Vendor Master Data & Records,
and
Purchasing Information Data
EGN 5620
Enterprise Systems Configuration
Spring, 2013
Types of Buyer/Supplier Relationships

Antagonistic
◦ Parties view each other as the enemy (lose/lose)

Adversarial
◦ Each party attempts to maximize their gain
(win/lose)

Cooperative
◦ Parties understand the benefits of working
together (win/win)

Collaborative
◦ Parties look for opportunities to create value
(win/win)
January 2008
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2
Trend in Buyer/Supplier Relationships

Traditional purchasing process tends to
◦ Create an environment of mistrust and low
bidder mentality,
◦ Leading to higher total purchasing costs

Trend is
◦ Collaborative partnership
◦ To establish long term product/service supply
contact agreements
◦ Via identifying, qualifying, and cultivating
longer term suppliers/partners
January 2008
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3
Benefits of Managing the
Supply Base






Contract with only world-class suppliers
The fewer suppliers, the lower the
purchasing overhead
Purchasing can pursue strategic sourcing
issues, instead of clerical functions
Streamline the supply chain
Improve overall quality
Improve delivery performance
January 2008
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4
Process for building a supply base
1.
2.
3.
4.
5.
6.
Identify need for long term supplier
contract (agreement)
Determine specific sourcing requirements
Identify potential suppliers
Determine method of evaluating suppliers
Select supplier for contract (agreement)
Negotiate and execute contract
(agreement)
January 2008
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5
Supplier Evaluation and Selection
A critical step is to identify and evaluate
potential suppliers
 It usually involves supplier development
aiming to

◦ Develop partnership with good (product quality) suppliers
◦ Improve total cost and delivery performance of purchased
materials and services

Qualification process includes
◦ Vendor’s qualification
◦ Vendor’s product/service qualification (vendor sub-range)
January 2008
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Outline Agreement
Long-term purchase agreements
 Can be divided into the types below:

◦ Contracts
 Centrally agreed contracts
 Distributed contracts
◦ Scheduling agreements, referencing a centrally
agreed contract

Can be subject to a release (approval or
clearance) procedure
January 2008
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Contract Management

Track supplier performance using metrics
for
◦
◦
◦
◦
◦
On-time delivery
Material and/or service quality
Returned materials
Expedite issues
Pricing analysis
Resolve problems
Engage in continuous improvement
process
 Terminate/renew contract agreement


January 2008
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8
Contracting Questions
How will potential suppliers be evaluated
and selected?
 What procedures will be required to
manage the contracts (and suppliers)?
 How will performance be measured?
 How many are too many suppliers?

◦
◦
◦
◦
◦

Too many suppliers cost money
Supplier integration
Collaborative agreements
Supplier development
Without material production shuts down
What is the risk?
January 2008
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9
Creating a Contract

Is an agreement with a vendor to provide
a material or service
◦ For an agreed upon period of time
◦ At a negotiated price or quantity

Can be created manually or with reference
to purchase requisition, Request for Quote
(RFQ)/quotation etc.
January 2008
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Contract types

Quantity contract
◦ Agreement with a particular vendor to purchase
a specific quantity of materials.
 Example: Target quantity of 50,000 meters of
electrical wire at $2/meter. (MK)

Value contract
◦ Similar to quantity contract except the
agreement is to purchase an established
monetary value of materials.
 Example: Target value of $100,000 for electrical
wire. (WK)
January 2008
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11
Vendor Master Data & Records, and
Purchasing Information Data
SAP Implementation
EGN 5620
Enterprise Systems Configuration
Vendor Master Data

Includes all data required for
◦ processing business transactions and
◦ corresponding with vendors

Information is shared between the
◦ accounting and
◦ purchasing departments
January 2008
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Vendor Master Data & Records,
and Purchasing Information Data

Vendor master data and records are
maintained by both
◦ accounts payable (A/P) and
◦ purchasing

Purchasing information data are
maintained primarily by
◦ purchasing
January 2008
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Vendor Master Data

A master record must be created for
every vendor
◦ General data,
◦ Company Code data (Financial Accounting FI), and
◦ Purchasing data (Material Management - MM)
General data
Address
Control data
Payment
transactions
Company code data
Account management
Payment
transactions
January 2008
Purchasing data
Condition
Control data
Partner functions
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Vendor Master
Structures of the Data
General Data
Company Code Data
Financial Accounting (FI)
Vendor 10001
Purchasing Data (MM)
January 2008
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Vendor Master Data – General
data
Vendor attributes that sufficiently
differentiate them by their:
 Address
 Control
 Payment Transactions
 Accounting Information
 Correspondence
 Purchasing Data
 Partner Functions
January 2008
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Vendor Master
General Data – Address
General Data – Address
Address
Vendor Name
Search Term
Street address
City, Region Postal code
Country
Communication
Language
Telephone, Fax, E-Mail
January 2008
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Vendor Master- General Data –
Control Data

Account Control
• Customer (if the vendor is both a vendor and a
customer)
• Trading partner (if the vendor is a part of an
independent company)
• Authorization
• Group key (combines vendors to enhance the
search capacity)
January 2008
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Vendor Master- General Data –
Control Data

Tax Information
◦ Tax codes
 used to enter ID number of the vendor
◦ Fiscal address
◦ Country code
◦ City code

Reference Data / Area
◦ International locator number
 used to identify a legal, functional, or physical
location within a business or organizational entity
◦ Industry key
 allows similar vendors to be grouped by industry
◦ Transport zone
January 2008
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Vendor Master - General Data –
Payment Transactions

Bank Details
◦ Bank Key
 selected from a match code with company code entered
◦ Bank Account
◦ Account Holder
◦ Partner Bank Type (if vendor has more than one bank
account, then it allows to sequence those accounts)

Payment Transactions
◦ Alternative Payee
 used to enter another vendor number
◦ Instruction Key
 To control which statements are given to the banks during the
payment order
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January 2008
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21
Vendor Master – Accounting
Information

Accounting Information
◦ Reconciliation Account
Reconciliation in G/L is at the summary level and is
used to reconcile against the vendor account at the
total level, while the sub-ledger identifies line-item
data. Postings to sub-ledgers (such as accounts
receivable or accounts payable) are automatically
concurrently posted to the corresponding
reconciliation account in G/L.
◦ Sort Key
 used to select a sort for the allocation field
◦ Release Group (for payment)
 the release-approval group can be defined and
configured to allow only those in the
group
to be
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able to “release for payment
January 2008 rights reserved.
22
Vendor Master – Accounting
Information

Interest Calculation
◦ Interest Calculation Indication
 for automation interest calculation, and is
configured by accounting department
◦ Interest Calculation Frequency
 used to select a period for calculation of interest

Withholding Tax
◦ Withholding Tax Code
◦ Exemption Number
January 2008
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Field Status
Field status controls how the data will be
entered for a field when an accounting
master record is being used in a
transaction
 Determining whether a field is required,
optional, suppressed, or display only
 Field status controls are also relevant to a
specific activity — create, change, or
display

January 2008
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Field Status Variant
Fld status groupText
ZALL
All Accounts
ZBSA
Balance Sheet Accounts
ZEXP
Expense Accounts
ZGRI
Material Management (GR/IR) Accounts
ZRCN
Reconciliation Accounts
ZREV
Revenue Accounts
January 2008
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Vendor Master – Payment Transactions

Payment Data
◦ Payment Terms (cash discounts and favorable payment
periods offered by vendor)
◦ Tolerance Group (the limit to which an event can deviate)
◦ Check Double Invoice (to check for double or duplicate
invoices when they are entered)
◦ Check Cashing Time

Automatic Payment Transactions
◦ Payment Methods
◦ Alternate Payee
◦ Payment Block(prevent any open items from being paid)

Invoice Verification
◦ Tolerance Group
January 2008
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Vendor Master –
Correspondence Accounting

Dunning Data
◦ Dunning Procedure
 To remind vendors to deliver the material from the purchase orders
◦ Dunning Block
 If selected, the vendor is not for dunning run
◦ Dunning Recipient
◦ Date of Legal Dunning Procedure

Correspondence information
◦ Local Processing
◦ Accounting Clerk
◦ Account With Vendor
 used to identify the company
◦ Clerk at vendor
 the contact person at the vendor side
January 2008
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27
Vendor Master –Purchasing Data

Conditions
◦
◦
◦
◦

Order Currency
Terms of Payment
Incoterms (next slide)
Minimum Order Value
Sales Data
◦ Salesperson
◦ Telephone
◦ Account with vendor
January 2008
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Vendor Master –Purchasing Data
Incoterms
are standard trade definitions used in international
contracts. The International Chamber of Commerce based
in Paris, devised these standard trade definitions. The 13
incoterms are divided into four groups (arrival, departure,
carriage paid by seller, and carriage not paid by seller).
Group
E-Departure
D - Arrival
D - Arrival
D - Arrival
D - Arrival
D - Arrival
C- Paid
C- Paid
C- Paid
C- Paid
F - Unpaid
F - Unpaid
F - Unpaid
Incoterm
EXW
DAF
DES
DEQ
DDU
DDP
CFR
CIF
CPT
CIP
FCA
FAS
FOB
Long Name
Ex work
Delivered at Frontier
Delivered Ex Ship
Delivered Ex Quay
Delivered Duty Unpaid
Delivered Duty Paid
Cost and Freight
Cost, Insurance, Freight
Carriage Paid to
Carriage, Insurance Paid
Free Carrier
Free Alongside Ship
January 2008
Free on Board
Location
Named Place
Named Place
Port of Destination
Port of Destination
Destination
Destination
Port of Destination
Port of Destination
Destination
Destination
Named Place
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Port of Destination
29
Vendor Master –Purchasing Data
• Control Data
• Acknowledgement Required
• To indicate if acknowledgement is required upon receipt of the order
• Automatic Purchase Order
• To allow automatic issuance of purchase order
• Good receipt-based invoice verification
• To perform invoice verification based on the goods receipt amounts
• Subsequent settlement
• To allow a rebate
• Default Data Material
• Purchasing Group
• Planned Delivery Time
• Confirmation control (confirmation type and sequence)
January 2008
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Vendor Master – Purchasing Data –
Partner Functions

Partner Functions

List of (Vendor) Partner Functions
◦ Used to define the relationships between the
vendor (or customer) and the company.
◦
◦
◦
◦
◦
◦
◦
◦
AZ
CA
CP
ER
GS
OA
PI
VN
alternative payment recipient
contract address
contact person
employee responsible
goods supplier
ordering address
invoice presented by
vendor
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January 2008
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31
Vendor Master – Purchasing Data
– Account Group
Vendor masters are assigned to a vendor
account group
 Through field status maintenance, vendor
account groups can be set up for one-time
vendors, regional vendors, and internal
vendors
 The vendor account group controls both
type and number range assignment for
vendors

January 2008
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Purchasing Info Record

The purchasing info record provides
continuously updated information about
◦ the relationship of a specific material with a
specific vendor
◦ Order unit, price, price changes, tolerances,
reminder information, historic data, statistics,
texts
◦ Choice of automatic or manual updating
January 2008
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33
Source List
It stores information about where to
acquire a given material for a given period
of time
 It specifies whether this source should be
used by Materials Requirement Planning
(MRP)

January 2008
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34
Purchasing Tolerances

A tolerance limit set for allowed variance
before a warning/error message is
displayed
◦ Price variance
 Compares the price in the purchase order with the
valuation price stored in the material master
◦ Maximum cash discount
 This tolerance limit is set to assure that cash
discounts do not exceed allowable discounts
January 2008
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35
Goods Receipts Tolerances

Purchase order price quantity
◦ Two tolerance levels maintained per item
 The maximum percentage variance before a goods
receipt postings is not allowed
 A percent variance that generates a warning
message but allows posting

Moving average price variance
◦ the maximum moving average price change
allowed
January 2008
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Invoice Receipts Tolerances
Tolerance limits configured for invoice
receipts: price, quantity, and blanket
purchase orders
 The tolerances include:

◦ Amount for item with or without order
reference
◦ Percentage Over/Under Quantity Variance
◦ Exceed amount: quantity variance
◦ Blanket purchase order (value and time limit)
◦ Price variance
January 2008
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Automatic Account Assignment
Created to avoid manual postings of
financial transactions which follow goods
movements to reflect the values of
transferred materials
 Used across all modules to keep track of
the values of materials that are being
consumed (e.g., production), or transferred
into other valuation areas of the company
 Is a set of rules and master data which
enable the financial tracking of logistics
movement

January 2008
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Automatic Account Assignment
Valuation Grouping Code
Grouping Code
G001
Grouping Code
G002
Plant – P001
Plant – P004
Plant – P002
Plant – P005
Plant – P003
January 2008
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Automatic Account Assignment
Transaction Keys

Transaction Keys
◦ The transaction keys are used to determine
accounts (or posting keys for line items)
which are created automatically by the
system.
◦ The transaction keys are defined in the
system.
January 2008
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Automatic Account Assignment
Transaction Keys
 Transaction
Keys
◦ Inventory Postings
 BSX
◦ Offsetting Entry for Inventory Postings
 GBB
◦ Materials Management Small Differences
 DIF
◦ Cost (price) differences (PPV)
 PRD
◦ Goods receipt / inv. receipt clearing acct
 WRX
January 2008
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Automatic Account Assignment
Modifier

Modifier – modifies the transaction key for
various movement types
◦
◦
◦
◦
◦
Blank – Goods receipt from purchase order
with account assignment
VBR – Goods issue to consumption
VAX – Goods issue to sales – post to cost of
goods sold
AUF – Goods receipt from a production order
– post to production settlement
Etc. – Many others
January 2008
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Material Types & Valuation Classes

Account category reference:
◦ Builds the link between material types and the
valuation class(es)
Material Type
Account Category Reference
Valuation Class
ROH
0001 – Reference for Raw Materials
3000/3001/3002/3003
HIBE
0002 – Reference for Operating Supplies
3030/3031
HAWA
0005 – Reference for Trading Goods
3100
FERT
0009 – Reference for Finished Products
7920
January 2008
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Material Types & Valuation Classes
Valuation Class
3030
(Supplies)
Valuation Class
3100
(Trading Goods)
Material Type
ROH (Raw Material)
Acct Cat. Ref
0001 – Raw Materials
Valuation Class
3000
(Raw)
Valuation Class
7920
(Finished goods)
January 2008
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44
Vendor Master Data & Records, &
Purchase Information Records
PEN, Inc.
EGN 5620
Enterprise Systems Configuration
Pen Inc. : Supplies
Vendor Name
Vendor Code
City
State
Zip
code
Promotions Ltd _ _ _
Chico
CA
95929
Slick Pens _ _ _
Milwaukee
WI
53201
Premier Pens _ _ _
Baton Rouge
LA
70803
Boxes inc _ _ _
Sioux Falls
SD
57101
Tanager
Vermillion
SD
57069
Pen Inc. : Vendor Master
Pen Inc. : Purchase
Information Records
Pen Inc. : Source List
Exercises: (Due date 2/13/2013)
89. Set default values for inventory management reservations
90. Maintain purchasing tolerance limits
91. Maintain goods receipt tolerance limits
92. Maintain invoice receipt tolerance limits
94. Assign valuation area grouping
208. Create labor expense account
209. Create production order settlement account
210. Create production variance account
96. Configure automatic postings for goods movement
97. Configure automatic posting for taxes
98. Set parameters for invoice verification
99. Create default values for invoice verification
173. Create purchasing information records
173a.Create source list