Procurement

Processes
EGN 5620 Enterprise Systems Configuration
Fall, 2012

Procurement Processes
SAP Implementation
EGN 5620 Enterprise Systems Configuration
Fall, 2012

Business Process Integration

FI

MM

SD

Data
Master

Rules

FI
MM
SD

FI

FI

MM

MM

SD

SD
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

Business Process Integration

Purchase Process

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

Rules (review)
Rules

define the parameters for Master

Data and Transactions
Rules determine functionality for Master
Data and Transactions
Rules are relatively fixed
Rules change, when corporate policy
changes

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

Rules (review)
Material Management
Fiscal Periods
Account Groups
Material Types
Plant Parameters
Purc./Rec./Inv.
Tolerances
Automatic Account
Assignment
Reservations
Material Group
Loading Group

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2007. All
rights reserved.

Transaction Data (review)

Transaction

data are application data; each

transaction is dynamic and unique, unlike
master data and organization data which
do not change very often.
Transaction data use (is comprised of)
organization data, master data, and rules
Transaction data includes internal and
external exchanges that describe business
activities

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

Purchasing in SAP R/3 (review)

The

purchasing process resides in the Materials

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

Master

data for the purchasing process exists in

the (MM) and (FI) modules

The

purchasing process may interface with the

modules below:

Production Planning (to plan for production),

Quality Management (to check quality at receipt), and
Warehouse Management (to put away)

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

Procurement Process (Procure-to-Pay)

Purchase
Requisition

Purchase
Order
Notify
Vendor

3-Way
Match
Payment
to Vendor
Invoice
Receipt

January 2008

Vendor
Shipment
Goods
Receipt

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

Create & Save Purchase Order

Purchase Order in SAP

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

Purchase Order Structure

Header
Vendor
Purch. Org.
Purch. Org. group

Company
Date
PO Price

Item Overview
Purchase
Order
45......01

Materials
Quantities
Delivery Date

Price/UofM
Currency
Plant

Line Item
PO History
Line Price
Delivery Schedule

Tolerances
Storage

Purchase Order Structure:

Header
Header

- information specific to the entire

purchase order
Vendor
Purchase organization data
Condition (total purchase price)
Partner
Payment process
Status

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

13

Purchase Order Structure:

Line Items
Line item purchasing information
required for the item

Item category
Material id and description
Materials or services quantity
Delivery date
Net price
Currency
Plant
Storage location
Measurement unit
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

14

Purchase Order Structure:

Item Details
Material data for the item
Quantities/weights
Delivery schedule
Invoice
Conditions (Purchasing price for the item)
Delivery address
Confirmation
Condition control
Subcontracting
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

15

Purchase Order: Output Format

Printed

and mailed

E-mail
Electronic

Data Interchange (EDI)

Faxed (hardcopy or electronic)
eXtensible Markup Language (XML)

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

16

Search Purchase Orders

You

can search for the purchase order

number with
Material number,
Vendor number, etc.

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

17

MM: Goods Receipt

Notify Vendor

Purchase
Order
45......01

Vendor

Receipt

Shipment

Goods Receipt Movement Types

Movement

types - stock transactions

Goods receipt
Goods issue
Stock transfer
Movement

type determines which

Quantity fields are updated

Stock types are updated
General Ledger (G/L) stock or consumption
accounts are updated
Fields are displayed during document entry

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

19

Material Movements
When a goods movement takes place it is
represented by a Movement Type
Movement types are three-digit keys used to
represent a movement of goods
101 goods receipt into warehouse
102 - reversal of goods receipt for purchase
order into warehouse/stores
103 goods receipt into GR blocked stock
122 return delivery to vendor
501 - receipt w/o purchase order into
unrestricted-use stock

Goods Receipt
Goods

receipt is a goods movement

activity in which we accept goods into our
system.
If materials are delivered against a
purchase order we will reference that
order and SAP can
retrieve data from the PO for us to verify:
material, quantity, and so on
Update inventory G/L account automatically
Update purchase order history with the receipt
Update physical inventory

Goods Receipt Destinations

Goods

receipt into (destined for) the warehouse

Goods

receipt into consumption

Goods

receipt posted into blocked stock

SAP increases total valuated stock by the delivered quantity.

SAP updates the stock value at the same time.
SAP only updates the consumption statistics in the material
master record
SAP does not update the consumption statistics if the goods
movement posting uses the special stock types: sales order
stock type and project stock.

SAP maintains the same stock level.

SAP only records it in good receipt block stock of the purchase
order history.

Note:

If goods receipt is being posted into a storage location where

data does not yet exist for the material, SAP automatically
creates a storage location data in the material
master
record.
SAP
AG - University
Alliances and
January 2008

The Rushmore Group, LLC 2008. All

rights reserved.

22

Goods Receipt Effects

Purchase

Order (PO) history and Purchase

Order (PO) updated
Material Master - stock and value updated
Notification of goods receipt issued
(optional)
Transfer request to the Warehouse
Management module (if active)

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

23

Goods Receipt Effects

(continued)
Material

and financial documents created

and/or updated
Stock and consumption accounts updated
Inspection notification in the Quality
Management (QM) module - if active

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

24

Goods Receipt Account Postings

Inventory

account is debited at standard

price
Goods Receipt/Inventory Receipt (GR/IR)
clearing account is credited at purchase
order price
Price difference account is debited
(credited) with difference between
standard price and purchase order price

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

25

Goods Receipt Account posting

Purchase requisition
Purchase order
Goods receipt

No impact on
Financial Accounting (FI)
Materials Management (MM)
and Financial Accounting (FI)
via automatic account
assignment

Invoice Receipt Process

Tasks:
Engage

in 3-way match to validate the invoice.

Enter PO number to retrieve the PO and view
(verify)

Open dollar amount.

Quantity,
Price,
receiving date,
Vendor name

Enter

the invoice number and the dollar amount to

be paid
Simulate invoice posting
Post the invoice in SAP
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

27

3-Way Match for Payment

Purchase
Order
Payment
Program
Invoice
Receipt

Debit Credit

Verification

Goods
Receipt
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

28

Invoice Processing - 3-Way Match

Incoming Invoices are reference against a Purchase Order to
verify their content, prices, and arithmetic.
If discrepancies arise between the purchase order or goods
receipt and the invoice the system with generate a warning
or an error
Depending on system configuration the difference could cause the
system to Block the Invoice
Purchase order
- Target quantity - Target price -

Invoice receipt
- Actual price -

Goods receipt
- Actual quantity -

Invoice Verification - 3-way match

Matches

the vendors invoice to the

purchase order and the goods receipt (3rd
part of 3-way match)
Matches price and quantity
Updates the purchase order and its
history
Updates accounting information

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

30

Financial effects of Invoice Posting

When an invoice is posted, SAP shifts the
liability
From the Goods Receipt/Invoice Receipt
account (for the purchase order)
To the vendor account
Upon posting, SAP:
Updates the Purchase Order
Updates the Material Master
Creates an Accounting Document
Initiates the payment process within
Financial Accounting

Invoice Receipt Reconciliation

Account

Invoice receipt

Amount owed is
assigned and transferred to
vendor account payable

Invoice Payment
Selects

invoices for payment based on the

payment terms in the vendor master or
purchase order
Generates payment for released invoices
Updates accounting information

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

33

Accounts Payable Settlement

Process
Determines:

Which open items to be paid

When they will be paid
Which bank to make payment
Payment medium
Who will get paid

Payment

process creates a financial

accounting document to record the
transaction

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

34

Payment to Vendor
Can be done automatically or manually
Post Outgoing Payment vs. Payment Program
Elements of the Payment Transaction:
Payment Method
Bank from which they get paid
Items to be Paid
Calculate Payment Amount
Print Payment Medium
Process will create a financial accounting
document to record the transaction

Vendor Payment

Bank

Amount owed is paid to

vendor and account payable
is reduced

Procurement Processes
PEN, Inc.

EGN 5620 Enterprise Systems Configuration

Fall, 2012

600

C_ _ _
P_ _ _

xxx

P_ _ _

Check PO History (ME23)

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

39

Check PO History (continued)

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

40

Check Inventory

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
rights reserved.

41

Exercises: (Due date 10/15/2012)

100.
101.
102.
103.
104.
105.
106.
107.

Create a Purchase order for Slick Pens

Create a purchase order for premier pens
Create a purchase order for Promotions Ltd.
Create receipts for the purchase orders
Create an invoice receipts from vendors
Post payments to vendors
Display vendor line items
Create purchase outline agreement (contract) for Stock item