................................... 44
10. Service Specifications ............................ 45
10.1. Overview ....................................................... 45

10.1.1. General ...................................................................... 45
10.2.1. Service Specifications ................................................. 45
10.5. Key Meetings................................................. 46
10.6. Integration .................................................... 46
10.9. Open Issues ................................................... 46
11. Purchase Requisition ............................. 47
11.1. Process Definition.......................................... 47

11.2. Existing Process General Explanation (As-Is) .. 47

11.3. Business Overview (To-Be in SAP) .................. 47
11.3.1. Information in a PR .................................................... 48
11.3.2. PR Document types.................................................... 48
11.3.3. Approval of Purchase Requisition .............................. 49
11.3.4. Business Process Specific Scenario ............................ 50
11.3.4.1. Cash Purchase Requisition ......................................................50
11.3.4.2. PR with reference to Contract.................................................52
11.3.4.3. PR’s generated thru MRP ........................................................52
11.3.4.4. Direct PR’s...............................................................................53
11.3.4.5. Account Assigned PR’s ............................................................53
11.4. Gap Fitment .................................................. 54
11.5. Integration .................................................... 54
11.6. Key Performance Indicators (Reference) ........ 54
11.7. Reports.......................................................... 54
11.8. Workflow ...................................................... 54
11.9. Developments ............................................... 54
11.11. Key Business Decisions .................................. 55
11.12. Open Issues ................................................... 55
12. Prequalification of Vendors / Source

Determination ....................................... 56

12.3.1. Identifying the vendors for RFQ’s .............................. 56
12.3.2. Business Process Specific scenario ............................. 56
12.3.2.1. For Material Vendor / Source Selection ..................................56
12.3.2.2. For Service Vendor / Source Selection ....................................57
12.4. Gap Fitment .................................................. 57
12.5. Integration .................................................... 57
12.7. Reports.......................................................... 57
12.8. Workflow ...................................................... 57
12.9. Developments ............................................... 57
12.12. Open Issues ................................................... 58
13. Request for Quotation / Quotation ........ 59

13.3.1. Identifying the vendors for RFQ’s .............................. 59
13.3.2. Types of RFQ .............................................................. 60
13.3.3. Business Process Specific scenario ............................. 60
13.3.3.1. Quotation Entry ......................................................................60
13.3.3.2. Quotation Comparison ...........................................................60
13.4. Gap Fitment .................................................. 61
13.5. Integration .................................................... 61
13.7. Reports.......................................................... 61
13.8. Workflow ...................................................... 61
13.9. Developments ............................................... 61

13.12. Open Issues ................................................... 62
14. Purchase Order ...................................... 63

14.3.1. Triggering Point.......................................................... 63
14.3.2. Purchase Order Process Flow..................................... 63
14.3.3. Document Types ........................................................ 64
14.3.4. Information in PO ...................................................... 64
14.3.5. Payment Terms in PO................................................. 65
14.3.6. Delivery Tolerances.................................................... 65
14.3.7. Conditions .................................................................. 65
14.3.8. Other Features in the PO ........................................... 66
14.3.9. Release Strategy ........................................................ 67
14.3.10. Tracking of Documents for Local or Imported
Material ..................................................................... 69
14.3.11. Forms Tracking / Marine Insurance ........................... 69
14.3.12. Vendor Discounts ....................................................... 69
14.3.13.1. Purchase of External Services .................................................69
14.3.13.2. Free of Cost Material ..............................................................72
14.3.13.3. Materials Procurement for Assets or Sub- Assets ...................72
14.3.13.4. Vendor Managed Spare Parts Order .......................................72
14.3.13.5. Contract Call off Orders ..........................................................74
14.4. Gap Fitment .................................................. 75
14.5. Integration .................................................... 75
14.7. Reports.......................................................... 75

14.8. Workflow ...................................................... 75
14.9. Developments ............................................... 75
14.12. Open Issues ................................................... 76
15. Contracts ............................................... 77

15.3.1. Contract Process Flow................................................ 77
15.3.2. Contract Types ........................................................... 78
15.3.3. Centrally Agreed Contracts ........................................ 78
15.3.4. Document Types ........................................................ 78
15.3.5. Information in Contract ............................................. 79
15.3.6. Conditions .................................................................. 79
15.3.7.1. Milestone / Job Based .............................................................79
15.3.7.2. Fixed Periodic Fees .................................................................80
15.3.7.3. Fixed Periodic Fees with a Variable Component .....................80
15.3.7.4. Rate Contract ..........................................................................80
15.4. Gap Fitment .................................................. 81
15.5. Integration .................................................... 81
15.7. Reports.......................................................... 81
15.8. Workflow ...................................................... 81
15.9. Developments ............................................... 81

15.12. Open Issues ................................................... 82
16. Inventory Management ......................... 83
16.1. Definition ...................................................... 83

16.3.1. Triggering Point.......................................................... 83
16.3.2. Inventory Management Concepts ............................ 83
16.3.3. Material Movements ................................................. 83
16.3.3.1. Stock Types .............................................................................84
16.3.3.2. Documents .............................................................................84
16.3.3.3. Units of Measure ....................................................................84
16.3.4. Business Process Specific Scenarios ........................... 84
16.3.4.1. Goods Receipts Process ..........................................................84
16.3.4.2. Material to Asset ....................................................................86
16.3.4.3. Consumption of Material (Direct Charge Materials) ...............86
16.3.4.4. Goods Issue.............................................................................86
16.3.4.5. Material Return to Stores from Departments .........................88
16.3.4.6. Material Return to Vendor ......................................................89
16.3.4.7. Material sent to vendor for Job work or Subcontracting.........90
16.3.4.8. Material sent to Vendor for Repair .........................................91
16.3.4.9. Transfer of Assets & Materials ................................................91
16.3.4.10. Scrap and Sale of a Material ...................................................91
16.3.4.11. Cash Purchase .........................................................................92
16.3.4.12. Vendor Managed Inventory ....................................................93
16.3.4.13. Imported Materials .................................................................94
16.4. Gap Fitment .................................................. 95
16.5. Integration .................................................... 95
16.7. Reports.......................................................... 96
16.8. Workflow ...................................................... 96
16.9. Developments ............................................... 96
16.12. Open Issues ................................................... 98
17. Physical Inventory Management ............ 99

17.3.1. Process Flow .............................................................. 99
17.3.2. Stock Types & Special Stocks ................................... 100
17.4. Gap Fitment .................................................101
17.5. Integration ...................................................101
17.6. Key Performance Indicators (Reference) .......101
17.7. Reports.........................................................101
17.8. Workflow .....................................................101
17.9. Developments ..............................................101
17.10. Authorization Matrix ....................................101
17.11. Key Business Decisions .................................102
17.12. Open Issues ..................................................102
18. Materials Requirement Planning ...........103
18.1. Process Definition.........................................103

18.2. Existing Process General Explanation (As-Is) .103
18.3. Business Overview (To-Be in SAP) .................103
18.3.1. Creation of procurement proposals ......................... 103
18.3.2. Planning at plant level.............................................. 104
18.3.3. Lot-sizing procedures ............................................... 104
18.3.4. Reorder point procedure ......................................... 105
18.3.4.1. Manual Reorder Point Planning – For some spare parts .......105
18.4. Gap Fitment .................................................106
18.5. Integration ...................................................106
18.7. Reports.........................................................106
18.8. Workflow .....................................................106
18.9. Developments ..............................................106
18.12. Open Issues ..................................................107
19. Vendor Evaluation ................................108

19.4. Gap Fitment .................................................109
19.5. Integration ...................................................109
19.7. Reports.........................................................110
19.8. Workflow .....................................................110
19.9. Developments ..............................................110

19.12. Open Issues ..................................................111
20. Bill Passing / Invoice Verification ..........112

20.2. Salient Features in Invoice Verification .........113
21. GAPS / ISSUES ......................................115
22. KEY INTEGRATION AREAS .....................115
22.1. Production Planning & Control .....................115

22.2. Sales & Distribution ......................................116
22.3. Finance & Controlling ...................................116
22.4. Quality Management ....................................116
22.5. Plant Maintenance .......................................117
22.6. With-In Materials Management....................117
23. REPORTS IN MM ...................................118
23.1. Purchasing Reports .......................................118

23.2. Reports Involving Master Data .....................120
23.3. Inbound Logistics Reports .............................122
24. LIST OF ABAP DEVELOPMENTS ..............124

24.1. Forms and Reports .......................................124
25. DATA MIGRATION STRATEGY ................125
25.1. Master Data .................................................125

25.2. Transactional Data........................................125
…………..

1. INTRODUCTION
The Purpose of the Business Blueprint, which is the main deliverable of
Business Blueprint Phase, is to serve as conceptual master plan for Sales
and Distribution module for Sree Jayajothi Cement Ltd (SJCL).
This Blueprint has been developed by documenting all input gathered

from our Business process knowledge in the Cement Industry, and
scheduling meetings and workshops with the core team based on their
SOP. This document shows the business requirements in detail, and
serves as the basis for organization, configuration and development
activities.
1.1. Objective of this Report
During the course of this phase, business process workshops were

conducted for the Core team members to discuss and deliberate the
business requirements for respective functional areas. The objective of
the workshops was to discuss the following aspects of each business
process and to define the requirements of Sree Jayajothi Cement Ltd in
detail:
• Business Process
• Expectations/ Improvements
• Reporting/Information requirements
During the workshops, the core team members were communicated the
capabilities and functionality of the SAP solution.
Based on the discussions during the Business Process Workshop, various

business scenarios have been documented which need to be addressed
by the system. The purpose of this report is to confirm the understanding
of these business scenarios, which would form the basis for system
specifications and to also list requirements which cannot be addressed by
the system. This document forms the basis for all subsequent activities to
be conducted during the project.

1.2. Structure of the Report
The report initially gives an overview of the Sales and Distribution

Module purview. This would essentially help in defining the boundaries of
the module and also in identifying the activities to be performed within
Sales and Distribution Module in SAP. Subsequently, the report discusses
in detail, the proposed coverage of SAP at Sree Jayajothi Cement Ltd, in
terms of organizational entities and business processes. Each business
process has been described with all the variations. The authorization
requirements would be identified and configured during the
configuration phase.
2. ORGANISATIONAL OVERVIEW
2.1. Executive Summary
Sree Jayajothi Cement Ltd, SAP implementation spans the following the
division.
• SJCL – Cement, Banaganapalli Plant.

3. SAP ORGANIZATION STRUCTURE
3.1. Materials Management
The SAP-MM Organization units being used in SJCL are:
• Plant
• Storage Location
• Purchasing Organization
• Purchasing Group
3.1.1. PLANT
3.1.1.1. SAP DEFINITION
An entity in SAP is defined as a ‘Plant’ if one or more of the following conditions are
met:
• The entity is a manufacturing unit

• The entity holds an inventory which is valuated at that entity level
• Material Requirement Planning (MRP) is carried-out at the entity level
The plant is embedded in the organizational structure as follows:
• The plant is assigned to a single company code. A company code can have several
plants.
• Several storage locations in which materials are managed on quantity basis can
belong to a plant.
• A plant can be assigned to several combinations of sales organization and
distribution channel.
• A plant can have several shipping points.
• A plant can be defined as a planning plant.
A plant has an address, a language and belongs to a country. A plant also has its own
material master data. The plant plays an important role in the following areas:

• Material valuation: If the valuation level is the plant, the material stocks are valuated
at plant level, material prices can be defined for each plant. Each plant can have its
own account determination.
• Inventory management: The material stocks are managed within a plant.
• MRP: Material requirements are planned for each plant. Each plant has its own MRP
data. Analyses for materials planning can be made across plants.
• Plant maintenance: If a plant performs plant maintenance planning tasks, it is
defined as a maintenance planning plant. A maintenance planning plant can also
carry out planning tasks for other plants (maintenance plants).
3.1.1.2. DESIGN RATIONALE
In SJCL, the entities, satisfying one or more of the following, will be defined as Plants in
SAP:
Physical Plants
Manufacturing location
Inventory holding point where Inventory is valuated
Level at which MRP run is to be carried out
In line with the above rationale, following entity (indicative) will exist as plant in SAP:
Physical Plant
• 1000(Banaganapalli-Works 1)
3.1.1.3. ASSIGNMENTS
In SAP, plants are assigned to company codes. A plant can belong to only one company
code. The table underneath depicts the detail list of entities to be defined as SAP
‘Plants’ along with their assignments to ‘Company Code’:
Company Code Description Description

1000 SJCL Banaganapalli-Works 1

3.1.2. STORAGE LOCATION
A storage location is the place where stock is physically kept within a plant. There may
be one or more storage locations within a plant. Storage locations are always created
for a plant. A storage location has the following characteristics
• Description and an address.

• It is possible to store material data specific to a storage location (Storage view in the
material master record).
• 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. If a material exists in a
storage location, you have to carry out a physical inventory for this storage location.
In SJCL, storage locations will be defined as follows: for e.g.
• Stores & Spares

• Stock yard
• Chemicals Store
• Shutdown (to be decided during blue print finalization)
• Raw materials(to be decided during blue print finalization)
• Tanks
• Silos
• SJCL has to give the nomenclature for all the storage locations decided before the
blue print is finalized.
3.1.3. PURCHASING ORGANIZATION
A 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. The form of procurement is defined by the
assignment of purchasing organizations to company codes and plants.
The following forms of purchasing exist:
• Corporate-group-wide: A purchasing organization procures for all the company

codes belonging to a client
• Company-specific: A purchasing organization procures for just one company code
• Plant-specific: A purchasing organization procures for a plant
The purchasing organization in SJCL is going to be designed based on the following

criteria:
• Flexibility of business operations

• Achieve fair degree of standardization
• Reduce complexity in maintenance of vendor master database
• Vendor Evaluation
• The best practice - least number of Purchase Organizations
In view of the above rationale, following is the purchasing organization for SJCL:
Purchasing Organization Description

1000 Banaganapalli Purchasing Organization
3.1.3.3. ASSIGNMENTS
Purchasing organization will be ‘floating’ in nature. This implies that these will not be
attached to any company code. Instead, plants across company codes will be assigned
to each purchasing organization (refer to the table below). At the time of transactions,
company codes will be determined through plants.
Purchasing Organization Description Plant

1000 Banaganapalli Purchasing 1000
Organization

3.1.4. PURCHASING GROUP
Key for a buyer or group of buyers responsible for certain purchasing activities.
The purchasing group is:
• Internally responsible for the procurement of a material or a class of materials

• Usually the principal channel for a company's dealings with its vendors
The purchasing organizations in SJCL have been designed based on the following
criteria:
• Individual or Group of buyers / departments

• Report analysis
In view of the above rationale, following are the examples of purchasing group for SJCL:
Purchasing Group Description
XXX Raw Materials / XXXXXXXXX

XXX Spares / XXXXXXXXX
XXX Services / XXXXXXXXX

4. MATERIAL MASTER
4.1. OVERVIEW
4.1.1. GENERAL
A material is central to all transaction processing in Logistics and is used to represent a

product in the SAP system by an alphanumeric code of length 18.
4.1.2. IMPORTANT FIELDS IN MATERIAL MASTER

Material Number: It is the key that identifies the product and can be maximum 18
characters long. The number can be internally generated or externally assigned.
Description: The description can be of maximum length 40 and must incorporate the
complete description.
Unit of Measurement: Unit of measurement in which the stocks are maintained
Material Group: This field shall be used to capture the technical domain of the
product (for example: Spares, Consumables, Chemicals etc. This field is available for
analysis in various Information System
Old Material Number: Identifies the old material code of the legacy system
Purchasing group: Identifies the single purchasing group responsible for the
material purchase
Ordering Unit : If the ordering unit is different from the Base UOM
Purchasing Value Key : Identifies the various dates wherein the reminders to the
suppliers can be sent and the standard delivery time
GR Processing Time : Standard Time being taken for processing the GR (in days)
(Time taken by the purchase department to convert the PR to PO is identified at
plant level. The days are standard for all materials.)
Source list identification : Whether for the material plant combination source list is
required / compulsory
Batch Management : Material is managed in Batches in the plant
Serial number Profile : Identification if Material is managed in serially (Necessary if
equipment is to be created )
Valuation Class: With other factors the valuation class determines the G/L accounts
that are updated.
Storage location stock will be monitored on quantity basis
All the materials, which are in storage stock, will be valued on the basis of moving
average price (in their respective material master records) at plant level
Materials moving average price will be affected only when material is procured or
bought to storage location stock, the moving average price of materials will not change
if posted directly to asset or bought to special stock
Source List Field: If this indicator is active system for a plant then source
determination has to be specified in the source list before a purchase order can be
created
MRP type: Key that determines whether and how the material is planned.
Storage Bin: It identifies the storage bin within the storage location where the
material is stored. The value is merely for information purpose.
Purchasing Value Key: Key that identifies the reminder days and tolerance limits.
4.1.3. MATERIAL TYPE
Materials with the same basic characteristics are grouped together and assigned to a
Material type. This allows managing different materials in a uniform manner in
accordance with the company’s requirements.
The material type controls the following:

• The Purpose of material, for example, as a raw material or packing material
• Number range assignment – whether internal or external
• The number range from which the material number is taken
• Whether material is manufactured within or can be procured or both
Account Category Reference: A group of valuation classes that the system uses. It
checks whether the valuation class you has entered is allowed when you maintain
the accounting data in the material master record.
Internal / External Procurement: Allows external procurement and internal
procurement (production) of materials for a particular material type
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
• Which GL accounts are affected at the time of Goods receipt.

4.1.4. MATERIAL GROUP
Material group is used for the purpose of grouping together of goods and services by
their characteristics or technical properties for control and information analysis
purpose. Material group can also be used to default the consumption / expense account
in case of PO wherein the Material code is not maintained.
The various Material Groups will be decided by SJCL during Realization Phase. Given
below is a sample list for reference purpose:
Chemicals
Electrical Spares
Mechanical Spares
Instrumentation Spares
General Spares
Finished Goods
Services
Raw Materials
Semi finished Goods
Finished Goods etc…
4.2. CONFIGURATION DESIGN

4.2.1. MATERIAL TYPES
The various Material Types that shall be created for use in SJCL will be decided during
Realization Phase. SJCL shall identify the materials for creation of material types.
However the list could be as follows:
Raw Materials (Valuated items)

Semi finished Goods (Valuated Materials)
Finished Goods (Valuated Materials)
Plant Spare Items (Valuated Material)
Consumable Spare Items (Valuated Material)
Operating Supplies (Valuated Materials)
Waste Materials
The material number range, will be system generated (internal number range)
for SJCL.
The Views / user data screens that need to displayed during creation /
change and display of material master record will be identified along with
Material types during blue print finalization stage
Account category reference for each material type needs to be finalized along
with material types during blue print finalization stage
Since no material is produced internally through SAP system, all the material
types will have indicator ‘0 (ZERO)’ (No internal Purchase order allowed)
Quantity and Value updating will be carried out depending on the material
type. The List will be finalized along with material types during the blue
print finalization stage
4.2.2. OTHER IMPORTANT FIELDS IN MATERIAL MASTER

Source List Field: If this indicator is active system for a plant then source
determination has to be specified in the source list before a purchase order can be
created
• SJCL has to inform if Source List indicator needs to be active for all materials or
only selected materials
MRP type: Key that determines whether and how the material is planned.
• SJCL has informed that ROL materials will be having manual reorder point
planning with indicator ‘VB’.
• The details like MRP group, MRP controller, Lot size etc, will be discussed during
the realization phase
Storage Bin: It identifies the storage bin within the storage location where the
material is stored. The value is merely for information purpose.
• This field will be used in SJCL for recording storage bin data only for information
purpose
Purchase Groups: This field will be used in SJCL to identify which purchasing group is
responsible for a particular material

Material Groups: This field will be used in SJCL to identify / group different materials
together, for reporting and search purpose.
The List of material groups needs to be given during realization phase by SJCL Core team
members.
Purchasing Value Key: Key that identifies the reminder days and tolerance limits.
SJCL has to confirm if they would be using this specific field in the master. If yes, they
have to provide data for reminder and tolerance during realization phase.
Valuation Class: The List of valuation class will be finalized depending on the account
category reference given in the material type during the blue print finalization stage.
4.3. SPECIFIC REQUIREMENTS

Purchase Order text: SJCL requires the material description to be captured in
Purchase Order text during upload of data into the system.
4.4. KEY BUSINESS DECISION

All the materials which are in stock will be valued on the basis of moving average
price; finished goods will be at standard price at manufacturing plant and moving
average price at depots.
The material number range, will be system generated (internal number range) for
SJCL.
4.5. KEY MEETINGS

Assuming the standard SAP cement business functionality the above assumptions
were made.
4.6. INTEGRATION
4.6.1. FINANCE MODULE:
Account category reference for each material type needs to be finalized along with
material types during blue print finalization stage
Quantity and Value updating will be carried out depending on the material type. The
List will be finalized along with material types during the blue print finalization stage
The List of valuation class will be finalized depending on the account category
reference given in the material type during the blue print finalization stage

4.7. AUTHORIZATION MATRIX
Sl. No Authorization Required Person / Group Authorized

1 Creation of Material Master MM Core team for Materials
2 Change of Material Master MM Core team for Materials
3 Display of Material Master (All Views) All Users & Core team of MM, SD, FI
4 Flag for Deletion of Material Master MM Core team for Materials
The above is only outline authorization. Authorization for each individual user Id will be
finalized along with their roles during realization phase.
4.8. ROLES & RESPONSIBILITIES

SJCL will define at the time of Blue print finalization stage.
4.9. OPEN ISSUES

SJCL shall identify the various material types to be created in the SAP system during
Blue Print finalization stage / Realization Phase.
The Views / user data screens that need to displayed during creation / change and
display of material master record will be identified along with Material types during
blue print finalization stage
The List of various Material Group’s need to be given by SJCL to Leadsoft team
during Realization Phase.
Account category reference for each material type needs to be finalized along with
material types during blue print finalization stage
Quantity and Value updating will be carried out depending on the material type. The
List will be finalized along with material types during the blue print finalization stage
The List of valuation class will be finalized depending on the account category
reference given in the material type during the blue print finalization stage

5. VENDOR MASTER
5.1. OVERVIEW
5.1.1. GENERAL
All the business related information on vendors is stored in the vendor master. The
vendor has the following views:
General Data: Data related to name, address, telephones, contact persons, industry
details, etc., which remain constant for a vendor across organization elements such
as company code, purchasing organization in SAP.
Accounting Data: Data used in Financial Accounting, such as the reconciliation
account number, sort key, banking related data, dunning related data, etc., which
remains constant for a company code. Ownership of this data is mainly with the
accounting function. Since there is only one company code in this implementation,
all the customers will have the accounting data maintained for a single company
code representing SJCL.
Purchasing Data: Data used in purchasing transactions, such as the indicator for
pricing procedure, currency for the purchase documents, payment terms, Incoterms,
partner determination etc are maintained in this view. This view needs to be
maintained for each of the purchasing organization.
The purchasing data pertaining to a vendor must be maintained before an

order is placed on the vendor. The accounting data pertaining to a vendor
must have previously been maintained before you enter the vendor's
invoices in the system for payment at the time of Bill passing.
5.1.2. VENDOR ACCOUNT GROUPS

Account groups control the following functions of the vendor master:
Identification of Number Range to be used for creation of vendor code

Field Statuses (Hidden / Display / Required / Optional)
Whether or not a one-time vendor is involved
Valid Partner determination schemas
5.1.3. VENDOR PARTNER FUNCTIONS
The following partner functions are standard and are generally used:
Vendor
Ordering address
Goods supplier
Invoicing party
The use of the above partners is explained below:
Vendor: Vendor on whom the PO is placed

Ordering Address: If you define another partner for the ordering address, PO or
release order will not be sent to the address of the vendor but to the ordering
address of the partner.
Good Supplier: Who is the vendor who is supplying the goods on behalf of the
vendor
Invoicing party: Identified vendors account will be charged instead of the PO vendor
It is important to note that each partner needs to be created as a vendor in the system.
5.1.4. VENDOR BLOCKING
Vendors can be blocked at various levels:
Vendor can be blocked for account posting for a single company code or for all company
codes
Vendor can be blocked for purchasing for a single Purchase Organization or for all
Purchasing organizations.
5.1.5. VENDOR OTHER FIELDS

Check flag for double invoice or credit memos: Indicator which means that incoming
invoices and credit memos are checked for double entries at the time of entry.

5.2.1. VENDOR ACCOUNT GROUPS
The different Account groups that shall be used in SJCL are:
For Materials
Domestic Vendors
Import Vendors
For Services
Domestic Vendors
International Vendors
One time Vendors 1
Employees – as Vendors
Finance Vendors
All the vendors for MM shall be created using an internal number range, except
employee vendors. The number range shall be different for each of the account group.
The number range for vendors, whether internal or external needs to be decided by
SJCL during the realization stage.
Also the number range intervals shall be identified during the realization stage.
FI shall create Employees as vendors using separate Account groups. External number
range / internal number range will be finalized by SJCL.
There are some vendors who are directly paid by Finance without vendor liability getting
created from Purchasing and Inventory route. Such vendors shall be created by FI using
the vendor account groups related to FI e.g. Finance Vendors etc. For such vendors,
purchasing data shall not be maintained and no PO can be raised.
A vendor will have a single vendor code throughout the company code.
1
You can create special vendor master records for vendors from whom you procure goods only
once or rarely, so-called One Time vendors. One-time vendor" master record is used for several
vendors. The purpose of this is to avoid the unnecessary creation of an excessive number of
individual vendor master records. At the time of PO, the user shall have to insert the address ,
name etc.

5.2.2. VENDOR PARTNER FUNCTIONS
SJCL can use all the partner functions as applicable, although none of these partners
shall be compulsory.
Each partner has to be created as a vendor in the SAP system.
5.2.3. VENDOR BLOCKING
SJCL can use the entire Vendor blocking functionality at company code level as
applicable, although it shall not be compulsory.
5.2.4. OTHER FIELDS IN VENDOR MASTER
Standard payment terms with respect to each vendor shall be attached in the
vendor master as payment terms. The same shall be informed and given by SJCL
Core team members during the realization stage
Respective Inco-terms will be mentioned for each vendor depending on their agreed
terms and conditions
Schema group will be maintained as domestic and import respectively for domestic
and import vendors
GR-based Invoice verification indicator and Service based invoice verification
indicator will be active in the purchasing data of the Service and Materials vendor
master respectively
Purchasing group will be maintained for each vendor master to identify the
responsible group

Nil / None

Account Groups: Need to be finalized
For Materials / Services

Domestic Vendors
Import Vendors

Schema group will be maintained as domestic and import respectively for domestic
and import vendors
GR-based Invoice verification indicator and Service based invoice verification
indicator will be active in the purchasing data of the Service and Materials vendor
master respectively
Purchasing group will be maintained for each vendor master to identify the
responsible group.
5.5. KEY MEETINGS

were made.
5.6. INTEGRATION
Reconciliation account need to be given in the vendor master record and this needs
to be identified and communicated by the Finance department at the time of
realization for effective posting, for balances & reconciliation of Invoice values in
Vendors account.
Different payment terms need to be identified with the MM core team for effective
payment process between MM and FI.
The payment mode for each vendor would be taken up at the time of realization.

1 Creation of Purchasing Vendor Master MM Core team
2 Changing of Purchasing Vendor Master MM Core team
3 Display of Purchase Vendor Master All Users & Core team of MM, SD, FI
4 Flag for Delete / Block Purchase Vednor masterMM Core team

The list of purchasing vendors (service and materials) need to be provided by

respective SJCL MM Core team members
Bank details and payment methods needs to be discussed with SJCL Finance core
team members and the details together with general data and purchasing data need
to be given by MM Core team to Leadsoft team for upload.
The maintenance of Purchasing Vendors (Services & Materials) will be carried out by
MM Core team respectively. Finance vendors, Employee Vendors will be maintained
by SJCL Finance Core team
5.9. OPEN ISSUES
The vendor account groups need to be finalized at the time of blue print finalization
stage
The number range for vendors, whether internal or external needs to be decided by
SJCL during the realization stage
Also the number range intervals shall be identified during the realization stage

6. PURCHASE INFORMATION RECORDS
6.1. OVERVIEW
6.1.1. GENERAL
A source of information for the procurement of a certain material from a certain vendor.
6.1.2. TYPES OF PURCHASE INFORMATION RECORDS
Standard Information record: Specifies that the info record is used only in
connection with standard purchase orders. If this indicator is set, the data from the
info record (e.g. conditions, texts etc.) is only adopted in standard PO’s.
Subcontracting Information record: Specifies that the info record is used only in
connection with subcontracting orders. If this indicator has been set, the data from
the info record (e.g. conditions, texts, etc.) is only adopted in subcontract orders.
Pipe Line Information record: Specifies that the info record is used specifically for
pipeline withdrawals
Consignment Information record: Specifies that the info record is only used in the
case of consignment withdrawals. If you set this indicator, the data of the info
record (conditions, texts etc.) is only adopted for the purpose of procuring
consignment materials
6.1.3. FIELDS IN PURCHASE INFORMATION RECORD
Defining price history: Specifies whether the purchase order price history should be
updated with effective price or the net price
Vendor material number: Material number used by the vendor. In most cases, the
vendor uses a different number for the material than the one used in this system.
The vendor's material number can therefore also be quoted in a Purchase Orders for
identification purposes.
Standard quantity: Quantity of the Material that is normally ordered from the
Vendor The standard purchase order quantity serves as a basis for computing the
effective prices in vendor evaluations for determining the price if a price/quantity
scale applies
Minimum Purchase Order quantity: Smallest quantity of the material that can be
ordered.

The order quantity in each purchase order item relating to the material and vendor of
the purchase information record may not be less than the minimum order quantity
specified in the purchasing info record.
Material Master record Po text not relevant: Specifies whether the info record PO
text (and not the PO text that is stored in the material master record) is to be copied
into the purchasing document item. If this indicator has been set, the info record PO
text is always displayed and printed out (if one exists).

6.2.1. PURCHASE INFORMATION RECORD
In SJCL the P-info records shall be populated by the system based on the vendor-
plant–material combination. The updation shall be from Purchase Order documents.
Inspection certificates will not be required to be maintained
The purchase order price history shall be updated with net price
The following SAP standard P-Information records will be used in SJCL:

• Standard Information Records
• Subcontracting Information Records
• Pipe line Information Records – for material type ‘PIPE’
• Consignment Information Records

Nil / None

P-info records shall be populated by the system based on the vendor-plant–material
combination. The updation shall be from Purchase Order documents.
6.5. KEY MEETINGS

were made.

6.6. INTEGRATION
Nil / None

1 Creation of Infor Records MM Core team (Mateials & Service)
2 Changing Infor Records MM Core team (Mateials & Service)
3 Display of Info Records All User of MM
4 Deletion of Info Records MM Core team (Mateials & Service)

Since Info records are created by system thru purchase order. Source list and
conditions need to be maintained by SJCL Core team members.
6.9. OPEN ISSUES

The number range intervals for purchase information records during the realization
stage

7. SOURCE LIST
7.1. OVERVIEW
7.1.1. GENERAL
Source list is used to identify a list of vendors on whom the PO can be raised. The source
list can also be used to fix a vendor for the material procurement plant wise.

7.2.1. SOURCE LIST
If the Source list functionality is activated, the PO can be only being raised on the
vendors which are identified in the source list for a material.
A vendor can also be blocked for procurement for a period through a source list.
Short listing or Pre-qualification of vendors can be achieved through activation of
Source List
Source list is maintained for a period
SJCL identify the material for which the source list is required

Nil / None

Source list to be used for Short listing or Pre-qualification of vendors before sending
the request for quotations
7.5. KEY MEETINGS

were made.

7.6. INTEGRATION
Nil / None

1 Creation of Source List MM Core team
2 Changing of Source List MM Core team
3 Display of Source List All MM Users & Core team

SJCL has to provide the list of materials for which source list is required during the
realization stage
7.9. OPEN ISSUES

Nil / None

8. CONDITIONS
8.1. OVERVIEW
8.1.1. GENERAL
Terms of payment (such as surcharges or discounts) those are negotiated with a vendor.
The conditions determine how the system calculates the net price or effective price.
While making a PO / Contract, several Pricing Conditions can be defined to arrive at the
Net Price from the Basic Price. These conditions are e.g. Freight, Discount, Packing /
Forwarding etc. Various conditions shall be created in SAP and the group of conditions
shall be proposed in the PO / Contract. The proposed group of conditions which can be
used in a PO / Contract shall be controlled using the Pricing procedure. The pricing
schemas (procedures) shall be created and be assigned to each vendor to get the
relevant set of conditions automatically while creating a PO / Contract
E.g. When a PO is created for an Indian Vendor, a pricing procedure which captures the
details of Basic Rate, Freight etc. shall be available whereas in case of PO for a foreign
vendor, a procedure containing Customs duty, Insurance etc. shall be available.

8.2.1. CONDITIONS
Conditions can be configured either as a Header condition or as item level condition or

both. Specific conditions shall be created which are identified only at the Header level.
The apportionment of such condition value to line item shall be on the basis of value of
each line item.
All charges like excise duty or tax are applicable for SJCL. We propose some conditions
for local purchases:
Basic Price
Discounts
Surcharges

Packing and Forwarding Charges (Delivery Condition)2
Loading / Unloading Charges (Delivery Condition)
Freight Charges (Delivery Condition)
Insurance Charges (Delivery Condition)
Other Charges (Delivery Condition)
We have listed down some conditions which may arise during Import purchases as
below:
Basic Price
Discounts
Surcharges
Customs Duty (Delivery Condition)
Freight Charges (Delivery Condition)
Insurance Charges (Delivery Condition)
Clearing Charges (Delivery Condition)
Demurrage Charges (Delivery Condition)
Other Charges (Delivery Condition)
Legalization Charges
SJCL shall provide all the details of pricing elements that are required for local and
import purchases.
Some important points regarding the delivery conditions are:
Delivery conditions can be either on a percentage or value basis. For these charges,
a separate vendor can be selected. The payment for the vendor(s) shall be effected
with the help of invoice verification against the PO
The TT Charges and LC charges shall be handled directly through FI entry. The
Demurrage charges shall be handled as FI entry however, a condition has been
provided in the PO, if the user wants to identify the same and load it on the material
cost
Final list of conditions shall be finalized during the realization stage

Nil / None
2
Delivery Conditions are those conditions wherein the user can identify that the charges are to be paid to
another vendor than the vendor on whom the PO is created. Such conditions shall be identified as accrual
entries in Accounting. A separate clearing account is posted for such conditions at the time of Goods receipt
(GRN). The vendor if need be changed at the time of GRN. However, no change in value of charges can be
carried out during the creation of GRN.

Nil / None
8.5. KEY MEETINGS

were made.
8.6. INTEGRATION
Nil / None

1 Creation of Additional Conditions MM Core team
2 Changing of Additional Conditions MM Core team
3 Display of Condtions All MM Users & Core team

SJCL has to provide the list of condition that need to be incorporated into the system
during the realization stage
8.9. OPEN ISSUES

Final list of conditions shall be finalized during the realization stage

9. SERVICE MASTERS
9.1. OVERVIEW
9.1.1. GENERAL
Service Master is a repository for the descriptions of all services that a firm frequently
has to procure. There is a service master record for each individual service description.
A service master record contains the following principal information for the unique
description of a service:
Service number
Service category
(Service category: Key used to differentiate between services according to their usage)
Descriptive texts (short and long text)

Base unit of measure
Material group
Valuation class
(Valuation Class: Assignment of the service to a group of G/L accounts.

The valuation class makes it possible to post the values of services of the same service
category to different accounts)

9.2.1. SERVICE MASTER
Organizational service category ‘AS03’ (described as Basic + MM) will be used for all
service categories of SJCL.
(Organizational service categories are assigned to service categories. This organizational

unit indicates the area in which the service master record is used)
The list of service categories will be decided during the blue print finalization stage
The number range for service master records is based on the service category.
The number range assignment and series will be standard as per SAP.

Nil / None

Nil / None
9.5. KEY MEETINGS

were made.
9.6. INTEGRATION
Nil / None

1 Creation of Service Master records MM Core team
2 Changing of Service Master records MM Core team
3 Display of Service Master records All MM & PM Users & Core team

SJCL has to identify and provide the list of services that can be created as service
master records into the system during the realization stage
9.9. OPEN ISSUES

The list of service categories will be decided during the blue print finalization stage

10. SERVICE SPECIFICATIONS
10.1. OVERVIEW
10.1.1. GENERAL
Listing and description of services for procurement purposes
Service specifications contain service items with detailed descriptions or items with
value limits for unplanned services
For bid solicitation purposes, service specifications are entered in requests for quotation
(RFQs). If the specified work is to be awarded directly to a bidder, the service
descriptions are entered in a purchase order (PO). If longer-term business relations are
entered into with certain suppliers, specifications can be entered in contracts. The
individual service descriptions need not be entered manually, but can be copied from
the service master or from existing specifications

10.2.1. SERVICE SPECIFICATIONS
No Configuration design for this master, only maintenance of the master is
envisaged
Service master records will be attached in the specifications
Also Service description texts without service master records will be used

Nil / None

Nil / None

10.5. KEY MEETINGS
were made.
10.6. INTEGRATION
Nil / None

1 Creation of Service Specifications MM Core team
2 Changing of Service Specifications MM Core team
3 Display of Service Specifications All MM & Core team

SJCL has to identify and provide the list of services specifications that can be created
into the system during the realization stage
10.9. OPEN ISSUES

Nil / None

11. PURCHASE REQUISITION
11.1. Process Definition

It is a process of intimating the purchasing department for materials or
service required by the user department.
Purchase Requisition is the document providing the request for the

material or service purchase to the purchasing department at a definite
point of time. Various departments can identify their material / service
requirements and place the request for purchase.
11.2. Existing Process General Explanation (As-Is)

A standard business practices are considered.
11.3. Business Overview (To-Be in SAP)

In SJCL, the requirements for purchase requisitions can be identified as
• Materials required for stand-by into stock from Maintenance

department
• Other stock requirements from other departments other than
maintenance
• Direct charge materials
• Service expenses from various departments
• Cash Purchase materials
Requisitions can be created
• Directly (manually) or
• Indirectly (thru another SAP component)
Requisitions can be created indirectly in the following ways:
• Via materials planning and control

• Via maintenance orders (from the R/3 components PM Plant
Maintenance and Service Management)
Requisitions are generated automatically from maintenance orders if:

• A material component with non-stock material has been assigned to
an operation, or
• An operation with the control key for external services has been
created.
11.3.1. INFORMATION IN A PR
PR submitter shall identify the plant for which the material is being
requested, Account Assignment or is a consumable item for stock
purpose, quantity and the rate of the material, delivery date, if vendor is
fixed the same can be identified in PR.
PR can be raised for a material and without a material code. If the

material is not identified in PR, Material text has to be compulsorily
identified in a PO.
Requisitioner and Tracking number fields shall be made compulsory so

that the user enters the original user in Requisitioner field. Tracking
number can be used for identifying the nature of PR (Shutdown, Rush,
Emergency etc). The respective departments to filter their PR’s for status
check and in reporting can use the same fields.
• PR can be copied from already existing PR’s in case of manual

creation of PR
• Service Specifications if maintained can be copied into the Purchase
Requisitions
• The finalization of fields such as breakdown, rush, emergency etc, in
purchase requisition will be taken up during realization phase.
11.3.2. PR DOCUMENT TYPES

Each purchase requisition shall be created by assigning a document type.
The document type is an important parameter, which decides the
following:
• Number Range
• Field Status – Which fields can be made hidden / optional /
compulsory

It has been proposed that following document types shall be created in
SJCL Limited:
• Standard Purchase Requisition (NB)– From MRP & Maintenance

Orders
• For Service Purchase Requisitions (ZSER)– Manually Created PR’s
• For Materials Purchase Requisitions (ZSTD)– Manually Created PR’s
• Emergency PR for Materials (ZEMR)- Manually Created PR’s
• For Capex Purchase Requisitions (ZCAP) - Manually Created PR’s
11.3.3. APPROVAL OF PURCHASE REQUISITION

• Approval for PR shall be triggered when created manually or thru
maintenance orders. The system shall determine the release strategy
based on the Document type and PR Value.
• All PR shall be released at the header level.
• There shall be multiple level approvals for PR depending on the total
value of the PR.
• The identified users shall be provided with required Release Codes for
each of the strategy which they shall use to release the PR’s.
• The Purchase requisition (PR) cannot be converted into a RFQ
(Request for quotation) and / or a purchase order (PO) without its
complete release.
• All requisitions will undergo for release strategy.
• In case of SJCL, the release strategy can be defined based on total
value of the PR.
In case SJCL, following value levels shall be followed for all the PR
documents with document type services.
Level Total value

Section Heads XXXXX
Department Manger XXXXX
OM / GM XXXXX

For Materials the following is the value limit:
Level Total value
Section Heads XXXXX

Department Manger XXXXX
Operations Manager XXXXX
General Manager XXXXX
The “Value” that is considered for Release Strategy will be the “Net
value” only and the Conditions (Freight etc.) and Taxes will not be
considered.
• All approvers will be able to approve / reject the PR.
• The approver can block a PR, which means that the PR is not to be
processed.
• Any approver in the release strategy can change / delete the PR. In
case the changes in a PR are pertaining to increase in value (either
quantity or unit price) or above a predefined percentage the PR
Identifies the new release procedure for the same.
• After the PR gets approved, there are 2 options for “Changes”. Either
the entire PR is open for changes or nothing in the PR is open for
changes. Out of these 2, “everything opens for Changes” is a better
option, since in the other option if the PR is to be modified for any
reason, it cannot be done and Buyer will have to cancel the PR and
make a fresh PR. However, in the option where all fields are open to
change, only the change pertaining to “Value” will trigger re approval
of the PR. Other Changes will not call for a re approval, although any
change will be tracked as Audit Trail.
11.3.4. BUSINESS PROCESS SPECIFIC SCENARIO

Standard business scenarios are considered in these processes.
11.3.4.1. CASH PURCHASE REQUISITION

For Cash purchases – a purchase requisition needs to be created in the
SAP system. This purchase requisition needs to be approved by the
concerned head and forwarded to purchase department. Purchase
department would then check the availability of material in the market. If
the material is available then purchase of material is done by paying cash.
The cash receipt along with invoice memo is submitted after receipt to

finance. The purchase requisition needs to be closed after the receipt is
made. No purchase order or other external purchasing documents are
raised for cash purchases. The material is directly received without
purchase order.
Note: The value posted for goods receipt would be from moving average
price of the material and not the actual cost of purchase.
Flow chat for this specific process is given below:
Materials
User Department FM
Management
Purchase Requisition for Cash Buyer takes the PR

purchase created by the User document & Checks the
availability in the market
Purchase & writes

the PR No. on the
invoice document
Approval of the
same by
Authorized Person
Accounting
Goods receipt without document posted
PO and close the PR. automatically
Informs the user
Creates a reservation if
material is acceptable
Issues Material
User collects the

material
Necessary
adjustments
Signs the invoice and
sends to FI

11.3.4.2. PR WITH REFERENCE TO CONTRACT
Two types of purchase requisitions are raised –
• For initiating a Material / Service Contract
• For creation of Contract work request
Different document type would be used for creating a requisition for

initiating a contract. The document is then forwarded by the user to his
departmental head, and other approving authorities, after which the
purchase requisition is submitted to Purchasing department.
For Service Contracts, during the creation of this requisition, user needs
to give the service description, account assignment – cost center / order
etc, and item category as service.
11.3.4.3. PR’S GENERATED THRU MRP

Stock materials where the re-order level and safety stocks are fixed or for
the materials where the consumption trend is established will be planned
thru the use of MRP.
The Planned order is converted into a PR by the MRP controller / the

person carrying out MRP. System will generate a planned order if the
available stock falls below the reorder point and subsequently converts
into a purchase requisition.
Standard document type ‘NB’ will be used for materials being raised thru
MRP Planned orders.
PR generated thru Planned orders (MRP) will be for a lot mentioned in

the material master and therefore for reservations raised with respect to
shutdown, no individual PR’s can be generated by the system. However,
the MRP controller can manually raise a PR.
Since all material PR’s (With MRP views) which are bought to stock are
created thru MRP run, the indicators like rush, urgent, emergency etc.
cannot be incorporated in PR.
The PR (Purchase requisitions) generated thru, material requirement

planning will not have a release strategy in the SAP system.

Following is the flow chart:
Requirements from
Maintenance orders
MRP
controller Purchase
plans for the Requisition is
material created by MRP
Requirement from
depending on controller
others – manual
reservation
11.3.4.4. DIRECT PR’S

Direct Purchase requisition will be crated for materials which do not have
MRP view maintained in the material master by the maintenance
department. In case of material being ordered for shutdown, User shall
specify the storage location as shutdown in the purchase requisition.
Other User departments can also create the PR directly in the system.
Release strategy will be applicable for direct PR’s.
11.3.4.5. ACCOUNT ASSIGNED PR’S

The account assignment category determines which account assignment
data (such as cost center, account number and so on) is necessary for the
item. As the material being purchased in SJCL can either be posted as a
Cost center (Direct consumption) / for maintenance order or taken into
inventory, the user has to identify the Account Assignment for each of
the material identified in PR.
The account Assignment can be a Cost Center, Order or standard. In case

of Asset, the user has to specify the Internal Order number and for
Account Assignment Cost Center, the debiting Cost Center has to be
entered and for maintenance services its corresponding order has to be
mentioned.

For non-stock shutdown material, a Purchase Requisition has to be raised
manually and storage location ‘shutdown’ needs to be specified for such
PR’s.
11.4. GAP FITMENT

Nil / None
11.5. INTEGRATION
Nil / None
11.6. KEY PERFORMANCE INDICATORS (REFERENCE)

Nil / None
11.7. REPORTS
Standard Reports
• List of Purchase Requisitions

• List of Purchase Requisitions with status for a particular Requisitioner
based on the plant / document type/ purchasing group/ material
group/ vendor etc
• List of Purchase Requisitions which are not converted to PO
11.8. WORKFLOW
SJCL core team has to give the required personal for configuring release
strategy by workflow.
11.9. DEVELOPMENTS
List of Pending PR’s (i.e. open PR’s).


1 Creation of Purchase Requisition All Users & Core team of MM
2 Change of Purchase Requisition All Users & Core team of MM
3 Display of Purchase Requisition All Users & Core team of MM
4 Deletion of PR lines All Users & Core team of MM
5 Release of PR All Authorized personal
11.11. KEY BUSINESS DECISIONS
Meeting Numbers Meeting Dates Attendees Agenda

MM Process PR, Source
Discussion Determination,
document RFQ / Quotation
MM Process Release Strategy
Discussion
document
11.12. OPEN ISSUES

• The number range shall be identified at the time of realization
• The release authorities for release strategy to be given by SJCL core
team to Leadsoft.

12. PREQUALIFICATION OF VENDORS /
SOURCE DETERMINATION
12.1. PROCESS DEFINITION

This 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).
12.2. EXISTING PROCESS GENERAL EXPLANATION (AS-

IS)
12.3. BUSINESS OVERVIEW (TO-BE IN SAP)

12.3.1. IDENTIFYING THE VENDORS FOR RFQ’S
The possible sources can be determined in the system through
information records or source list. These information records are
automatically created by the system during the purchase order.
Source list has to be maintained for materials. The material master has to
be activated for concerned material for source list determination.
The source list will contain the vendor, agreement, and validity periods.
A user or committee can refer to the source list or information records to

take decision regarding identifying source.
12.3.2.1. FOR MATERIAL VENDOR / SOURCE SELECTION

The committee can refer to the source list or information records for
specific materials that have already been purchased or agreement with a
validity data is existing in the system.

12.3.2.2. FOR SERVICE VENDOR / SOURCE SELECTION
The committee can refer to the Contracts or Orders already available in
the SAP system.
Source list cannot be created for services. For referring to estimated

rates, and the vendor who has performed the services, the committee
can refer to service specifications and list of contracts respectively.
12.4. GAP FITMENT
Nil / None
12.5. INTEGRATION
Nil / None

Nil / None
12.7. REPORTS
• Standard
• Source List
• List of Purchase Information Records
• Contracts List
12.8. WORKFLOW
Nil / None
12.9. DEVELOPMENTS
Nil / None


1 Display of Source List All Users
2 Display of Purchase Info-Recoreds All Users
3 Display of Contracts All Users

MM Process PR,
Discussion document Source Determination,
RFQ / Quotation
12.12. OPEN ISSUES

Nil / None

13. REQUEST FOR QUOTATION / QUOTATION

A request for quotation (RFQ) is an invitation extended to a vendor by a
purchasing organization to submit a quotation (bid) for the supply of
materials or performance of services.
Based on the various PR’s created by the respective users, the various
buyers can process the PR and convert them to RFQ or directly to a PO.

IS)

13.3.1. IDENTIFYING THE VENDORS FOR RFQ’S
RFQ can be prepared by the purchasing groups (Buyers) either with
reference to PR (Purchase Requisitions) or by creating without any
reference.
It will be possible to split Quantities of one line item in Requisition to

make RFQ. The quantity in RFQ can be either more or less than that
mentioned in PR of any item.
All the RFQ’s identified for a specific activity shall be identified with a
collective number. The collective number is useful as key for quotation
comparison in the system.
The vendors to whom RFQ has to be sent can be selected manually.

For each of the RFQ, a deadline date shall be entered by which the
Quotation have to be received. The RFQ’s can be printed as hard copy
per the desired layout.
SJCL shall let us know if they have their own format for RFQ for which a
separate customized layout development has to be done

No Release Strategy is envisaged for Request for Quotations / Quotations
13.3.2. TYPES OF RFQ

It is proposed that SJCL shall have following RFQ document types:
AN – Normal RFQ
AB – Global bid
13.3.3.1. QUOTATION ENTRY

Quotations received from various suppliers shall be entered into the
system with reference to RFQ generated in the system.
The terms of payment, inco-terms etc. along with the prices and delivery
conditions can be maintained.
Quotations shall be entered only after the commercial bids are opened
by the committee. Since there is a time gap between technical
evaluations and commercial bid opening, SJCL can use the field
‘Comments for RFQ’ where it can maintain the status of the RFQ’s /
Quotation.
13.3.3.2. QUOTATION COMPARISON

Using the collective number, the user shall carry out the Comparative
analysis of the quotations received.
The user can select the comparison using the delivery costs or without
the delivery costs.
If required the user can identify the relevant payment terms and the
incoterms from the quotation in the comparative analysis report.
Quotations shall be analyzed for basic price. Comparison of Qualitative

factors is not possible in Comparative analysis. Comparative analysis shall
be based on the prices entered in the quotation.

Comparison is on the latest prices and versions are not maintained.
Comparative analysis can be attached as a document to the PO. However

the user shall need to download the analysis in a excel worksheet and
attach the same manually at the time of generation of PO.
Bid bonds submitted by users / performance bonds are not part of

standard SAP system.
Documents such as technical evaluation, letter of acceptance,

acknowledgement of LOA and other tendering documents will not be
part SAP - MM component.
13.4. GAP FITMENT

None / Nil
13.5. INTEGRATION
None / Nil

None / Nil
13.7. REPORTS
Standard Reports
• Comparative statement
• General analysis of list of RFQ’s for a material /vendor /plant
/purchasing group /purchasing organization
13.8. WORKFLOW
Nil / None
13.9. DEVELOPMENTS
• Layout for print out of RFQ


1 Creation of RFQ MM Core team
2 Change of RFQ MM Core team
3 Display of RFQ MM Core team
4 Maintain Quotation Purchasing Department
5 Price Comparison statement Purchasing Department

MM Process PR, Source
Discussion Determination,
document RFQ / Quotation
13.12. OPEN ISSUES

The number range of RFQ document shall be identified at the time of
realization

14. PURCHASE ORDER

A purchase order (PO) is a formal request or instruction from a
purchasing organization to a vendor or a plant to supply or provide a
certain quantity of goods or services at a certain point in time. The PO
identifies various conditions of PO and the segregation of the rates under
various heads like Freight Cost, Customs Duty, Insurance, Clearing
Charges etc.

IS)
In SJCL, standard business practices are considered.

14.3.1. TRIGGERING POINT
In SJCL, the PO shall be created by the respective Buyer group based on
the Quotations received from various vendors and the Comparative
analysis thereof or directly using the reference of the Contracts.
Creation of Purchase Order directly by the purchasing department is not

envisaged. However as per the standard provision given in SAP, a PO can
be raised directly.
There is provision to copy a PO from an existing PO, PR, and Quotation or

from Contracts.
14.3.2. PURCHASE ORDER PROCESS FLOW

Based on the identified supplier on whom the PO is to be raised, the user
shall select the appropriate document type, purchasing organization,
purchasing group and the company code and create a PO.

14.3.3. DOCUMENT TYPES
following:
• Number Range
compulsory
• Which Item category can be used in which document type
• Identifying the Release Strategy
• Can be used for identifying separate layouts
The list of document types proposed for SJCL has been listed below.
• Domestic Purchase Orders

• Imports Purchase Orders
• Service Purchase Orders
• CWR – Others (Plant)
• Stock transfer PO (Mines)
• Stock transfer PO (Sales)
The number ranges for the document types shall be identified at the time
of realization.
14.3.4. INFORMATION IN PO
A Purchase Order consists of a document header and item details.
The Terms of payment, vendor details, delivery terms, purchasing

organization, purchasing group, and company code are defined in the
header. There are several text fields available at the header level.
Following details shall be entered at the line item level. If the PO is being
created using the PR reference the same shall be defaulted from the PR.
The user need not enter the same in PO.
• Account Assignment
• Item Category
• Plant
• Material code

• Description
• Purchasing group/ materials group
• Quantity
• Delivery Dates
• Prices
• Conditions for Freight etc,.
PO can be raised without a Material code. However, the text for material
description needs to be maintained (service orders)
14.3.5. PAYMENT TERMS IN PO

Payment terms are commonly used by FI and MM. The payment terms
can be defined in the vendor master which can be defaulted in PO. One-
Time “Payment Terms” are not available. Each time a non-standard
payment term is required, it will have to be first codified and then used in
the PO.
Payment terms are identified at the Header level. In case of Purchase

Orders for services, the payment terms are defined at the header level
and cannot be identified at the service line items
14.3.6. DELIVERY TOLERANCES

The tolerances shall be maintained in the PO for the goods receipt in case
of over/under receipt of material from the supplier. The tolerance can be
maintained in the material masters through the purchasing value key or
can be directly mentioned at the time of creation of the PO.
14.3.7. CONDITIONS
While making a PO, several Pricing Conditions can be defined to arrive at
the Net Price from the Basic Price. These conditions are e.g. Freight,
Discount, Packing / Forwarding etc. Various conditions shall be created in
SAP and the group of conditions shall be proposed in the PO. The
proposed group of conditions which can be used in a PO shall be
controlled using the Pricing procedure. The pricing schemas (procedures)
shall be created and be assigned to each vendor to get the relevant set of
conditions automatically while creating a PO.
E.g. When a PO is created for a Local Vendor, a pricing procedure which

captures the details of Basic Rate; Freight etc. shall be available whereas

in case of PO for a foreign vendor, a procedure containing Customs duty,
Insurance etc. shall be available.
Conditions can be configured either as a Header condition or as item

level condition or both. Specific conditions shall be created which are
identified only at the Header level. The apportionment of such condition
value to line item shall be on the basis of value of each line item.
• Keeping view of their future needs we have proposed various

conditions for local purchases of Material and services in MM master
data blue print. For further details refer to Master data blue print:
The import duties which are payable, shall be identified in the PO. This
shall help to calculate the material value posting inclusive of customs and
countervailing duties. SJCL shall provide all the details of pricing elements
that are required for local and import purchases.
Some important points regarding the delivery conditions are:
No amendments to the delivery conditions at the item level can be made

after a GRN has been prepared for the material.
Delivery conditions can be either on a percentage or value basis or can be

based on quantity basis. For these charges, a separate vendor can be
selected. The payment for the vendor(s) shall be effected with the help of
invoice verification against the PO.
The TT Charges and LC charges shall be handled directly through FI entry.

The Demurrage charges shall be handled as FI entry however, a condition
has been provided in the PO, if the user wants to identify the same and
load it on the material cost (if required)
14.3.8. OTHER FEATURES IN THE PO

Header text and Item text shall be maintained to communicate the
vendor regarding specific terms and conditions. These terms and
conditions can be printed on the PO, if required.
Incoterms are at Header Level.
A single PO can have different items that are shipped to different plants.

If Buyer selects “GR Based Invoice” in the PO then bill passing can be
carried out only based on the Goods receipt details
A “one time vendor” can be selected while making PO. The user can
identify the Name and Address of such vendors at the time of PO
• SJCL shall inform if they have their own format for PO for which a
separate customized layout development has to be done. In case the
layouts for import / local PO’s are different the details of the same
shall be provided by SJCL.
• SJCL shall inform the different loading or shipping Instructions or test

certificates required from vendors. The same will be incorporated as
Shipping Instructions in SAP system. While making a goods receipt,
shipping instructions shall be populated for the User, this will be for
information and recording only and can be used for vendor
evaluations. System will not stop the goods receipt posting if the
shipping instructions are not complied.
14.3.9. RELEASE STRATEGY

In Purchase Order, release strategy shall be on the total value of the PO.
SJCL has clarified that release strategy for purchase order is required.
Approval process for PO shall be at the document header level. All the
orders will undergo release strategy. In case of SJCL, the release strategy
can be defined based on the combination of net order value of the PO,
Purchase Group, Document type and Purchasing Organization.
In case SJCL, following approval value levels for Domestic PO documents
Level Net order value

Department Manager XXXXXXXXX
Operations Manager XXXXXXXXXXX
General Manager XXXXXXXXXXXXXXXXX
For ‘Contract work requests’ the following is the value limit

Section Head XXXXX
Department Manager XXXXXX
OM / GM XXXXXXXX

For ‘Import Purchase Order’ the following is the value limit
Section Head XXXX

Department Manager XXXXXX
OM / GM XXXXXXXX
The “Value” that is considered for Release Strategy will be the “Basic
Price minus Discount” only and the Conditions (Freight etc.) and Taxes
will not be considered.
• The Buyer can hold a PO before submission. This only generates a PO

number but does not submit the PO.
• All approvers will be able to approve / reject the PO.
• The approver can block a PO, which means that the PO is not to be
processed.
• The buyer also can block a PO at any stage of approval (prior to final
release/dispatch of PO).
• The buyer can delete the PO at any point of time till it is sent to
vendor. If PO is deleted, the quantity of the referenced PR becomes
open.
• Any approver in the release strategy can change / delete the PO. In
case the changes in a PO are pertaining to increase in value (either
quantity or unit price) or above a predefined percentage the PO
Identifies the new release procedure for the same.
• After the PO gets approved, there are 2 options for “Changes”. Either
the entire PO is open for changes or nothing in the PO is open for
changes. Out of these 2, “everything opens for Changes” is a better
option, since in the other option if the PO is to be modified for any
reason, it cannot be done and Buyer will have to cancel the PO and
make a fresh PO. However, in the option where all fields are open to
change, only the change pertaining to “Value” will trigger re approval
of the PO. Other Changes will not call for a re approval, although any
change will be tracked as Audit Trail.
FOC PO, all other PO’s shall be subject to the same Release procedure
If PO value exceeds PR value for a line item, there are no Alerts but if PO
quantity is greater then PR quantity the system will not allow saving.

14.3.10. TRACKING OF DOCUMENTS FOR LOCAL OR IMPORTED MATERIAL
After the PO is placed, SJCL has to complete a set of documentation like
security gate pass entry, etc. The document tracking for such PO’s shall
be maintained outside SAP. All the permissions, documents, etc. shall be
recorded and documented outside the system.
14.3.11. FORMS TRACKING / MARINE INSURANCE

Tracking of Forms and the marine insurance shall be done outside SAP
14.3.12. VENDOR DISCOUNTS

There is possibility that the vendor provides the discount based on the
quantities being purchased. The same can be entered in the discount
condition.
The system shall calculate the discounts in the PO. The discount should
be identified as a condition in the PO, in the item detail level.
14.3.13.1. PURCHASE OF EXTERNAL SERVICES

SJCL procures external services for carrying out functions of
Maintenance, etc.
The purchase procedure remains the same except that instead of

Material the services are procured.
While making a PO if at line level the Item Category is selected as service,

then that line item becomes “Service Item” and service lines can be
created against that item.
Based on the PO raised, vendor performs the activities and services

related to it. After the completion of the required services, the user can
record the services, which has been completed by using the service entry
sheet. The service entry sheet shall be created by the user in the system.
This shall result in the posting of the services expenses in the Financial
accounting system.

All external PO’s with item category as service shall be account assigned –
either to Cost centre or Order or Unknown (wherein the account
assignment can be identified at the time of Service Entry Sheet)
Till the service entry sheet has not been released, bill passing cannot be
carried out.
In some cases, depending on the activity, vendor also uses his own
material for carrying out the services. In such cases the material will also
be identified as one of the service being performed by the vendor. This
shall be used only in those cases wherein such material is not at all taken
into the stocks of SJCL.
The services can be received in excess of PO quantity if the percentage
tolerance has been maintained in the Service PO
Limits in the Service PO shall be used to track the unplanned services.

Some services can be received which were initially not planned. However
the same cannot exceed the limit identified in the PO.
Material cannot be placed (received / issued) or tracked in inventory

against a Service PO.
A Purchase order with item category as service, if referred to a contract it

would be termed as ‘Contract Work Request’.
1. Materials sent for Repair
For materials sent for repair, Purchase order with item category as
service (‘D’) shall be raised and materials shall be issued to vendor. The
tracking (issue / receipt) of material will not be part of SAP system. Once
the vendor repairs the material, a service entry sheet has to be
performed for the cost to capture into the respective maintenance order
and for posting into accounting.
2. Contract Work Request for Annual Maintenance
A Purchase Order generated by maintenance department with reference

to purchase requisition automatically generated thru maintenance order,
will also be considered as ‘Contract Work Request (CWR)’. CWR’s will be
created by the User departments and given to the vendor. A service entry
sheet shall be raised against ‘Contract work request (CWR)’ after

completion of work. The service entry sheet will be the actual work done
by the contractor, where as the ‘CWR’ would have the estimated values.
For these, CWR’s a contract has to be attached / referred in the
maintenance order.
• Print out of Service Entry Sheet is not envisaged in the system.

• In case of regular maintenance services, which are with respect to
contract, the user shall create a standing maintenance order and then
do, collective PR release, ‘CWR’ creation & create and approve service
entry sheet at the month end.
Following is the flow chart for standing maintenance orders containing AMC
services:
Release the
Standing Order Print out of Purchase PR’s at the
created for all Operation slip Requisition end of the
services created by the month
together system
Submit the Create and release Create a PO (known as

Invoice to Service Entry CWR) with respect to PR
Finance Sheet. (at the end at the end of the month
of the month)
Finance to
carry out
Invoice
verification
Following is the flow chart for Normal Maintenance orders containing AMC
services:

Release the
Maintenance Purchase Purchase
order- attach Requisition requisition
Outline agreement crated by the
system
Submit the Create and release Create a PO (known as

Invoice to Service Entry CWR) with respect to PR
Finance Sheet.
Take Print out

Finance to and submit it to
carry out vendor
Invoice
verification
14.3.13.2. FREE OF COST MATERIAL

There are some instances wherein the material is supplied to SJCL Free of
cost. Such cases shall be mapped using the PO without any value
(Identifying the FOC indicator in PO). In such PO’s there shall be no
provision to enter any of the conditions.
However, if there are Conditions in such a PO, it will be handled by giving
Basic rate = 0.01
14.3.13.3. MATERIALS PROCUREMENT FOR ASSETS OR SUB- ASSETS

Materials procurement for asset or sub-asset will have account
assignment as order (Internal Order) in the purchase order. No value
updation in material master will be possible for such materials. However
quantity tracking can be carried out for such materials.
14.3.13.4. VENDOR MANAGED SPARE PARTS ORDER

A Purchase order will be created with respect to vendor managed spare
parts when intimation needs to be sent to the vendor to replenish his
stocks. The purchase order will not contain any value / Price. The vendor
managed spare parts orders / intimations are also called as consignment
purchase orders. The item category for such purchase orders shall be
mentioned as ‘K’.

If SJCL is going to prepare ‘Contracts’ for Consignment stocks and later a
‘Call of Orders’ for every replenishment of material then the following
process can be followed in SAP:
A consignment Contract has to be prepared in the system with item

category ‘K’. No price for individual materials can be maintained in
consignment contracts. Instead total value of the contract is given. When
the user department has to intimate for material to be replenished, a
consignment purchase order can be made with respect to a consignment
contract in the system.
A Consignment information record needs to be maintained for these

materials with agreed price. The price mentioned in consignment
information record should only be a single value (include all breakup
costs) and no breakup costs (like freight, holding charges etc.) should be
mentioned.

Vendor / Vendors SJCL MM / User
Finance
Stock in SJCL Departments
User department consumes

material from consignment
stock
Materials department monitors

the stock for consignment
materials.
Materials department creates a

Vendor sends the Consignment Purchase order with
materials based on the reference to consignment contract
intimation received and issues to the vendor to
replenish his stocks
Stores makes a No value is

goods receipt for posted
Quantity is consignment
updated in stocks
Consignment
stock
14.3.13.5. CONTRACT CALL OFF ORDERS

Material Purchase orders when assigned with respect to contracts would
be treated as contract release orders also known as ‘Call off Orders’.
These can be carried in the SAP system.
User needs to create a ‘Call off order’ in the system. The user need not
create a requisition for call off order. Instead he can refer the contract
and create a ‘Call off Order’ in the SAP system.
Calls off Orders are same as Purchase Orders.

14.4. GAP FITMENT
Nil / None
14.5. INTEGRATION
Storage Location ‘Shutdown’ has to be defaulted in Purchase Orders thru
MRP – PR or manual PR. This will help in receiving materials into
shutdown storage location.

Nil / None
14.7. REPORTS
Following information can be derived from the standard SAP reports:
Analytical & descriptive Reports on the volume (numbers & value) on the
basis of several parameters – Purchasing Organization, Purchase Groups,
Material Groups, Material Code, Document Type, Plants, Vendor etc.
14.8. WORKFLOW
SJCL has to give the authorized persons list for PO release strategy
14.9. DEVELOPMENTS
Layout for print out of PO
List of Items for which PO delivery date is open (Material Due list) – for
periods: that is pending Po list – report


1 Creation of Purchase Order All Users
2 Change of Purchase Order All Users
3 Display of Purhase Orders All Users
4 Deletion of Purchase Orders All Users
5 Release of Purchase Orders All Authorized Managers
6 Creation of Service Entry Sheet All Authorized users

MM Process PO, Confirmations,
Discussion Contract, Service
document Entry Sheet
Discussion
document
MM Process Consignment
Discussion stocks, Physical
document Inventory, Vendor
evaluation
14.12. OPEN ISSUES

• The number range shall be identified at the time of realization

15. CONTRACTS

A contract is a type of purchase agreement against which release orders
(Purchase Orders) can be issued for agreed materials or services as and
when required during an agreed time-frame with the agreed rates.
Contracts in real terms are the rate contracts entered with various
vendors, referring which the organization can raise the purchase orders
as and when the material/ services is required within an agreed time
frame.
Those services, which are provided once but a legal contract has been
signed with the vendor for the same cannot be termed as CONTRACT in
system perspective. Such contracts are Purchase orders only

IS)
In SJCL, standard business practices are considered.

Whenever a new rate contract has been finalized, a new Contract shall be
prepared. Based on the recurring requirement of some material / service,
the purchase department can start a contract finalizing activity and finally
enter into a contract with some supplier for supplying the services /
material as and when required.
It is to be noted that Contracts will be used only when orders are to be

made against the Contract.
15.3.1. CONTRACT PROCESS FLOW

The user has raised a PR. The purchase department while processing the
PR can identify whether for the required material / services, contract is
existing or not. The users can then assign Contract as the source in the PR
and create a release order against the Contract. The release order is
same as PO and the rest of the process flow remains the same.

15.3.2. CONTRACT TYPES
From SAP perspective, there are 2 types of Contracts:
Quantity contracts
This type of contract shall be used if the total quantity to be ordered

during the validity period of the contract is known in advance. The
contract is regarded as fulfilled when release orders totaling a given
quantity have been issued.
Value contracts
This type of contract shall be used if the total value of all release orders
issued against the contract is not to exceed a certain predefined value.
The contract is regarded as fulfilled when release orders totaling a given
value have been issued.
15.3.3. CENTRALLY AGREED CONTRACTS

All contracts agreed by SJCL will be centrally agreed / created since we
will be having only one purchasing organization.
Contracts shall be created by Central Purchasing Organization

Plant wise Conditions can be maintained
A Centrally agreed contract is valid for:

All plants assigned to the purchasing organization
15.3.4. DOCUMENT TYPES

following:
• Number Range
compulsory
• Which Item category can be used in which document type
SJCL shall use the standard Agreement types supplied by SAP for creating
Contracts in the system, which are Quantity contract and Value contract.
The number range shall be identified at the time of realization.

15.3.5. INFORMATION IN CONTRACT
A Contract consists of a document header and item details.
Following details shall be entered during the creation of Contract:
• Purchasing Organization
• Purchasing Group
• Account Assignment
• Item Category
• Plant (in case of centrally agreed contract or contract for all plants of
a purchasing organization, it’s not necessary)
• Material code
• Description
• Purchasing group/ materials group
• Quantity
• Delivery Dates
• Prices
• Conditions / Plant wise Conditions
Contract can be raised without a Material code. However, the text for
material description needs to be maintained.
15.3.6. CONDITIONS
Same as PO, conditions can be maintained in the Contract and the same
shall be defaulted at the time of Purchase Order.
15.3.7.1. MILESTONE / JOB BASED

Milestone / job Based – A Service has several Milestones & payment is
against the Milestone. E.g. Extension of plant or Services for spares
• For such requirements, a Service Contract shall be created with Item
Category as “Service”. Service Lines will appear and each Milestone /
job will be defined as a Service Code & Description with associated
value against each Line.
• A Purchase Order will be created with reference to contract where
service rates are copied into the order. The quantity is changed /
entered here by the user departments and the print out the same
would be given to the vendor
• Service Entry Sheet will be posted after completion of each milestone
/ job
• Bills shall be passed for each of the Milestone / job
• For Maintenance Services, Contract would be referred in
Maintenance order, based on which a PR is generated by the system.
The Purchase order is created with reference to PR and the rest of the
process remains same.
15.3.7.2. FIXED PERIODIC FEES

• Fixed Periodic Fees – A Service has a fixed periodic Fees E.g. Annual
Maintenance Contracts.
• Option I : Create a Service Order with Item category as ‘Service’ and
identify the Service line items for the various machines. Quantity and
rate field can be used to arrive at the total AMC cost. When the
supplier provides his bill, the user can create a service entry sheet for
the quantity in the bill.
• Option II : Create a Contract with Item category as ‘Service’ and
identify the Service line items for the various machines. Quantity and
rate field can be used to arrive at the total AMC cost. Intimation to
supplier can be carried out by creating purchase order with respect to
contract. When the supplier has completed his work, the user can
create a service entry sheet for the quantity for he has completed the
work. Bill shall be passed for that quantity which has been entered in
service entry sheet.
15.3.7.3. FIXED PERIODIC FEES WITH A VARIABLE COMPONENT

Fixed Periodic Fees with a Variable Component - Service which can have
a fixed monthly fees plus a variable component for overtime or extra
work. E.g. Housekeeping.
• Framework Order can be created. Qty will be 12 and Price will be the
Monthly Fees. There is a provision to put in “Unplanned Service
Lines” and assign “Overall Limit”. This will take care of the extra work
and it can be controlled by way of the Limit. No CWR can be raised in
case of these services.
15.3.7.4. RATE CONTRACT

Rate Contract – There is a Contract of certain items, SJCL procures these
items on need basis and pays monthly as per the rates. E.g. Stationery
etc. To address such Contracts, following is the option:

• A Quantity Contract can be created in the System where rates of each
Item are defined. Releases will be made against the Contract as &
when the material is to be ordered, GRN will be made and Invoice
Verification will be done for the Goods received during the month.
15.4. GAP FITMENT

Nil / None
15.5. INTEGRATION
Nil / None

Nil / None
15.7. REPORTS
Standard Reports
• General analysis of list of Contracts for a material /vendor /plant
/purchasing group /purchasing organization
15.8. WORKFLOW
Nil / None
15.9. DEVELOPMENTS
Layout for print out

1 Creation of Contract MM Users
2 Change of Contract MM Users
3 Display of Contract All Users
4 Deletion of items in contract MM Users

MM Process PO, Confirmations,
Discussion Contract, Service
document Entry Sheet
Discussion
document
evaluation
15.12. OPEN ISSUES

The number range shall be identified at the time of realization

16. INVENTORY MANAGEMENT
16.1. DEFINITION
Inventory Management module keeps track of all the quantities in the
stock. The processes covered under Inventory Management are:
• Receipt of Goods
• Issuing the material as per the requirement
• Direct consumption of Material at the time of Receipt
• Transfer of Materials between storage locations
• Transfer of materials between plants

IS)
SJCL at present does not have any online system.

16.3.1. TRIGGERING POINT
The Inventory Management processes will be used whenever a material
is received or material is transferred / issued.
16.3.2. INVENTORY MANAGEMENT CONCEPTS
16.3.3. MATERIAL MOVEMENTS
To differentiate between various types of inventory transactions, SAP

uses the concept of Movement type. A movement type is a three-digit
identification key for a goods movement.
For e.g. 101 for Goods receipt of Stock into Free Stock, 201 for issue of
Material to a Cost Centre etc.

16.3.3.1. STOCK TYPES
There are three types of stock in as identified in SAP Inventory
Management. Each of these stock types indicates whether the material
identified with the stock type is usable or not.
• Unrestricted-use stock (Own stock, Free for Use)

• Quality stock
• Blocked stock
• In SJCL, the user would be issuing material only from unrestricted
stock.
16.3.3.2. DOCUMENTS
Whenever a Material movement is carried out in SAP, a material
document is created. The Material document depicts the details of
material movement carried out.
The material document number range shall be year wise.The number

range for material documents is identified according to the various
Material movements which are as follows:
• Good Receipts for PO (WE)

• Goods Issue, Transfer Posting, Other Goods Receipts (WA)
• The number range shall be identified at the time of realization for WE,
WA.
16.3.3.3. UNITS OF MEASURE

The standard base unit of measure in SAP system have been agreed
16.3.4. BUSINESS PROCESS SPECIFIC SCENARIOS
16.3.4.1. GOODS RECEIPTS PROCESS

Material can be received from foreign and local vendors. Before getting
the material, SJCL needs to complete the government formalities (With
customs / port / Industrial Area security gate pass) and once the
permissions are received, the material can be received into the stores.
The tracking of various permissions and documents shall be carried

outside SAP. The user has to identify the storage location where the
material is kept in Stock .
The various fields available for entry in the Goods Receipt Note (GRN)
are:
• Delivery Challan Number

• Document Date – GRN creation date
• Posting Date – Date on which the accounting entries are passed.
Could be back dated3
• Bill of Lading No.
• Header Text
• Line level Text
SJCL can use the above fields for the information as required by them.
Line level text flows to the Accounting document. No. of containers, Gate
entry no., other details may be entered in the text field to the extent as
possible in this field.
• Freight vendors as identified in the PO shall be proposed by the

system in GRN. User can change / enter the proposed freight vendor
in GRN.
Other important points in GRN are:
• Any changes to the PO shall be reflected before preparation of GR.

Following are the accounting entries during GR to Stock from vendor:
Stock A/c Dr
To GR/ IR Clrg. A/c Cr
3 In Materials management, posting is possible for two periods – one in

current period and the other in previous period. No postings are possible
in periods other than these. E.g. if the current month is July, the posting
date can be made only in July or June.

16.3.4.2. MATERIAL TO ASSET
At the time of goods receipt materials in SJCL which have been identified
as assets will post the value directly to the concerned Internal Orders.
Only quantity Updation will take place in materials management.
Accounting Entry would be as follows:

Consumption A/c Dr
To GR / IR Clrg. A/c Cr
16.3.4.3. CONSUMPTION OF MATERIAL (DIRECT CHARGE MATERIALS)

Direct charge materials are procured by creating account assigned PO’s,
these materials are directly posted to consumption at the time of GRN.
No stock / Inventory will be maintained for these materials. When
creating the purchase order, user shall enter the cost object for direct
charge materials. This cost object will be booked when making a goods
receipt. Materials cost object cannot be altered at the time of goods
receipt.
Accounting entry:
Consumption A/c Dr
16.3.4.4. GOODS ISSUE

At SJCL, materials that are in stock are issued to cost centers.
Goods issue with reference (movement type 201) will be carried out for
all issue of materials to departments.
All materials would be issued with respect to reference only. Therefore a

reservation has to be prepared in the system for materials that are to be
consumed from stock. In case of maintenance orders, reservations are
created automatically by the system.
Reservation needs to be approved before being issued by the stores

department. Standard SAP does not support this functionality.
The flow chart for the above process is given below:

Materials
User Department FM
Management
Prepares
Reservation or
Maintenance Order
(Reservation)
Stock keeper issues the

material, with reference
to reservation no.
Reservation print
out
Approval by
Authorized staff
Accounting
documents posted
User collects the material automatically
Materials which are being issued from stores require reservations to be

created.
• Approval for these reservations in the SAP system is not possible as

part of Standard SAP.
Accounting Entry:
Consumption A/c Dr
To Stock A/c Cr

16.3.4.5. MATERIAL RETURN TO STORES FROM DEPARTMENTS
Materials can be returned back into stores. If a maintenance order exits,
the return of material is carried out with reference to reservation. The
movement type for the return would be a reversal movement (262). For
materials where no maintenance order is created, these materials will
have to be returned by creating a reservation in the system manually
with reversal movement type (202 – cost center). Value will be
withdrawn from the necessary cost object.
Material return voucher is submitted to the stores department for which

a development is envisaged. The details of the same will be discussed
during the realization stage.

Materials
User Department FM
Management
Prepares Reservation or
Maintenance Order
(Reservation) with reversal
movement type
Stock keeper issues the

material, with reference
Reservation print out to reservation no.
Approval by
Authorized staff
Accounting
document posted
automatically
User collects the material
Accounting Entry:
Stock A/c Dr
To Consumption A/c Cr
16.3.4.6. MATERIAL RETURN TO VENDOR

Material shall be returned back to the vendor if it has been rejected by
the user or the material has been returned from the user’s department
due to some defects.
In case of SJCL, the material shall be rejected at the receipt stage based
on the remarks/ feedback given by the user. The stores personnel shall
prepare the return delivery with respect to the GRN. The user shall
specify the reason for rejection while preparing the return delivery
document. This would result in opening the quantity of the relevant PO
so that vendor can supply the fresh material.

The material shall be returned to the vendor using the return to vendor
movement type in SAP (122). The document shall refer to the GRN
document against which the material was received.
Based on the material return, the PO quantity will be opened up and

vendor can send fresh material against the same PO in place of the
rejected material. Fresh GRN will be created when replacement is
received.
In cases where the material is directly posted to an account assignment

and has to be returned to vendor, the above process shall be followed.
The value of the material will credit the cost object to the extent that was
received into it.
If the bill of the vendor has been passed and later the material is rejected
while using, the vendor liability is not reduced automatically while
posting the vendor returns.
At the time of vendor return of Stock item, system credits the Stock
account and debits the GR/IR account but vendor does not get debited
automatically.
Hence, a separate FI entry needs to be passed in Financial accounting

system if the vendor is not providing with the replacement for the
rejected material. FI may issue a Debit Note to the vendor. Also, if the
returned goods are not to be replaced by the vendor, the PO will have to
be closed in the System manually.
Accounting Entry:
GR / IR Clrg. A/c Dr
To Stock A/c Cr
The above entry would be the same for goods receipt which are cancelled
using movement type 102.
16.3.4.7. MATERIAL SENT TO VENDOR FOR JOB WORK OR SUBCONTRACTING

To track the inventory for the material that has been sent for job-work /
subcontracting, the user shall send the material to a vendor using a

subcontracting issue (movement type 541). The quantity shall be tracked
at the vendor place as a special stock.
A PO shall be prepared for the making charges and if the freight charges
are also borne by SJCL then a condition type shall be used to identify the
same in PO. When the invoice is received from the vendor for job-work /
subcontracting, the same shall be passed using Invoice verification.
There shall be no relation with the Material movement and the PO placed
on the vendor.
Note:- Maintenance materials sent for repair would not be part of this
process. Instead they would follow external service management of
Materials Management. Also these materials will not be tracked or be a
part of inventory. Refer to external service management section for
details.
16.3.4.8. MATERIAL SENT TO VENDOR FOR REPAIR

Maintenance material being sent to repair will follow the external service
management process. There will be no quantity updation in the
inventory. Only a service order will be created with respect to
maintenance order. When the material is received back after repair, a
service entry sheet will be created for the services rendered by the
concerned maintenance department. No tracking in SAP will be
maintained for maintenance materials that are sent for repair.
16.3.4.9. TRANSFER OF ASSETS & MATERIALS

Transfer of materials or assets from plant to plant is not envisaged in the
SAP system. However transfer of materials from storage location to
storage location can be carried out in materials management thru goods
transfer, movement type 311. Material movement from one Storage
location to another storage location within a Plant does not have any
effect on Accounting.
16.3.4.10. SCRAP AND SALE OF A MATERIAL

The material can be scrapped or sold by SJCL. For all such cases the
material is bought back into stock as a scrap material and then issued
(thru 551-issue for scrapping) to finance for further processing. The
procedure for bringing back into stock is similar to material returns to
stores from department. However, the material code for scrap materials
would be different.

Accounting Entry:
Scrap A/c Dr
To Stock A/c Cr
16.3.4.11. CASH PURCHASE
Since the user raises a purchase requisition and brings the material by
cash (no order is raised to the vendor). The goods receipt in SAP system is
carried out thru transaction ‘Goods receipt without purchase orders’.
The movement type will be 501 for these receipt transactions.
A cost object needs to be specified during GR.
It is important that the purchase requisition needs to be closed after the

receipt is made by the materials department. Else open requirements will
still be shown in the SAP system.
Flow chat for this specific process is given below:
Goods Receipt without

Purchase Order Close the Intimate the
Movement type 501. Purchase department
Requisition about the
receipt of goods
Create a
Goods issue reservation,
against And submit
reservation the bill to
finance
Return the goods to

materials
department and
intimate the buyer

Accounting Entry:
Stock A/c Dr
To Cash Clrg. A/c Cr
16.3.4.12. VENDOR MANAGED INVENTORY
Materials falling under vendor managed spare parts can be treated as

consignment stocks in SAP system. Consignment stocks will be kept in
consignment storage location and would not be valuated in inventory.
A consignment purchase order with reference to consignment contract

can be created in the SAP system. However this order would be without
value and only quantity is maintained.
The holding charges should be taken into separate G/L account and
would not hit the stock account. If required a service line can be created
for holding charges within the same contract or order
An information record has to be maintained with price for consignment

materials. This information record will be used when issuing the material
to concerned department.
Materials can be issued directly from consignment stock to the

department concerned. When the materials are posted to consumption
account when issued to user departments.
Accounting Entry:
Consumption A/c Dr
The process flow chart is given below:

Vendor / Vendors SJCL MM / User F
Stock in SJCL Departments M
Materials department send the

consignment order for
replenishment in vendors store
No value is
Vendor sends the Stores makes a posted
materials based on the goods receipt for
intimation consignment stocks
Quantity is updated in User creates

vendors stock material
reservation
Stores to make sure that price is maintained in

materials consignment information record and
issues material from consignment stock Accounting
document
posted
User receives the automatically
material (consumption)
Invoice
settlements
Vendor submits
for
his Invoice / Bill consignment
materials
Note: - Settlement of Invoice needs to be carried out for Consignment

and Pipeline materials by Finance.
16.3.4.13. IMPORTED MATERIALS

Materials which are imported will go thru normal materials receipt
process. There is no change for materials received from local and import.
Refer to goods receipt section for further details. However the change
with respect to different cost (for importing) will be discussed during the
realization stage in purchase orders as conditions. The price of the
material has to be entered in the purchase order before making a receipt.
Only after the price is entered in the system a goods receipt should be
posted.
With respect to tracking of material when goods are placed on ship, SJCL
can use the functionality of inbound delivery. When goods are posted on
the vessel, SJCL materials personal has to crate inbound delivery in the
system thru which they can know the status of the order or material.
(This inbound delivery step is not mandatory, its optional).
Following is the process flow for imported items:
On the arrival of materials

Inbound delivery is to stores, a goods receipt
Purchase Order created when note is crated with respect
raised goods are shipped to inbound delivery.
on the vessel (not (Goods receipt is created
mandatory) with respect to purchase
order)
Invoice verification
by Finance to be
carried out for the
Inventory is updated
received materials
Qty and value is updated
16.4. GAP FITMENT

Nil / None
16.5. INTEGRATION
Accounting & CO documents when creating material movements
Updation of costs to maintenance orders
Materials specifically procured for shutdown have to be received into

shutdown store and issued to shutdown reservations.

Material revaluation shall be carried out in the materials management
system for raw materials on monthly basis if necessary. This impact the
price difference account.
Material revaluation can be carried out for other material also depending
on the need.
Maintenance of GR / IR clearing account needs to be carried out by

finance. In case of differential amount in GR / IR clg. Account the same
shall be posted to appropriate account by finance.

Nil / None
16.7. REPORTS
Document list for all receipts and consumptions will be shown in SAP
standard report by giving selection criteria of material code, movement
type and date. Also the stock of consumable material as on date would
be a standard SAP report.
16.8. WORKFLOW
Nil / None
16.9. DEVELOPMENTS
• Development for Material receipt
• Development for Material Issue Note (Reservation Note)

1 Goods Receipt Posting / Change All MM Users
2 Goods Issue Posting / Change All MM Users
3 Transfer posting(Sloc. to Sloc.) All MM Users
4 Display of Material documents All Users
5 Accounting Document creation All MM Users
6 Display of Accounting document All MM Users

MM Process Inventory
Discussion Management
document
Discussion
document
MM Process Raw Material Org.
Discussion Structure &
document Master Data
MM Process Raw Material
Discussion Process
document
evaluation

16.12. OPEN ISSUES
• Approval for goods issue reservations in the SAP system is not
possible as part of Standard SAP. However development of
reservation print out in the system will only be decided after
consulting SAP ABAP consultants and will be finalized during the
realization stage.

17. PHYSICAL INVENTORY MANAGEMENT

Physical Inventory is the procedure thru which actual stock levels of a
given material are counted and recorded in a given storage location at a
specific time.

IS)
SJCL is a relatively new enterprise. A standard business practices are
followed.

Physical inventory with cycle count procedure shall be carried out in the
system;
Cycle counting is a method of physical inventory whereby inventory is

counted at regular intervals within a fiscal year. These intervals (or cycles)
depend on the cycle counting indicator set for the material master.
SJCL has to identify and maintain cycle counting indicators for various
materials.
SJCL has to finalize number of physical inventories per fiscal year of cycle
counting (Specifies how often during the fiscal year a physical inventory is
to be carried out for a material subject to cycle counting) during
realization phase.
17.3.1. PROCESS FLOW

1. Preparation
Physical inventory documents are created, the materials concerned are

blocked or the book inventory balance frozen and the physical inventory
documents (count lists) created and transferred to the stores.

2. Count
In this step the physical count is carried out in the stores. The results are
entered in the SAP system.
3. Physical inventory analysis
The system then compares the results of the count with the book
inventory balance for every material. You can create a difference list,
with which you can decide which materials displaying large difference are
to be recounted. When you trigger a recount, a new physical inventory
document is automatically created.
4. Posting
The last step is the posting of the physical inventory. If differences

occurred, the stocks are updated
The posting of differences in the inventory shall be booked to a separate

account code. The posting of differences will be subject to approval of
the higher authority
Stocks shall be blocked for Posting during Physical inventory process

Posting Block indicates that no goods movements involving the materials
listed in the physical inventory document can be posted for the duration
of a physical inventory count.
The posting of differences (loss / gain) will create an accounting

document in the background
17.3.2. STOCK TYPES & SPECIAL STOCKS
Stocks can be divided into various stock types, depending on how the
stock is to be used:
• Unrestricted-use stock in the warehouse
• Stock in quality inspection
• Blocked stock
If more than one stock type exists for a material, these can be entered in
a physical inventory document. Each stock type must, however, be
entered and counted as a separate physical inventory item.
Special stocks also have to be handled separately. These include:
• Consignment stock
Separate physical inventories must be carried out for your own stock and
for the various special stocks such as vendor consignment stock. Separate
physical inventory documents must be created in each case.
17.4. GAP FITMENT

Nil / None
17.5. INTEGRATION
Gain / Loss accounts will be posted thru accounting document.

None / Nil
17.7. REPORTS
Standard Reports
Inventory difference list
17.8. WORKFLOW
Nil / None
17.9. DEVELOPMENTS
Nil / None

1 Physical Inventory Document creation MM Core team - Materials
2 Count MM Core team - Materials
3 Inventory difference list report MM Core team - Materials
4 Posting of Inventory difference MM Core team - Materials

evaluation
17.12. OPEN ISSUES

Nil / None

18. MATERIALS REQUIREMENT PLANNING

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).
CBP - 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 triggered when stock levels fall below a predefined reorder
point or by forecast requirements calculated using past consumption
values.

IS)
SJCL wants to follow the following MRP procedures in SAP
• Some spares parts would follow reorder point planning
18.3.1. 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
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.
Purchase requisitions raised thru Consumption based planning (SAP MM

Component) are not subjected to release strategy.
SJCL has to decide to create planned orders or purchase requisitions

directly thru Material Requirement Planning run.
User has to select two important indicators during the planning run:
NETCH (Net change for total horizon) has to be selected
‘3’ for the system to generate planned orders in the filed ‘create
purchase requisition
Reservation raised from maintenance order will also be displayed in the

material planning run.
If the material available in stock is more than reorder point level, system
will not raise any planned order or requisition. If the requirement is more
than the available quantity, the materials planning controller has to
create manual PR in the system thru MRP component.
The PR (Purchase requisitions) generated thru, material requirement

planning are not subject to release strategy in the SAP system.
18.3.2. PLANNING AT PLANT LEVEL

As materials planning is carried out at plant level in SJCL, all available
stock in the plant is taken into account during planning. On the other
hand, consignment stocks from the vendor are always included in MRP
18.3.3. LOT-SIZING PROCEDURES

The standard lot-sizing procedures are available in the R/3 System. SJCL
would follow lot for lot order quantity, lot sizing procedure.

18.3.4. REORDER POINT PROCEDURE
In reorder point planning, procurement is triggered when the sum of
plant stock and firmed receipts falls below the reorder point.
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
18.3.4.1. MANUAL REORDER POINT PLANNING – FOR SOME SPARE PARTS
In manual reorder point planning, you define both the reorder level and
the safety stock level manually in the appropriate material master.
• In SJCL manual reorder point would be followed.
PR generated thru Planned orders (MRP) will be for a minimum lot

mentioned in the material master and therefore for reservations raised
with respect to shutdown, no individual PR’s can be generated by the
system. However, the MRP controller can manually raise a PR for
shutdown and assign storage location shutdown.
• For all Stock materials which have MRP view maintained in the
material master only reservations are raised either manually or
automatically thru maintenance orders.

18.4. GAP FITMENT
Nil / None
18.5. INTEGRATION
Reservations / Requirements from Plant maintenance module for all
stock materials
For requirements raised for shutdown thru maintenance orders,

shutdown store shall be specified by the User.
Integration between the MRP and purchasing cycle.

Nil / None
18.7. REPORTS
Standard Reports
• MRP list
• Stock List
18.8. WORKFLOW
Nil / None
18.9. DEVELOPMENTS
Nil / None


1 Creation of Planned Orders MM User
2 Creation of Purchase Requisiton MM User
3 Display of MRP list All Users & Core team of MM

MM Process Material
Discussion Requirement
document Planning.
18.12. OPEN ISSUES

• SJCL shall inform which forecast model they would follow for process
chemicals in Forecast based planning, during realization stage.

19. VENDOR EVALUATION

Program that provides a basis for decisions with regard to the selection
and control of sources of supply.

IS)
A standard business practices are considered, for major items and the
criteria are price, quality and delivery date.

A main criterion is a criterion on the basis of which a vendor is evaluated
can be selected and weighted by the user. Each main criterion is further
divided into sub-criteria’s.
The main criteria are:
• Delivery reliability
• Price
• Quality
• General Service
The Sub criteria are:
Price
o Price level
o Price history
Quality
o GR lots
o Complaints level
o Quality audit
Delivery

o On-time delivery performance
o Quantity reliability
o Compliance with shipping instructions
General service/support
Standard Ranking list with overall evaluation would be followed to
evaluate the vendors.
Following is the sequence of ranking that would be followed:
Overall evaluation 1
Price 2
Quality 3
Delivery 4
Service 5
SJCL can use both equal weighting key and unequal weighting key for
computing the scores manually through the above criteria’s
The evaluation needs to be maintained vendor wise.
User can enter the scores against sub-criteria’s or directly against the
main criteria
19.4. GAP FITMENT

Nil / None
19.5. INTEGRATION
None / Nil

Evaluation of vendors, who supply materials / Services on-time (as per
delivery date in order) for better decision making during purchasing
process.

19.7. REPORTS
Standard Reports
• Ranking List
• Evaluations per Material / Material Groups
• Vendors not evaluated since
• Compare Evaluations
19.8. WORKFLOW
Nil / None
19.9. DEVELOPMENTS
Nil / None

1 Maintain Evaluations MM Core team (Materals & Services)
2 Display Evaluations Management & MM Core team & PR users
3 Standard Reports for evaluation Management & MM Core team

evaluation

19.12. OPEN ISSUES
Nil / None

20. BILL PASSING / INVOICE VERIFICATION

Vendor provides the invoices along with the supply of material or
services. The purchase department needs to enter the invoice and after
approval of the same, the vendor can be paid. The whole process of
passing the bill and generating a vendor liability is carried out in SAP
using the Logistic Invoice Verification. The vendor liability generated
using the Invoice Verification is cleared while making the payment to the
vendor.
The Invoice Verification application component records and manages

accounting data for vendors. It is also an integral part of the purchasing
system: Deliveries and invoices are managed according to vendors. The
system automatically triggers postings in response to the operative
transactions.
Postings made in Accounts Payable are simultaneously recorded in the

General Ledger where different General ledger accounts are updated.

Accounts Payable
Invoice
Purchase Goods Receipt/
Order Receipt Invoice
Verification
Cash
Cash Mgmt
Mgmt & &
Forecast
Forecast Date
Date
Payment Transactions
Cash Payment Program
Management
Balance
sheet Profit
& Loss
(P/L)
20.2. SALIENT FEATURES IN INVOICE VERIFICATION

The user can verify the invoice based on the PO, Delivery Challan or
Service Entry sheets
The system provides for the selection of passing the invoice for only the
goods/services or only the delivery costs like Freight, Clearing charges etc
or if the vendor is same then both the Goods/services and Delivery costs
bill can be passed together (if the vendor provides a single invoice )
If the vendor provides a single Invoice for multiple PO the same can be
passed
Multiple invoices can be passed against a single PO
System shall provide the GRN details about the quantity and shall default
the prices from the PO. The user can change the prices based on the
invoices
In cases where the Advance has been paid before purchase order or at
the time of creating a purchase order then while making invoice

verification the system would show a message indicating that advance
has been paid for this purchase
Advance payments are not part of Invoice verification or Materials

Management module; refer to Business Blue Print of Finance on this
topic.

IS)
Accounting department of SJCL receives invoice from the vendors, which

is checked in terms of quantity, value, payment terms, other conditions
such as delivery etc. The same Invoice is then entered in their register
and released for payments.

Please refer to Business Blue Print of Finance on this topic.

21. GAPS / ISSUES
The following Gaps need to be addressed with the help of FICO Module.
SJCL requires Split Valuation for material types. Accordingly valuations
classes need to be decided.
Raw materials and other materials like Coal have many quality
parameters and payment to the Vendors and Service providers is
dependent on them. Though Raw material quality certification is routed
through QM module, whether all the quality parameters could be taken
into consideration need to be explored.
A Z-report needs to be developed to address specific requirements of

MM like PR Ageing Report, Vendor Rating Format and Physical Inventory
format etc.
All the developments and Reports as per MM Requirements have been

indicated in the List of ABAP developments.
22. KEY INTEGRATION AREAS

The Materials Management module is fully integrated with other
modules of SAP. The continuous exchange of information with other
application areas in the R/ 3 System ensures a real time database. Fully
integrated processing helps us to optimize Materials Management
processes within the company.
Considering the specific requirements of the organization, the SAP MM

module could be integrated with other modules and an interface could
also be developed with other external systems. The broad level
integration areas with SAP R/3 are as follows.
22.1. Production Planning & Control

Material Master to create Bills of Material, Procurement of materials and
based on Materials Requirement Planning (MRP) Staging of Components
required for Production Orders. The receipt of the finished products in
the warehouse is posted in Inventory Management.

22.2. Sales & Distribution
Within the framework of materials planning and control, a requirement
that has arisen in the Sales area can be passed on to Purchasing. In
addition, when a requisition is created, it can be directly assigned to a
sales order.
As soon as you enter a sales order, you can initiate a dynamic availability
check of stocks on hand. When the delivery is created, the quantity to be
delivered is marked as "Scheduled for delivery". It is deducted from the
total stock when the goods issue is posted.
22.3. Finance & Controlling
Purchasing maintains data on the vendors that are defined in the system
jointly with Financial Accounting. Information on each vendor is stored in
a vendor master record, which contains both accounting and
procurement information. The vendor master record represents the
creditor account in financial accounting.
Through PO account assignment, Purchasing can also specify which G/ L

accounts are to be charged in the financial accounting system. Valuation
of Materials Inventory and provides a framework for reporting inventory
valuation in Books of Accounts.
The interface to the cost accounting system (Controlling) can be seen

above all in the case of purchase orders for materials intended for direct
consumption and for services, since these can be directly assigned to a
cost centre or a production order. It passes on the relevant information
about payments or invoice analyses to these components.
22.4. Quality Management

In the case of a goods movement, the system determines whether the
material is subject to an inspection operation. If so, a corresponding
activity is initiated for the movement in the Quality Management system.

22.5. Plant Maintenance
Materials Management is linked with Plant Maintenance through

Inventory Management as follows:
It is possible to post goods movements with reference to equipment

BOM’s. It is possible to withdraw parts for maintenance orders.
When serial number management is active, the individual serial numbers
are entered in the case of every goods movement. Serial numbers are
managed in the Plant Maintenance system. It is possible to create
purchase requisitions & service orders for external services within the
framework of plant maintenance measures.
22.6. With-In Materials Management

As a component of Materials Management, Inventory Management is
directly linked with Material Requirements Planning, Purchasing, and
Invoice Verification.
Inventory Management provides information for MRP, which takes into

account not only physical stocks but also planned movements
(requirements, receipts).
When a material is ordered from a vendor, Inventory Management posts

the delivery as a goods receipt with reference to the purchase order. The
vendor invoice is processed later by Invoice Verification. Here, the
quantities and values from the purchase order and the goods receipt
document are checked to ensure that they match those in the invoice.
In the SAP System, Vendor Evaluation is completely integrated into the

MM Purchasing component within Materials Management. This means
that information such as delivery dates, prices, and quantities can be
taken from purchase orders.
Vendor Evaluation also uses data from the Quality Management

component, such as the results of incoming inspections or quality audits.
Vendor Evaluation accesses basic Materials Management data, Inventory

Management data (such as goods receipts), and data from the Logistics
Information System (LIS).

23. REPORTS IN MM
The following reporting requirements are met directly from standard
SAP.
• Materials receipt and consumption report
• Total inventory summary Report
• Pending Purchase order Status
• Pending Purchase requisition Status
• Purchasing Value Analysis
• Pending non approved stock (identified as quality inspection
stock)
• Stock statement/Weekly / Monthly
• Monthly stock of various items
• Receipt of FG Weekly /Monthly (standard SAP material Document
listing)
• Vendor Evaluation Report
23.1. Purchasing Reports
This section describes various standard reports provided by SAP for

Purchasing Function in MM Module. This covers all the reports related to
Purchases, External Services Management, Vendor Evaluation and
Logistics, Invoice Verification. The information contained in reports which
is only displayed on the screen can be downloaded in a spreadsheet for
further analysis. Any requirement, which is over and above the reports
mentioned in the following table, would need additional development &
effort.
FREQUEN
S.NO REPORTS CY SAP
1 List of Purchasing documents per As & Standard
Vendor/Purchasing Organization / Document When
Type / Item Category/ Account Assignment Required
Category / Plant / Supplying Plant / Purchasing
Group / Material / Delivery Date / Document
Number / Material Group / Vendor’s Material
Number/Project/Tracking Number

2 Reports on Services by Service Number / Purchase As & When Standard
Organization / Service Group / Document Number / Required
Vendor / Supplying Plant / Document Date etc
3 Comparison of Planned Services v/s Actual Services As & When Standard
performed on the basis of Vendor / Purchasing Required
Organization / Purchasing Group / Plant / Account
Assignment Category / Purchase Order Number /
Document Date / Start of Validity Period / End of
Validity Period
4 General Analyses of purchasing documents As & When Standard
Required
5 Comparison & Analyses of Purchase Order Values As & When Standard
Required
6 Monitoring Order Acknowledgements on the Basis As & When Standard
of Purchase Order(s) / Purchase Organization / Required
Confirmation Category / Document Type /
Purchasing Group / Vendor(s) / Delivery Date /
Document Date etc
7 Analysis of PO Value, Invoice Value and number of As & When Standard
Purchase Orders on the basis of Purchasing Group / Required
Vendor / Material Group / Material / Service
8 Good Receipt Forecast As & When Standard
Required
9 List of Purchase Requisition on the basis of As & When Standard
Purchase Requisition Number / Purchasing Group / Required
Material / Material Group / Requirement Tracking
Number / Plant / Document Type / Item Category /
Account Assignment Category / Delivery Date /
Release Date / Material Planner / Processing Status
/ Fixed Vendor / Purchase Requisition Processing
State / Blocking Indicator / Requisitioner / Cost
Centre / WBS Element / Order / Asses / Asset Sub
Number / Sales / Network / Operation Number
Order
10 List of Service Purchase Requisitions on the basis of As & When Standard
Service Number / Purchase Organization / Purchase Required
Group / Service Group / Document number /
Vendor / Supplying Plant / Document Date

11 List of Re-Submitted Purchase Requisition on the As & When Standard
basis of Purchase Requisition Number / Purchasing Required
Group / Material/Material Group / Requirement
Tracking Number / Plant / Document Type / Item
Category / Account Assignment Category/ Delivery
Date / Release
Date / Material Planner / Processing Status / Fixed
Vendor / Purchase Requisition Processing State /
Blocking Indicator /Requisitioner/Cost Centre / WBS
Element / Order / Asses / Asset Sub Number / Sales
Order / Network / Operation Number
12 Display List of Vendor Invoice Documents Per As & When Standard
Document Number / Fiscal Year / User / Invoicing Required
Party / Company Code/Document Date / Posting
Date / Document Type with various entry types and
Invoice Status as Posted / Not Posted and
Document Type as Invoice / Credit Note
23.2. Reports Involving Master Data

Purchasing Function in MM Module. This covers all the reports related to
various Master Data Elements. The information contained in reports
which is only displayed on the screen can be downloaded in a
spreadsheet for further analysis. Any requirement, which is over and
above the reports mentioned in the following table, would need
additional development and efforts.
S.NO REPORTS FREQUENCY SAP

1 List of Info Records per Vendor / Material / Material As & When Standard
Group / Vendor Material Number / Vendor Material Required
Group / Purchasing Organization / Info Record
Category / Plant / Purchasing Group with & without
restrictions
2 Purchase Order Price Histories As & When Standard
Required
3 Quotation Price Histories As & When Standard
Required
4 Buyer’s Negotiation Sheet by Material / Vendor As & When Standard
Required

5 List of Source List per material As & When Standard
Required
6 List of Quota Arrangements per Material As & When Standard
Required
7 Approved Manufacturer Parts List As & When Standard
Required
8 List of Vendors based on Vendor Code / Purchasing As & When Standard
Organization / Account Group Required
9 Ranking Lists of Vendors As & When Standard
Required
10 Vendor Evaluation per Material / Material As & When Standard
Group Required
11 List of Vendors which have not been evaluated As & When Standard
Required
12 List of Vendors not evaluated since (a given date) As & When Standard
Required
13 Vendor Evaluation List: Standard Analysis As & When Standard
Required
14 List of Pricing conditions: General Overview As & When Standard
Required
15 List of Pricing Conditions: By Contract As & When Standard
Required
16 List of Pricing Conditions: By Info record As & When Standard
Required
17 List of Pricing Conditions: Material Group As & When Standard
Required
18 List of Pricing Conditions: Market Price As & When Standard
Required
19 List of Discounts / Surcharges conditions: General As & When Standard
Overview Required
20 List of Discounts / Surcharges conditions: By Vendor As & When Standard
Required
21 List of Discounts / Surcharges conditions: By Vendor As & When Standard
Sub-Range Required
22 List of Discounts / Surcharges conditions: Condition As & When Standard
Group Required
23 List of Discounts / Surcharges conditions: By Material As & When Standard
Type Required
24 List of Discounts / Surcharges conditions: By Inco As & When Standard
Terms Required
25 List of Discounts / Surcharges conditions: By Invoicing As & When Standard
Party Required
26 Materials List per Material /Plant / Material Type / As & When Standard
Material Group Required
23.3. Inbound Logistics Reports

Stores and Logistics Function in MM Module. This covers all the reports
related to various Material Movements and Physical Inventory Counting
Process. The information contained in reports which is only displayed on
the screen can be downloaded in a spreadsheet for further analysis. Any
requirement, which is over and above the reports mentioned in the
following table, would need additional development and efforts.
S.NO REPORTS FREQUENCY SAP

1 List of Material Documents per Material / Plant / As & When Standard
Storage Location / Batch / Vendor / Customer / Required
Movement Type / Special Stock Indicator / by Posting
Date / User Name / Transaction Event Type
2 List of Accounting Documents Generated per Material As & When Standard
/ Company Code / Valuation Area / Posting Date / Required
Document Date / Document Type
3 List of Cancelled Material Document per Material / As & When Standard
Plant / Posting Date Range / User Name / Reversal Required
Document Number / Year of Reversal document /
Original Document Number / Year of Original
Document Number
4 List of Material Documents with Reason for As & When Standard
Movement per Material / Plant / Reason for Required
Movement Code / Material Document Type / Posting
Date / Vendor / Purchasing Document / Purchasing
Document Line Item Number
5 List of Stock in Transit per Material / Receiving Plant / As & When Standard
Receiving Plant Company Code / Required
Issuing Plant / Special Stock Type
6 Stock Overview for a Material in a Plant / Company As & When Standard
Code / Storage Location / Batch / Special Stock Type Required
7 Stock Requirement List for a Material and Plant As & When Standard
Required
8 Plant Stock availability for a material and / or Plant As & When Standard

Required
9 Availability Overview list for a Material and /or Plant As & When Standard
Required
10 Warehouse Stock of a material Per Material / Plant / As & When Standard
Storage Location / Batch / Material Type / Material Required
Group / Purchasing Group
11 Shelf Life List per Material / Plant / Storage Location / As & When Standard
Batch Required
12 Stock for Posting Date per Material / Company Code / As & When Standard
Plant / Storage Location / Batch / Valuation Type / Required
Movement Type / Special Stock Indicator / Selection
Date / Stock Type
13 List of Valuated Sales Order / Project Stock (Special As & When Standard
Stock) Required
14 List of Stock with Subcontractor per Material / Plant / As & When Standard
Vendor / Company Code Required
15 List of GR/IR Balances per Vendor /Purchasing As & When Standard
Organization / Purchasing Group / Material / Required
Purchasing Document / Purchasing Document Line
Item Number
16 List of Vendor Consignment Stock per Material / Plant As & When Standard
/ Storage Location / Batch / Material Group / Vendor Required
17 Liability of Consignment Stock from Vendor As & When Standard
Required
18 List of Inventory Differences per Material / Plant / As & When Standard
Storage Location / Batch / Physical Inventory Required
Document / Physical Inventory Number Special Stock
Type / Fiscal Year / Count Date / Planned Count Date
/ Reason for Inventory Difference

24. LIST OF ABAP DEVELOPMENTS
24.1. Forms and Reports
Apart from the standard reports provided by SAP, following are the
reports which are needed additionally by the core team members. These
reports would require additional efforts.
S.NO REPORTS / FORMS Development REMARKS

1 PO print out for Std PO By ABAPER Format will be given by MM Owner
2 PO print out for Service PO By ABAPER Format will be given by MM Owner
3 RFQ form By ABAPER Format will be given by MM Owner
5 Print out for PO reminders By ABAPER Format will be given by MM Owner
6 Reservations Print out format By ABAPER Format will be given by MM Owner
7 Issue Pass check list By ABAPER Format will be given by MM Owner
8 Physical Inventory document By ABAPER Format will be given by MM Owner
format
9 Gate Pass (RGP & NRGP) By ABAPER Format will be given by MM Owner
format
11 Scrap Sales Order Print format By ABAPER Format will be given by MM Owner
12 Purchase requisition Aging By ABAPER Format will be given by MM Owner
format
13 Purchase Order Aging format By ABAPER Format will be given by MM Owner
14 Goods Receipts in QI Report By ABAPER Format will be given by MM Owner
15 Reorder Level Items List By ABAPER Format will be given by MM Owner
format
16 Vendor Rating format By ABAPER Format will be given by MM Owner

25. DATA MIGRATION STRATEGY
The following data will be programmatically transferred to SAP from the
current system with help of field mapping to all the Masters Data and
transactional data.
25.1. Master Data
The following masters will be programmatically transferred to SAP from

the current system
• Material Master
• Vendor Master
• Purchasing Info records
• Source List
• Outline Agreements
25.2. Transactional Data
The following transactional data will be programmatically transferred to

SAP from the current system
• Pending purchase requisitions
• Pending purchase orders
• Stock balances in the stores

BUSINESS BLUEPRINT - MM - SJCL - Version 1.0

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SAP IMPLEMENTATION PROJECT

BUSINESS BLUE PRINT

LEADSOFT SOLUTIONS PVT LTD

Document Numbering convention

1.1. Objective of this Report ................................. 16

2.1. Executive Summary ....................................... 17

3. SAP ORGANIZATION STRUCTURE ........... 18

3.1. Materials Management ................................. 18

4. Material Master .................................... 23

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 2

5. Vendor Master ...................................... 29

5.1. Overview ....................................................... 29

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 3

6. Purchase Information Records ............... 35

6.1. Overview ....................................................... 35

7. Source List ............................................. 38

7.1. Overview ....................................................... 38

8.1. Overview ....................................................... 40

9. Service Masters ..................................... 43

9.1. Overview ....................................................... 43

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 5

10. Service Specifications ............................ 45

10.1. Overview ....................................................... 45

11. Purchase Requisition ............................. 47

11.1. Process Definition.......................................... 47

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 6

12. Prequalification of Vendors / Source

12.1. Process Definition.......................................... 56

13. Request for Quotation / Quotation ........ 59

13.1. Process Definition.......................................... 59

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 8

14. Purchase Order ...................................... 63

14.1. Process Definition.......................................... 63

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 9

15. Contracts ............................................... 77

15.1. Process Definition.......................................... 77

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 10

16. Inventory Management ......................... 83

16.1. Definition ...................................................... 83

17. Physical Inventory Management ............ 99

17.1. Process Definition.......................................... 99

18. Materials Requirement Planning ...........103

18.1. Process Definition.........................................103

19. Vendor Evaluation ................................108

19.1. Process Definition.........................................108

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 13

20. Bill Passing / Invoice Verification ..........112

20.1. Process Definition.........................................112

21. GAPS / ISSUES ......................................115

22. KEY INTEGRATION AREAS .....................115

22.1. Production Planning & Control .....................115

23. REPORTS IN MM ...................................118

23.1. Purchasing Reports .......................................118

24. LIST OF ABAP DEVELOPMENTS ..............124

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 14

25. DATA MIGRATION STRATEGY ................125

25.1. Master Data .................................................125

BUSINESS BLUE PRINT DOCUMENT: MM MODULE Page 15

This Blueprint has been developed by documenting all input gathered

1.1. Objective of this Report

During the course of this phase, business process workshops were

Based on the discussions during the Business Process Workshop, various