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
Rules
FI
MM
SD
January 2008
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3
Business Process Integration
Purchase Process
January 2008
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4
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
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5
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
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6
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
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7
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
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8
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
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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
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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
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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
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15
Purchase Order: Output Format





Printed and mailed
E-mail
Electronic Data Interchange (EDI)
Faxed (hardcopy or electronic)
eXtensible Markup Language (XML)
January 2008
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16
Search Purchase Orders

You can search for the purchase order
number with
◦ Material number,
◦ Vendor number, etc.
January 2008
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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
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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
◦ SAP increases total valuated stock by the delivered quantity.
◦ SAP updates the stock value at the same time.

Goods receipt into consumption
◦ 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.

Goods receipt posted into blocked 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
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creates a storage location data in the material
master
record.
January 2008
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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
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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
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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
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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
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3-Way Match for Payment
Purchase
Order
Payment
Program
Invoice
Receipt
Debit Credit
Verification
Goods
Receipt
January 2008
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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 vendor’s 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
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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
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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
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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_ _ _
3
Check PO History (ME23)
January 2008
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39
Check PO History (continued)
January 2008
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40
Check Inventory
January 2008
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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