the procurement process (mm). slide 2 introduction the procurement process involves purchasing goods...
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The Procurement Process (MM)
Slide 2
Introduction The procurement process involves
purchasing goods from vendors through an internal purchasing organization These goods might be used
for resale in a manufacturing process as packaging
Goods are received into inventory Invoices are verified
Slide 3
SAP Process Diagram
Slide 4
Materials Management Tasks Vendor management Purchasing Physical inventory
Inventory management (quantities) Inventory valuation
Invoice verification Materials management (MM) MRP Product catalogs
Slide 5
Vendors (Introduction) Vendors sell goods to us
Some information is pertinent to the company
Some applies only to a particular purchasing organization
Slide 6
Vendors (Configuration) Vendor information is divided into three
categories General data
(applicable to the client) Company code
(accounting) data Purchasing data
(applicable to the purchasing organization)
Slide 7
Vendor Data (Taxonomy) Client data (LFA1)
Client / Account number keys Contains name and address information One-time account indicator Contains the account group (KT0KK)
The vendor account group controls the transaction types possible with the vendor
Slide 8
Vendor Data (Taxonomy) Company code (LFB1)
Client / Account number / Company code keys
Reconciliation and bank account information (accounting segment)
Co/Cd gives us the link to our G/L Link to GL recon account (AKONT)
Slide 9
Vendor Data (Taxonomy) Purchasing organization (LFM1)
Client / Account number / Purchasing Organization keys
Sales person name Currency of purchase order
Slide 10
Vendor (Account Group) Every vendor is assigned to an account
group The account group defines which partner
functions are allowed Partner functions for a
vendor
Slide 11
Partner Functions (Illustration)
Slide 12
Organizational Structure (1) Purchasing Organization (PO)
An organizational unit in logistics Manages the buying activities for a plant Procures services and materials A purchasing organization can be
responsible for many plants Purchasing group
Group of buyers within a PO responsible for certain activities
Slide 13
Organizational Structure (2) Purchasing can be centralized or
decentralized Centralized (one purchasing organization
for many plants) Decentralized (many purchasing
organizations) Global bikes has a hybrid purchasing
organization Global / US / DE
Slide 14
Purchasing Organizations (GBI)
Slide 15
Organizational Structure (Plants) In plants, we make things or store
things A plant has a purchasing organization
assigned to it There is a hierarchical relationship between
the following A client has one or more plants (T001W)
A plant has one or more storage locations T001L where goods are stored (logical or physical)
A plant belongs to a valuation area (T001K) (where goods are valued)
A plant belongs to a purchasing organization
Slide 16
Plant Table T001W
• Global Bike has 5 plants• Each plant is assigned a purchasing
organization
Slide 17
Storage Location Table T001L
• Global Bike uses logical storage locations
Slide 18
Valuation Table Plants belong to a valuation area A valuation area belongs to a company
code So materials can be valued at the plant
or company code level
Slide 19
GBI Organizational Structure
Slide 20
Materials Introduction Materials are the things we buy from
vendors Supplies that we consume internally Trading goods that we buy and resell Raw materials that we use in production Semi-finished goods that we make from
raw materials and use in the production of finished goods
Finished goods that we make and sell using raw materials and semi-finished goods
Slide 21
Material Types SAP predefines several material types A material’s type dictates what can be
done with the material
Slide 22
Material Types (Configuration) Material types are configured through
the IMG (OMS2)
Slide 23
Material Types (Configuration) And stored
in table T134T
Slide 24
Material Master Data Everything our company needs to know
about the material Data is stored in functional segments
called views Basic data Sales Materials Management Accounting MRP Etc.
Slide 25
Material Views
Slide 26
Material Master (Financial) Financial data is maintained about a
material Valuation currency is the currency in which
the unit is priced Valuation class – The inventory account
associated with the material Price control
Moving average price – the average price of materials in stock
Standard price – material prices are updated periodically
Slide 27
Material Master (Financial)
Slide 28
Material Master (Purchasing) Purchasing group Goods receipt processing time
Time to move goods into inventory Delivery tolerances
Slide 29
Material Master (Purchasing)
Slide 30
Material Master (Plant) Environmental requirements Special storage containers or handling Shelf life Weight
Slide 31
Material Master (Plant)
Slide 32
Purchasing Information We purchase materials from vendors Purchasing information defines the
relationship between a vendor and a material
This information is used to create purchases from Quotations Manually
Slide 33
Purchasing Information Record Determines which materials are
supplied by which vendors Purchasing information
Pricing Lead times Availability periods Order history
Slide 34
Purchasing Documents Purchase requisition Request for quotation Purchase order Goods receipt Vendor invoice processing
Slide 35
Common Purchasing Sequence
Slide 36
Purchase Requisition An internal rather than external
document It instructs purchasing to request
specific goods be purchased to arrive at a specific time
A requisition gets created Manually Automatically through MRP, production
orders, or sales orders
Slide 37
Requisition Sourcing Requisitions must be assigned a source
of supply Internally
Get goods from our own plant or centralized warehouse
A list of sources Vendors who provide the particular
material Outlined agreements
Long-term purchasing agreements RFQ
Slide 38
Request for Quotation Use for very expensive goods or goods
with no known source It’s an invitation for a vendor to bid Quotations from vendors are legally
binding offers Price, materials, shipping details are all
defined
Slide 39
Vendor Evaluation SAP allows you to evaluate vendors
based on Price Quality Delivery
You define scoring ranges You define detailed criteria
Slide 40
Purchase Order It’s really the acceptance contract for
the vendor’s quotation A request to procure specific materials
or services and the conditions of procurement
Slide 41
Types of Purchase Orders SAP supports different types of
purchase orders Standard For services For consignment And others
Slide 42
Purchase Order Structure Remember the structure of a document
Header information Vendor / payment terms
Item overview Materials, quantities, item delivery dates
Line items Item prices
Slide 43
Purchase Order Output All is not printed Purchase orders might be sent via
E-mail EDI Fax XML
Slide 44
Goods Receipt Here is where we receive the goods
from the vendor from our purchase order
Tasks Determine whether order is correct Update purchase order history with receipt
of goods Updates physical inventory Updates G/L account (Inventory)
Slide 45
Receipt of Goods (Events) Several events fire when goods are
received Material document created Accounting documents created Inventory is updated Purchase order status is updated
Slide 46
Vendor Invoice Processing Invoices are validated against the
corresponding purchase order Discrepancies might cause the invoice to
be blocked When processed
The accounts payable liability is created Payment process is initiated for financial
accounting
Slide 47
Financial Accounting Processing Accounting pays the invoice
Payment method Bank Items
It’s possible to pay all or part of an invoice Medium
Can be done manually or automatically
Slide 48
Financial Accounting (G/L) Transactions
Invoice Receipt
Payment Program
Goods Receipt
AP
(Vendor)Dr Cr
GR / IR
$100
BankDr Cr
Inventory
$100 $100
$100
Dr Cr
Dr Cr
$100
$100
Slide 49
Material Movement (1) SAP tracks the movement of goods in,
around, and out of a warehouse They are depicted using three digit
codes 101 – goods receipt into warehouse 103 – goods receipt into GR blocked stock 122 – return delivery to vendor 231 – consumption for a sales order 561 – initial entry of stock
Slide 50
Material Movement (2) Goods can be placed into different
destinations Into the warehouse
Unrestricted use Blocked use
Quality assurance
Slide 51
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