Contents

Topics
Overview and Org. Structure

Invoice Verification/Valuation

Material Master

Automatic Account Determination

Purchasing Master Data

Procurement
Inventory Management/
Valuation

Overview and Organizational Structure

Definition: Logistics
NCPDM (US National Committee on Physical
Distribution Management) :
"..physical distribution management .. is ..
the integration of one or more activities
for the purpose of planning, implementing and
controlling the efficient flow of raw

materials, in-process inventory and

finished goods from point of origin to
point of consumption..."

Resource Management in Logistics

Capital

Investment

Expense/costs

long-term

Cash
short-term

Capital resources
Logistics chain
Procurement
Purchase orders
materials

Production
Warehouse

Distributions

Sales
Warehouse

services

Vendor

Sales orders
products
services

Material resources

Capacity resources

Customer

Overview of MM
Material requirements
planning

External procurement

Internal procurement

Purchasing

Production

Invoice
verification
Invoice
receipt

Warehouse
management

Goods
receipt
Inventory
management

Goods
issue

Internal and external accounting

Transfer
posting

Sales and
distribution

Master data
Material
Batch
Vendor
G/L accounts
Customer
Storage bins
.
.
.

Procurement Process
Order

Invoice

MRP

?
7

Invoice verification

Requirement determination

MM

Goods receipt and

inventory management

Materials
management

Source
determination

Order

Order follow-up

5
4

Order processing

Vendor selection

Organizational structures in R/3

Organizational units
Company
Controlling areas
Sales organizations

Purchasing organizations

Company codes
Valuation areas
Plants
Storage locations/batches/special stocks

Invent. mgmt w/o warehouse mgmt

Company Code

Plants

0001

Storage locations

0001

0002

0001

0003

0002

Invent. mgmt with Warehouse mgmt

Company Code

0001

Plants

Storage
locations

0001

0002

0088

0088

Warehouse numbers

Storage types

Storage bins

0002

001

001

05-04-03

005

05-04-04

Valuation
Client

Company codes

0001

Plants

0001

0002

0002

0003

Example for Valuation

RC

Company codes

Karachi
plant

Lahore
depot

VAL. AT CO.CODE

125/ BAG

125/ BAG

VAL. AT PLANT

125/ BAG

150/ BAG

Plants

Accounting
Client

Company codes

0001

0002

Business area
0001

Business area
0001

Business area
0002

0003

Purchasing Organization
0001

Company (Group)

Company codes

0001

Purchasing
organizations

Plants

0002

0001

0001

0002

0002

0003

0003

0004

Entities in Organizational Purchasing

Purchasing group 1

Purchasing group 2

Purchasing organization 1

Purchasing organization 2

Purchasing
organization

Plant 1

Plant 2

Plant 2

Plant 10

Material Master

Material master record

General data
Material number
Description
Units of measure
Technical data

Plant-specific data

Valuation

MRP/type
Valuation price
Planned delivery time Valuation procedure
Purchasing group
Valuated quantity
Batch indicator

Storage locationspecific data

Storage time
Stockfields

Warehouse Management system data

Sales-specific data

Unit of measure
Palletting instruction

Delivering plant
Sales texts

Forecast data
Consumption data

Units of measure
Base unit: Piece

Box
(unit of issue)

16

72

Crate

Pallet

(order unit)

(sales unit)

Material data maintenance: accounting

Valuation class

MARTAllowed values
ROH
HALB
HIBE

3000
3010
7920
3000

Maintenance of material data

Price control

Standardprice control:
Valuation of
standard price
from the material
master record

Moving average
price control:
Final delivered price
(such as purchase
order price) influences
the valuation price

Purchasing Master Data

Purchasing Master Data

The Vendor

The vendor
Purchasing

Bank

purch
ase
order

DEUTSCHE
MARK
DEUTSCHE
MARK

Payment

Material

DEUTSCHE
MARK

Vendor
Invoice

order

account

?
=
Goods receipt

Invoice verification

Organizational levels of vendor master record

General data

Purchasing
organization data

Company code
001
data
Company code

Vendor master record

General data
Address
Communication

Purchasing data
Order currency
Incoterms
Minimum order value

Accounting data
Bank data
Payment transactions
Account management

Valid
for the whole group

Valid
for one purchasing
organization

Valid
for the whole group or
for one company code

Account group
One-time
account
Account group

Type of number
assignment

Interval for number

assignment

Field selection

Control account
Invoice

You
Vendor
Invoice

Enter invoice

G/L accounting

Accounts payable

Payables

Vendor A
"Parallel"

Vendor

Purchasing Master Data

Info Record

Purchasing info records

Piece
Piece
%
%
Conditions
Conditions

USD
USD

Material

Info record
Vendor A

Info record

Stock material M1

Info record
Consumable
material M2
Info record
Vendor B

Info record

Service S1

Data in the purchasing info record

General data

Texts

Vendor data
Origin data
Order unit

Control data

Prices and
conditions

Delivery time
Minimum quantity
Tolerances

Gross price
Discounts
Freight

Price history
Purchasing statistics
Changes

Pricing
Pricing procedure RM000

22
33

44

1.Price
2.Discount

PB00
RA00

11

Purchase order
Vendor 123
Purchasing organization 2000
Item 10
PB00

120 pcs
Price

$99

Condition type:
PB00
Access sequence: PB01
Access sequence: PB01
1. Outline agreement
2. Vendor/material/
organizational level
3. Vendor/material group/
organizational level
Records for condition type
No valid record exists
Valid record exists

55

Scale
$100 for
$99 for
$98 for

1 pcs
100 pcs
200 pcs

Conditions
Pricing procedure
Condition type

Gross price
Discount %
Net price:
Fixed freight
charge +
Effective price:

PB00
RA01
FRA1

Calculation type
Scale basis
Price/quantity
scale

Purchasing Master Data

Source List

Source list

1.1.95 - 30.6.95

1.7.95 - 31.12.95

Vendor 1 allowed
Vendor 2 allowed
Vendor 3 allowed

Vendor 1 fixed

Source list

Material M1
Plant 0001

Procurement

Procurement
Procurement Environment

External procurement environment

Source list

Requirements
determination

RFQs

Purchase
Quotations
Quota
arrangement

Outline
agreement

requisition

Source
determination
Vendor
selection

Purchase
order

Goods receipt

Piece
Piece
%
%
Conditions
Conditions
USD
USD
Purchase
order
history

Info record

Invoice
receipt

Purchasing documents
Purchase
requisition

Purchase requisition

RFQ

Quotation

Quotation

Quotation

RFQ

Purch.order

Purchase order

31.
Contract

Release order

Scheduling
agreement

1.

Structure of a purchasing document

Document
header
ocument
ocument
General
General data
data
statistics
statistics
Messages
Messages
Conditions
Conditions

Item 1

Additional
data for item 1
Purchase
order history

Item 2

Additional
data for item 2
...

...

General data
Conditions
Texts
Schedule line

...

Purchasing
document

Item category
Purchasing
document

Item
Account assign.
category
category

Account assignment type

Purchasing
document
A

Item
type

Acct.assign.
type

Procurement for stock

Purchasing
document(s)
Item:
no account
assignment
category

Warehouse
Goods
receipt

Goods
issue

Material

Vendor

Production

Procurement for consumption

Purchasing
document(s)
Item:
with account
assignment
category

Goods
receipt

Production

Vendor
Material

Procurement
Consumption-driven MRP

Consumption-driven MRP
Requirements
planning
Net requirements calc.
A
Material

Lot sizing

Forecasting

Material master

Scheduling

Purchasing

Inventory
management

Materials planning and control procedures

Requirements
planning

Consumption-based

Deterministic MRP

VM, VB

VV

Reorder point
procedure

Stochastic

Stock level

Consumption

Time

Time

Reorder Point Procedure

Lot size

Stock

Reorder level

Safety stock

Reorder point

Delivery date

Replenishment
lead time

Time

Net Requirements Calculation in the Reorder Point

Procedure
Shortage

Purchase order proposal

to the amount of
the lot size

Reorder level
Purchase order
Fixed planned
orders
Fixed purchase
requisition
Warehouse stock

Comparison
Comparison

Safety Stock and Reorder Level

Stock

Reorder
level

Daily
x Replenishment
lead time

Safety stock
Replenishment
lead time
Service level
MAD

Replenishment
lead time

Time

Net Requirements Calculation in Forecast

Based Plng.
Shortage
Lot size
Forecast requirements

Fixed inward movements

e.g. purchase orders
Purchase orders proposals
Planned orders
Purchase requisitions
Warehouse stock

Comparison
Comparison

Safety stock

Lot sizing procedures

Exact lot
size
Static
procedure

Lot sizing procedures

Periodic
procedure

Fixed lot
size
Replenish to
maximum stock
level

Optimum
procedure

Part period
balancing

...

Groff procedure

Static Lot-sizing Procedures

Exact lot size

Quantity
Inward
movements
Outward
movements

Planned warehouse stock =

Fixed lot size

Replenish to
maximum stock level

Time

Periodic Lot-sizing Procedures

Quantity

Time
Period length

Inward
movements
Outward
movements

Period length

Dynamic Planning Calculation

Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price :
Lot fixed costs:
Storage costs percentage :
Requirement
date
06.07.1994
13.07.1994
20.07.1994
27.07.1994

Req.
quantity
1000
1000
1000
1000

Lot size
1000
2000
3000
4000

$ 20
$ 100
10 %
Fixed costs Storage costs
100

Optimum

0
38.36
76.71
115.07

Part Period Balancing

Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price :
Lot fixed costs:
Storage costs percentage :
Requirement
date
06.07.1994
13.07.1994
20.07.1994
27.07.1994

Req.
quantity
1000
1000
1000
1000

Lot size
1000
2000
3000
4000

Fixed
costs
100

$ 20
$ 100
10 %
Storage
costs
0
38.36
76.71
115.07

Optimum

Total storage
costs
0
38.36
115.07
198.78

Least Unit Cost Procedure

Req. x Price x Storage costs x Time in storage
Storage costs =
100 x 365
Price :
Lot fixed costs :
Storage costs percentage :
Requirement
date
06.07.1994
13.07.1994
20.07.1994
27.07.1994

Req.
quantity
1000
1000
1000
1000

Lot size
1000
2000
3000
4000

Fixed
costs
100

$ 20
$ 100
10 %
Storage
costs
0
38.36
76.71
115.07

Total
costs
100
138.36
215.07
330.14
Optimum

Unit
costs
0.10
0.07
0.11
0.08

Scheduling in the case of external

procurement
Forward scheduling

11

22
Replenishment lead time

Today + 1

GR processing time

Purch. order
delivery date

MRP
delivery date

Backward scheduling

22

Replenishment lead time

Start /
release date

11

GR processing time

Purch.order
delivery date

MRP
delivery date

The requirements planning process

Planning mark-out
Process
relevant to
MRP

MRP

31.

1.

Material requirements
planning

Order

Planned order
Opening period of
materials planning/
control

Purchasing

Purchase
requisition

Purpose of the forecast

A
Material

MRP type

VM

VV

Forecast

Forecast

Reorder level
Safety stock

Forecast requirements

Procurement
Processing Purchase Requisitions

Purchase requisition
Department
MRP

Requisition

Requisition

Purchasing

Purchase requisition processing

MRP

Direct entry

Purchase requisition
Determine source of supply

Release

Vendor

o.k.
Allocate and process
RFQ

Purchase
order

Release
Release
order
order

Procurement
Processing Vendor Inquiry / Quotations

Request for quotation/ quotation

RFQ 1

RFQ 2

Requirements known.
Procure from which
source?

?
Vendor 1

Quotation 1

Vendor 2

Quotation 2

Price comparison list

Purchase
order

Rejection

Entering an RFQ
11

22

Item list
Vendor 1

Inquiry 1

Vendor 2

Inquiry 2

Issuing output
Purchasing
document

Output
Printer

Reprint

EDI

Reminder

Fax

Rejection

Order
acknowledgement check

Processing Quotations: Example

11 Enter price and pricing conditions

Vendor A
Quotation for
RFQ 1
Item 10
Gross price: 400/t
Discount:
$50

Vendor B
Quotation for
RFQ 2
Item 10
Gross price: 400/t
Surcharge: 50%

Vendor C
Quotation for
RFQ 3
Item 10
Gross price: 400/t
Fixed costs: $40

22
Compare quotations using price comparison list
350/t

Steel 2 t

480/t

520/t

450/t

Price
Quotation 1

Quotation 2

Quotation 3

33
Create info record or reject quotation
Vendor A
- Order Mat.
Qty
Price
Steel

2t

350/t

Vendor C, B
- RejectionThank you for your
offer. Unfortunately,
we cannot place an
order at this time .....

Mean value
quotation

Procurement
Processing Purchase Orders

Processing Purchase Orders

Purchase
requisition

RFQ

Reference
document

Contract

?
Vendor

Order history
Purchase
order

One-time vendor

Pcs
Pcs

%
%

Conditions
Conditions

$$

Info record

Contract
Contract
request

Reference
RFQ

Reference
contract

Purchase
requisition

Contract

Release order

11

22
Vendor

Scheduling Agreements
Purchase
requisition

RFQ

Reference
scheduling
agreement

Purchase
requisition

Einstellungen
Einstellungen
Schedule
lines

Scheduling
agreement

11

Vendor

22

PROCUREMENT OF EXTERNAL SERVICES

Inventory Management/Valuation

Inventory Management
Goods Movements

Inventory management
Old system

Vendor

In-house
production

Goods receipt

Transfer posting
Warehouse 1

Warehouse 2

Goods issue

Scrapping

Consumption

Documents for goods movements

Warehouse
A
Material

Goods movement

Material
document

Accounting
document

Material Valuation Levels

Material valuation levels

0001

Company code

Plant
Valuation area

Split Valuation: Structure

Plant

Batch

0001

Material 1

Plant

Storage
location

Valuation
Valuation area
Material
Valuation category
Quantity
Mvg. av. price

Stor. loc. 0001

Quantity 30

Italy
Quantity 10

Stor. loc. 0002

Quantity 70

France
Quantity 20

0001
1
H
100
5.20

Valuation type
Italy

Valuation type
France

Quantity 40
V - price 4.00

Quantity 60
S - price 6.00

Italy
Quantity 30

France
Quantity 40

Updating the stock situation

Stock situation
On a quantity basis

On a value basis

Material master
Special stocks

G/L accounts

Stock fields per

plant, storage location
and special stock

Debits and credits

per company code,
period and, possibly,
business area

Entering material documents

Material document item

Account determination
Consumption update
Movement type

Quantity update
Indicator for printout
Field selection

Analyses in inventory management

Analyses

Stocks
overviews
Stock per material

Material
movement list

Inventory
control
ABC-Analyses

Plant stock availability

Stock value

Reqs./stock list

Range of coverage

Warehouse stock list

Slow-moving items/
inventory turnover
Standard analyses

Inventory Management
Processing Goods Receipts with Purchase
Order Reference

Purchase Order Views in Inventory

Management
Purchase order
Header

Statistics
General

Vendor
Texts

$ Conditions
Conditions
Output
01/01/95
Schedule
10/01/95
lines
30/03/95

Items

Purchase order
history

Account assignment

Changes

Texts

Determining the purchase order during GR

Goods receipt for

purchase order
Manual

Purchase
Manuell
order

Matchcode
List of open purchase orders by
- vendor
- material
- delivery plant

Stock types for goods receipt

Goods receipt blocked stock

Unrestricted-use stock
Warehouse
Vendor

Co
ns
um
pt
ion

Stock in quality inspection

Blocked stock

Account assignment object

Cost center
Order
......

Posting procedure for goods receipt

(example)
Stock account
Stock value

GR/IR clearing

Price differences

Update for goods receipt

Inventory Management
Processing Goods Receipt w/o Reference

GR w/o Reference to a Purch. Order or

Production Order

Preplanning

without purchase order

without production order

Goods receipt
Initial entry of stock balance
Without purchase order
Without production order
Goods receipt of by-products
Delivery free of charge
Returns from customer

Inventory Management
Processing Stock Transfer / Transfer Postings

Transfer posting
Transfer posting

Miscellaneous
transfer postings

Stock transfer

From plant
to plant

From storage
location to
storage
location

From
material
to material

From QM to
unrestricted use

From
consignm.
stores to
warehouse

Valuation in the Case of Stock Transfer

Issuing plant

Standardprice 2.00
Moving average
price 2.00

Stock
Stock plant
plant 01
01
(( aa ))
(( bb ))

200.00
200.00
200.00
200.00

100 pcs

(a)
(a)
(b)
(b)

Expense
Expense // revenue
revenue
from
from stock
stock transfer
transfer
100.00
100.00

Receiving plant

Standardprice 3.00
Any moving
average price

Stock
Stock plant
plant 02
02
300.00
300.00
200.00
200.00

Inventory Management
Processing Goods Issues

Goods issues
From warehouse
Goods issue

Consumption

Issue

Cost center

Sampling

Asset

Scrap

Sales
Order

From consignment
stores

Effects of goods issue

Material document

Stock quantity
Consumption statistics
...

Accounting document

Point of consumption:
Cost center
Order
...

G/L account.
Stock account
Consumption account
...
Goods issue
Reservation
Order

Warehouse mgmt:
Transfer order
Quality management:
Inspection lot

Posting method for goods issue

Stock account
Stock value

Update on goods issue

Consumption account

Special Stocks and Special Procurement Types

Consignment
Subcontracting
Stock Transfer with Stock Transport Order
Third party processing
Returnable Transport Packaging
Pipeline handling
Sales order stock
Project Stock

Companys Own Special Stock

Stock of material provided to Vendor
Consignment stock at Customer
Returnable packaging stock at Customer

Companys Own Special Stock

Managed at plant level

Stock types
Unrestricted use stock
Quality inspection stock

Externally-Owned Special Stocks

Vendor Consignment
Returnable Transport Packaging
Sales order stock
Project Stock

Externally-Owned Special Stocks

Managed at Storage
location level

Stock Types
Unrestricted Use
stock
Quality inspection
Stock
Blocked stock

Inventory Management
Physical Inventory

Physical Inventory Procedures

Periodic inventory
Continuous inventory
Cycle counting
Inventory sampling

Physical Inventory
Can be carried out for Companys own stock and
Special Stock
Inventory for Companys own stock and Special stock
must be taken separately in different physical documents
Physical inventory can be taken for
Unrestricted-use stock in the warehouse
Quality inspection stock
Blocked stock

Physical inventory procedure

Create physical 1
inventory document

Batch-Input

Set blocking
indicator

Batch-Input

Print physical
inventory
document

4
Physical
inventory document
5
List of
differences

Post differences

Arrange
recount

5a

Change
count

5b

Invoice Verification / Valuation

Types of invoice verification

Purchase
order
Purchase
order

or

or
Vendor
invoice

Goods receipt

Invoice verification

Invoice verification environment

Purchase
order
G/L accounts

Assets

---Goods receipt
Material master

Vendor master

Conditions

Invoice
verification

Invoice
document

Cost centers

Purchase order

Material master

Posting an invoice
Invoice
relating to
purchase
order

GR/R account

Post
A
XX

Doc. No. 51000123

Vendor
GR/R

100100+

Vendor account

B
XX

Material master
Moving average
price
Value

Purch. order history

Goods receipts
Down payments
Invoices

Variances
Invoice
Goods receipt

WE 40

Purchase
order
$5

Quantity

50 pieces
Invoice

Price

at $6
Invoice
10 pieces

Goods receipt
10
10 pcs
pcs == 200g
200g

= 250 g

Order
price quantity

Purchase
order
= 2 kg
10 pieces at
$20/kg

Invoice

Purchase
order
Planned
delivery date 04/12/95

Invoice

10 pieces

= 2.5 kg

Date
26/11/95

Tax
Material value
+ input tax

Company

Vendor

Material value
+Tax on sales/
Purchases

KMT

A
A

Customer

Tax payable

Tax office

Invoice receipt postings

GR/R clearing

Input VAT

Stock account
Stock value

) (

Vendor
(control acct.)

Price differences

) (

Postings at Standard Price

GR / IR clearing account

Stock account
(2)

200.00

(3)

Exp. / revenue Price difference

(2)

40.00

20.00

240.00

Vendor / general ledger

(3)

Event

240.00 (2)

220.00

Stock

Total value

Standard
price

Moving av.
price

(1)
(2)

Initial situation
GR for purch. order: 100 @ 2.40

100
200

200.00
400.00

2.00
2.00

2.00
2.20

(3)

IR for purch. order: 100 @ 2.20

200

400.00

2.00

2.10

Purchase order price

2.40 / pc

Invoice price

2.20 / pc

( 3)

Postings at Moving Average Price

Stock account
(2)
(4)

240.00
240.00

20.00 ( 3 )
550.00 ( 5 )
10.00 ( 6 )

Exp.. / revenue Price difference

GR / IR clearing account
(3)

240.00

( 6)

240.00

240.00 ( 2 )
240.00 ( 4 )

Raw material consumption

( 5 ) 550.00

Vendor / general ledger

10.00 ( 6 )

Event

220.00 ( 3 )
220.00 ( 6 )

Stock

Total value

Moving av. price

(1)

Initial situation

100

200.00

2.00

(2)

GR for purch. order: 100 @ 2.40

200

440.00

2.20

(3)

IR for purch. order: 100 @ 2.20

200

420.00

2.10

(4)

GR for purch. order: 100 @ 2.40

300

660.00

2.20

(5)

Goods issue: 250 @ 2.20

50

110.00

2.20

(6)

IR for purch. order: 100 @ 2.20

50

100.00

2.00

INVOICING PLANS
Facility to schedule Invoicing dates for planned
procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan

Account Determination Procedures for

Automatic Postings in MM

Types of Account Determinations

SD

FI
CO

MM

R/3AM
Client/Server
QA
ABAP/4 WF PS
PM
PP

HR

MM

Movement Type based

Transactions
Non-Movement Type
based Transactions

IS

SD

Cond. Technique

Grouping Organizational Levels for Account Determination

Case: valuation area = plant
Valuation
grouping
code

Plant

Company code

0001

0001

0001

0002

0002

0003

0003

0002

Chart of accounts

GKR

0004
0003

0005

0004

IKR

Grouping of Material Type - Valuation Class

Material type

Account category
reference

Valuation
class

0001

7900

0002

3000
3010
3020
3030
3040

FERT
HALB
HAWA
.
.
.
ROH1

0003

ROH2

3100
0004

ROH3
...

3200

Grouping of Materials for Account Determination

Option 1:
ROH
Mat 1

Option 2

Acct.
Acct. 11

Mat 2

HIBE
Mat 3
Mat 4

FERT
Mat 5
Mat 6

ROH

ROH

Mat 1
Mat 2

Acct.
Acct. 22

Option 3

Mat 1
Acct.
Acct. 11

HIBE
Mat 3
Mat 4

Acct.
Acct. 33

FERT
Mat 5
Mat 6

Acct.
Acct. 33

Mat 2

Acct.
Acct. 11
Acct.
Acct. 22

Procedure Part 1: Value String - Processing Keys

Inventory Management

Invoice verification

Material

Invoice
verification
?
=

Transaction

Value String
(Generalized
posting record)

BSX
BSX

WRX
WRX

300100
300100

191100
191100

Processing keys

G/L account number

KBS
KBS

425000
425000

Procedure Part 2: Processing Key - Rules

1
Processing keys
for debit/credit posting

Transaction

Processing Key
(Transaction)
Chart of accounts

Rules

Parameters on which
account allocation
depends

Procedure Part 3: Rules - Account Allocation

Processing Key
(Selection of
transaction)
Selection of
chart of accounts

(Valuation grouping
code)
(Account grouping
code)
(Valuation class)

Rules specify
account determination
key

Account
number

Account Determination Procedure: Overview

Type of
Transaction
Movement
type based
Transaction

Non-movement type based

Transaction

Material
Master
"Type of
Material"
Material
Type

Step 1 or 2
Value
Posting String

Plant

Qty.
Posting String
Account
Categ. Reference

Company Code

Step 3

Processing
Key (GBB)

Rules
Account
modification

Valuation
Class

Val. Grouping
Code

Processing
Key (AUF)
Step 4

Legend
Information derived from Transaction type
Information derived from Material Master
Information derived from the organiz. Structure
Main Customizing area

G/L Account

Chart of
Account

Automatic Posting: Maintenance of the Settings

1
Selection of the
valuation grouping code

2
Selection of the posting transaction

Allocation of the G/L account number(s)

per valuation class
(and account grouping code)