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1 ENTERPRISE STRUCTURE
CLIENT
Is a commercial Organizational Unit within R/3 system with its own data, Master
records and set of tables.
- It is the highest level element of all Organizational unit
- Represented by 3 digit alphanumeric key
COMPANY CODE
It is the smallest Organizational unit within R/3 system for which can have an
independent accounting department within external accounting. Legal entity
- It is having balance sheets, Profit & Loss accounting required by the law
- Represented by 4 digit alphanumeric key.
PLANT
Is an organizational logistic unit that structures the enterprise from the perspective
of production, procurement, Plant maintenance, Material Planning
- It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant.
- Represented by 4 digit alphanumeric key
STORAGE LOCATION
Is an Organizational unit that allows the differentiation of material stocks within the
Plant
- Inventory management on quantity basis is carried out at storage location level.
- Physical Inventory is also carried out at storage location level.
VALUATION AREA
Is an organizational level at which material is valuated.
- R/3 system recommends Plant level
- Valuation at Plant level is mandatory if you are using Production planning/ CO/
Retail system
- Valuation area selection is a fundamental setting in customization and very difficult
to REVERSE
PURCHASE ORGANIZATION
Is an organizational level that negotiates conditions of purchase with Vendors for 1
or more Plant.
- It is legally responsible for completing purchasing contracts
CENTRALISED PURCHASE ORGANIZATION
Should be attached to Company Code or otherwise Plant specific (attached to Plants). We
can have cross-company code OR Cross-plant Purchase Organizations
PURCHASING GROUPS
Is the key for buyer or group of buyers responsible for certain specific purchasing
activities (eg. Mech/ Elect, etc.)
Organizational Unit – Organizational grouping of an enterprise.
Transaction – Application programs which executes business processes in R/3
system
Document – Data record generated through a transaction
Material Master – Central data object in SAP R/3 system.
Configuring is the method of doing customizing
CONFIGURE to CUSTOMIZE
2 BASIC PROCUREMENT PROCESS (GENERAL)
Flow
1. Determination of requirements
2. Source determination
3. Vendor selection
4. Purchase Order processing
5. Purchase Order monitoring
6. Goods Receipt
7. Invoice Verification
8. Payment processing (FI)
Purchase Order : A formal request to Vendor to supply certain goods / services under the
stated conditions
When we enter an invoice against a PO/ GR, the system checks the price, rate, payment
terms with respect to Purchase Order and Quantity w.r.to GR
While entering the GR, system checks whether the material is as per PO or not w.r.to
Quantity, Shelf life, etc.
Several GRs can be entered for a PO item in one operation
The type of Invoice verification (PO Based / GR Based) is to be fixed in PO , Invoice Tab
If MRP Procedure is set, PR will be generated automatically during MRP run.
Purchasing value Key
for auto-reminders and supply tolerances. It is fixed in the purchasing view of the material
master. It is managed at CLIENT LEVEL.
Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline
Agreement (Item Tab)
Item Category
Defines whether an item requires or can have
- A material number
- An account assignment
- Goods Receipt
- Invoice Receipt
Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing)
- Standard – Blank – materials that are procured externally
- Subcontracting – L – Finished product ordered from a Vendor (maintained at
STORAGE LOCATION level)
- Consignment – K – Vendor makes the material available and manage a
consignment stock (maintained at PLANT Level)
- Stock Transfer – U –
- Third Party – S –
- Text
MANDATORY REQUIREMENTS (GENERAL)
Material Account Stock Goods Invoice
ITEM CATEGORY Number Assignment Receipt Receipt
Standard BLANK YES YES
Consignment K YES YES YES
Subcontracting L YES YES YES
Stock Transfer U YES YES YES
Third Party S YES YES
Limit/ Blanket B YES YES
ZERO VALUE POs
Generally used for samples. But generally used monitoring the delivery. FOC indicator is
set in item level. Invoice receipt is cancelled because of this tick
Variable Order unit can be specified in material master record and purchasing info record.
In PO,
Inco-terms are specified at Header level
Shipping Instructions can be at Item and header level (As a Text in header level and
Delivery tab at item level)
Delivery instructions can be at Item and header level. (In texts tab)
Changeability of PO
1. If PO is already sent to Vendor – CAN change the PO and send a copy to the
Vendor
2. If Vendor is delivered material against PO – Only LIMITED changes like texts are
possible (We can not change qty)
3. If Goods received and payment made – NO changes possible.
Invoicing Plan
System creates invoice automatically as per Plan and release them for payment
For automatic settlement for periodic invoicing plan, ERS must be selected in
Vendor Master
In partial invoicing plan, provision of down payment in the Billing or Invoicing
plan rule date
3 MASTER DATA
VENDOR MASTER
Vendor Master Data is maintained at
- General - CLIENT LEVEL INFORMATIONS
Addresses
- Company code level – COMPANY CODE LEVEL INFORMATIONS
Accounting related - Payment terms, payees,
- Purchasing Organization level -
Related to purchasing – Currency, Inco-terms, VSR, etc
We can BLOCK a Vendor Master Record (XK05) - Complete
If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST –
ME01
Automatic PO generation is in purchasing data.
ACCOUNT GROUP of a Vendor
Control functions of Vendor account group are –
1. Status of the Vendor ( One time Vendor or routine vendor)
2. Field selection in the Vendor Master Record
3. Partner schemas
4. Vendor Sub range
5. Type of number assignment (external or internal)
Single Master Record is maintained for one time Vendor – Account group is CPD
Other routine vendors are generally in LIEF
Vendor Reconciliation account
It’s a G/L account which maps Company’s liability towards several vendors.
Depending on account grouping selected, system assigns a number (can enter manually
also). This Vendor number is used in sub-ledger number in Financial Accounting.
When posting an invoice, system uses the reconciliation account automatically from
Vendor master record.
A vendor account code is created against Company code and Purchase Organization, so its
account is unique in all Plants under the Company code.
Pre-requisite for Vendor Partner roles
1. Vendor master record for each partner separately
2. Specified in customizing – Partner roles selected
Controls of Document type
- Screen sequence and screen layout (Screen variant)
- Number ranges of document
MATERIAL MASTER
Material Master is structured for various organizational levels.
Data at CLIENT / COMPANY CODE LEVEL (table – MARA)
Data Valid for the total Company. Basic data
Material No., Material group, Unit of measure, Conversion factors, Purchasing
value key, etc
Data at COMPANY CODE LEVEL
Accounting Data, Costing data if valuation is at Company code
Data at PLANT LEVEL (Table – MARC)
Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc.
Data at STORAGE LOCATION LEVEL
Storage bin, picking area, etc.
MATERIAL NUMBER
18 character alpha numeric key
- Basic data is CLIENT SPECIFIC
- Some Purchasing data are PLANT Specific – Pur group, GR processing time, etc.
- Purchasing Value key is maintained at CLIENT LEVEL
- If we are not specifying a Plant at Organizational level, only data at higher level
(Client) will be displayed
- Language selection is additional data of Material Master.
The standard system uses a BUFFER when assigning numbers to the material master
records
The amount of numbers for the buffer is 10. Using this buffer and having the material
number assigned before saving a new number, the master can be lead to a gaps in the
number assignment. However if you reset the number level of an interval back to the initial
value, R/3 system fills these gaps when you create the new materials
MATERIAL TYPE
Materials with same characteristics are grouped together in Material types- Raw Material,
Finished Goods, etc.
Represented by 4 digit alphanumeric codes
Material type is having following CONTROL functions
1. The type of number assignment (Internal or external)
2. The permitted number ranges
3. Screen layout and screen sequence
4. User specific views
5. Procurement type (Internal / external)
6. Up-dating of Quantity and Value in master records / FI
7. Account determination on goods movements
8. Price control
Material type CANNOT be changed for materials whose Purchase Order is made.
Special Material types available in std SAP
Additionals (VKHM) - requirements like effective presentation to Customs
Eg. – Care labels
Advertising media (WERB) – presentation for advertising. Eg. – leaflets/ catalogues
Apparels (MODE)
Empties (LEER) – Type of RTP generally subject to deposit of money. Can have
several components together in BOM. Eg. – empty bottle/ empty crate, etc. (SD)
Full Products (VOLL) – counter part of empties.
Operating supplies (HIBE) – Procured externally and required for the manufacture
of other products.
Packing Materials (VERP) – Transport with goods/ come with goods of FOC. It is
managed at quantity and value in Material master even though it is free of cost.
Used in HU management
Material filed selection reference
A reference control key defines which control string applies to the relevant influencing
factor
We can maintain reference key for
1. Material type
2. Plant
3. Industry sector in customizing
Filed selection group
Grouping of master records according to the filed option (Hide/ Display/ Optional/
reqrd. entry)
Field selection against TRANSACTION is also to be defined for filed option
Link rules of each transaction against the material type
SAP defined link rules CAN NOT be changed
Screen/ views can be customized as per Company code
INDUSTRY SECTOR
Represented by 1 digit alphanumeric key
The control functions of Industry sector are
- Screen selection and its sequence
- Industry specific fields
If we assigned a material to an Industry sector, we CANNOT change it later.
Unit of measure
- Base unit of measure
- Purchasing Unit, Sales Unit, Issue unit
- Order Price Unit (OPU)
Main fields in Purchasing View are
- Purchasing Value key
- Automatic PO Selection
- Source list requirement
- Quota Management
Accounting View
Valuation Class – determines to which stock accounts are to be updated on goods
movements
Price Control – Standard or Moving Average Price
Valuation of material depends on the price control set in Material Master.
Standard Price – All stock postings will be at standard price and in case of any
deviation posting the difference to Price difference account
Moving Average Price (MAP or v)
GR valuation will be at PO price and Goods Issue at Moving average price
MAP updates on goods movements.
In case of any difference with respect PO price, the difference amount will be
posted to the stock account (on total stock at that moment). If sufficient stock is not
available to distribute, system will post the difference to Price difference account.
Extending/ adding a View to an existing material master – MM50
Then select the required view, Select
B – Accounting
D – MRP
E – Purchasing
K – Basic Data
C – Classification
G – Costing
A – Work Scheduling
4 PROCUREMENT OF STOCK MATERIAL
PURCHASING – GENERAL
Centralized Purchasing
With one Purchasing Orgn
1 Purchase Orgn responsible for a number of Company codes
Distributed Purchasing
Number of Purchase Orgn for different Plants
1 Purchase Orgn responsible for 1 Plant
Company specific
1 Purchase Orgn responsible for 1 company code
Reference Purchase Organization
Pre-requisites for reference purchase organization:
1. Both the purchase organizations (reference and normal) are to be maintained in
Organization structure
2. The reference purchase Orgn can be maintained WITH or WITHOUT Company
code and Plant
3. Assign reference purchase Orgn as Reference purchase orgn in customizing
Data in MM Purchasing
Material Master – 1. Client related data 2. Plant related data 3. Storage location related data
Vendor Master – 1. General data 2. Company code related data(accounting) 3. Purchasing
related data
Master records in Purchasing
1. Purchasing Info Record
2. Source List
3. Quota Management
4. Conditions
5. Vendor Evaluation
The linking of document type made in customizing (in purchasing) are:
Document type to allowed item categories
Allowed item categories to Link PR document type
The conditions dependencies on time (TD & TID) are fixed at document type level at
customizing.
PURCHASE REQUISITION
PR can be created – Manual, or Auto from PP/ PS/ PM/ PPC
Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in
purchasing
Purchase requisitions are processed by item-by-item
PR can be created for material with master record and without master record also. But if it
is without master record, it will be with Account assignment and Text & material group
PR changeability
Before changing PR, check
1. Already PO is issued or not – If issued, NOT changeable
2. Already released or not (release procedure) – If released limited changes possible.
Depend on changeability indicator
3. Created by MRP – NO Changes possible (Quantity can be changed while
processing. But the left out will shown as open against the same PR)
Flagging of PR items are “CLOSED”
The item of a PR is regarded as closed, if the requested quantity is ordered in a PO
If we are creating PR manually, the items will not be considered in MRP.
RFQ / QUOTATIONS
Single document for RFQ and Quotation
Can be created with respect to:
Manual
Via reference document
Reference to PR
Reference to Outline Agreement
RFQ/ Quotations are Created and maintained at purchasing Organization level.
For RFQ – NO COMPANY CODE / PLANT
Collective Number: For linking a number of RFQs. It is in the header of RFQ.
It is a 10 digit alphanumeric number.
Creation of RFQ
Initial screen – Quotation deadline, Purchase Orgn & Purchase group are fixed
Header details – Collective number is assigned, Vendor addresses are maintained.
Item overview – Material, Qty & deadline for each item
We cannot enter an account assignment in RFQ
Quotation processing
Vendor’s price and price conditions
We can enter the prices and conditions of each vendor in RFQ.
Comparison list
We can save the quotation data in purchasing info record by giving the tick in check
box ‘Info update’
We can set the rejection indicator for unsuccessful vendors.
The mean value of all quotations can be saved as ‘Market Price” in the quotation
comparison list. This market price will be used as the basis for valuating the price
level of a vendor and is called up during Vendor Evaluation.
Conditions in Purchasing
Conditions can be maintained for – Contract/ Sch. Agreements/ PO level. Conditions can
be maintained in Info record. There are extended conditions also.
PURCHASING INFO RECORD
Info records are created for
1. Standard
2. Subcontracting
3. Pipeline
4. Consignment,
Where the system copies the data in purchasing
Certain concise information of a Vendor and material.
If we are not maintaining Material in Info record, system will store this information
against a material group.
Info record contains :
1. Current and future price with pricing conditions for Plant/ Purchase
organization
2. Delivery date and tolerance limits. Availability period – During which,
vendor can supply the material
3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a
regular Vendor here.
4. Texts that can be maintained for Info record, which can be called up in PO
5. Number of last Purchasing document/ PO (In Purchasing data 2)
We can fix the PO text in Info record
1. If only info record text is to be fixed in PO, set NO M text option
2. If you are not selecting the above option, system will display both the texts
in PO
Info update indicator WILL NOT update the info record. It will update the
information.
The updated details can be seen at Info list (ME1L/M/P)
These data will be displayed as default data while creating the purchasing
documents. It can be edited at purchasing document level.
Info record can be created
- manually
- automatically from Quotation / Outline agreements / Purchase orders, if info update
indicator is selected while creation
If you want to maintain conditions in Info record, you have to maintain it
MANUALLY.
Auto-updated info records will NOT BE HAVING the pricing conditions
(ONLY final price will be retained)
Info update indicator
If we are fixing this info update indicator, system will copy the data and conditions
maintained.
If we fix
A – System will update the data WITH or WITHOUT PLANT
B – System will update WITH PLANT
C – System will update WITHOUT PLANT
For Quotations/ Contracts/ Scheduling Agreements and Conventional POs
- If BLANK selected, Info record will not be updated
o A – If an info record exists at Plant level, it is updated. Otherwise, info record at
Purchase Organization will be updated
o B – If Plant conditions are allowed for the Plant, an info record at Plant got updated
o C - IF Plant conditions are not necessary, for the Plant, info record at Purchase
Organization level will be updated.
The info update Indicator can be set at PO
If we fix
BLANK – No update
TICK – System will update the info record as per the settings in
Customizing ( node –Conditions > Define condition at Plant level)
BLANK – Conditions allowed WITH or WITHOUT PLANT
+ - Only PLANT BASED Conditions will be updated
- - NO-PLANT BASED CONDITIONS are allowed.
For Enjoy transactions (PO- ME21N)
If just one (With or without Plant) exists, record will updated.
If NO info record exists, PLANT Level info record will be CREATED
If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info
record will be updated
Structure of Info Record
1. General Data – Vendor data, Order unit, etc.
2. Purchasing Organization Data 1 –
Control data – Delivery time, Minimum quantity, etc
Price & Conditions – Gross price, discount, etc.
Statistics – PO History, PO statistics, etc.
Text – Texts are maintained here, can be called up in PO
3. Purchase Organization / Plant Data
Control, Price, statistics, texts
4. Purchase Organization data 2
Here you will get the reference document number on which the info record
is created/ updated. This option is available only if the record is created with
reference to a purchasing document.
In other words, if an info record is created manually, the last PO data will be
updated in Info record at purchasing data 2
Purchasing Info Record is valid for PLANT / PURCHASE ORGANIZATION
While creating a PO, system first search for info record with PLAN&PURCHASE
ORGANIZATION combination for price, if it is not available in the system, it will
search for data with PURCHASE ORGANIZATION only.
Purchasing Info record is suggesting prices in 2 ways :
a. Conditions – conditions are included, if info record is prepared manually.
b. If info record does not contain conditions, then the system will select the
price of last Purchase Order.
We can define the conditions of last PO by customizing
a. Are always copied
b. Not to be copied when prices are entered manually
c. Never copied
Info Record CANNOT be deleted by normal archiving program run. It can be deleted by
the system administrator
Data can be displayed from Info record screen through ENVIRONMENT are
Material
Vendor
RFQ/ Quotation
QM Info record
Last Document
Quotation price history
Order price history
We can have 4 different info record for a material & vendor – for standard/ Consignment/
Subcontracting/ Pipeline
TEXTS
Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts
Item Texts - Item Text (CAN copy from Info Record/ Material Master)
- Delivery Text
Inserting texts from material master record
\
CONDITIONS
Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc..
We can create conditions in
- Quotations
- Info Records
- Outline agreements
- Purchase Orders
Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT
System will ask for VALIDITY for TIME DEPENDENT conditions.
Time dependent Time Independent
Conditions Conditions
1. Info Record YES NO
2. Quotation Depends on Doc Type Depends on Doc Type
3. Sch. Agreement Depends on Doc Type Depends on Doc Type
4. Contract YES NO
5. Purchase Order NO YES
We can specify both time dependent and Time Independent conditions at Header
level and Item level EXCEPT Info Record. The setting is at Document level
In Info record, conditions are stored at Info record level.
For Time Dependent conditions, we can create
1. Supplementary conditions
2. Validity Periods
3. Scales
4. Upper and Lower Limits
If we are creating a new condition type, should be assigned to an access sequence to link
with Pricing Procedure
If the conditions are on header level of the document, then it is applicable for items in that
document, but if it is at item level, it is applicable for that particular item only.
Conditions in Purchase Order DEPEND on DOCUMENT TYPE.
Conditions are prepared in a PO are at the level of document type
Conditions can be created for a Vendor/ for a Plant/ for Purchasing.
Header conditions – Applicable for all items as per % or Value
Item conditions – applicable for specific items - % or Value
Group conditions – Applicable to all items but distributed proportionately as per the
quantity/ value
CONDITION TECHNIQUE
Up to 3.1H version, Time independent conditions are referred as Document conditions and
Time dependent conditions are referred as Master conditions.
Condition Type and condition category - Example
Condition category Assigned to condition type (Std system)
H- Base Value PB00 (this must exist in all pricing procedure
except stock transfer)
B- Delivery Cost FRA1
N –Non de-ductable input tax NAVS
E – Cash Discount SKTO
G – Moving average Price P101
Condition types used in standard system (examples)
PB00 -Price - Gross Price (With access sequence-0002)
RB00 - Discount/ Surcharge - Absolute discount
ZB00 - Discount/ Surcharge – Absolute Surcharge
FRB1 - Discount/ Surcharge – Absolute Freight
ZOA1 - Discount/ Surcharge - % Duty amount Customs
SKTO - Discount/ Surcharge – Cash discount
NAVS -Taxes - Non de-ductable input taxes
Standard pricing procedure in SAP is RM000 used for Purchasing
Purchase Requisition Prices
If the material is WITH material master record, the price will be displayed for
Purchase requisition from the material master, even if we are maintaining a separate
price in Info record. But the vendor will be populated from the Info record.
If the material is WITHOUT material master record, we have to maintain the price
manually during the creation of PR, if required.
While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can
be referred for other plants also.
VENDOR CONFIRMATIONS
Vendor confirmations can be of
Order acknowledgements
Loading or Transport confirmations
Shipping Notifications
ASN – Advanced Shipping Note
5 PROCUREMENT OF CONSUMABLE MATERIALS
Account assignment category determines which category of accounts is to be debited in
G/L accounting.
Categories are:
A – Asset
K – Cost centre
P – Project
F – Production Order
C – Sales Order
U – Unknown
Consumable materials that are procured directly for consumption against an account
assignment object
It is NOT managed in value based in Inventory management
System updates the consumption in material master, if master data is available.
Examples are NLAG/ UNBW/ DIEN
NALG – Non Stock Material
UNBW – Non-valuated stock material
DIEN – Services procured externally
If we select consumable material as material type in Material Master, it controls
- Procurement type (Internal / External)
- Account postings
- Requirement in Inventory Management
Consumption is directly posted to consumption account
Inventory Management is NOT based on Value basis
Stock Vs Consumable
Stock Consumable
1. Entry of Material Number Required Possible but not required
2. Account assignment not required Mandatory
3. Account postings to Stock account Consumption account
4. Mat. Master up-dation Qty, Value& Qty & Consumption
Consumption are updated
5. MAP Adjusted Not applicable
Purchase Requisition for Consumable Material
Can be by manual or though automatic- through MRP run/ PM order/ Sales order
Can use account assignment U (Unknown) in PR. But to be confirmed in PO
If material master is available, system will take the price from it otherwise we have
to enter manually.
Multiple account assignment is possible in PR
BLANK – No multiple account assignment
1 – Distribution on Quantity basis
2 – Distribution on Value basis.
Goods Receipts are NON-VALUATED for consumable goods.
6 EXTERNAL SERVICES PROCUREMENT
Procurement cycle – Flow
1. Determination of requirements
2. Creation of service specification
3. Source Determination
4. Vendor selection
5. RFQ (Bid evaluation)
6. Comparison of Quotations
7. Creation of service Order
8. Purchase Order monitoring
9. Service Entry
10. Service acceptance
11. Invoice verification
12. Release of Payments
Service Master
Master record creation- description of service, UoM, etc.
Can attach price through conditions
Conditions can be maintained at
- At Service level (Market price/ Estimate)
- At Service and Vendor level
- At service, Vendor and Plant level
Service is procured for direct consumption.
Account assignment ‘U’ (Unknown) is accepted at PR level, not in PO
Materials are procured at Item Level, but Service is procured BELOW item level.
Item category ‘D’ is used for Service POs
Provision of unplanned expenses and total limit at item level
Release procedure is possible for Service Entry Sheet
Service Entry Sheet is made with respect to PO
Invoice verification also done with respect to PO
PO History is updated after Invoice verification
Service Entry sheet updates FI/ CO.
Complex service specification can format through outline levels
Can assign any number of service lines to each item level
AC03 – Creation of Services, ML 81N – Service Entry Sheet
Account assignment in services
Specifying the account assignment for the services at the time of their initial procurement is
optional. Account assignment category is at document item level.
-‘U’ (Unknown is accepted
- Multiple account assignment is accepted
- Distribution is also possible
Invoice verification of services (SES)
In Vendor master we have to specify, GR based IV/ ERS/ Service based IV
Global Percentage Bidding (GPB)
It is a procedure of bidding used in procurement of external services ONLY.
Pre-requisites are
1. Document type AB in RFQ
2. Calculation schema – MS0002 (with condition types –KR01 –
header discount & KZ01 – Header Surcharges
Process
1. Create RFQ with document type –AB.
Maintain price per service and send to Vendors
2. Vendors will not quote any price for each service, But they will indicate a %
addition or Deletion with respect to the price shown in RFQ.
This % can be at Per Outline level or for the uppermost outline level (total)
- INVOICING PLAN and BLANKET POs are possible with Services
OUTLINE AGREEMENTS
It’s a long term purchasing agreement with a Vendor concerning the supply of materials
or the performance of services according to the pre-determined conditions.
These are valid for a certain period of time and cover a pre-defined total purchase
QUANTITY and VALUE
Outline Agreements - 1. Contracts
a. Value (WK)
b. Quantity (MK)
c. Centrally agreed Contracts
d. Distributed Contracts
2. Scheduling Agreements
a. LA
b. LPA
c. LU
Contracts are with Release Orders and Scheduling agreements are with Delivery
schedule
Release Order is a Purchase Order reference to a Contract
CONTRACTS
NO DATES
PR > RFQ > Contracts (manual)
VALIDITY PERIOD is to be indicated in the Header
In Quantity contract, the target quantity and purchasing conditions are to be
maintained for EACH item
Item category M & W are permitted in Contracts (M- Material Unknown & W-
Material group)
Item category M – Similar materials with SAME PRICE, but different material
numbers. Material numbers are to be specified in release order.
Item Category W – Material belonging to the same material group, but with
DIFFERENT PRICE.
W can be used in VALUE CONTRACTS ONLY
M & W are NOT ALLOWED in Release Orders
Account assignment –U (unknown) is permitted in contracts but NOT in release
orders
Release order documentation contains the statistics for an item. It is updated
automatically and used for monitoring the contract
Single and multiple account assignments are allowed in contracts
Centrally agreed contracts – For many Plants in a purchase organization. In this case DO
NOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise
against the contract. Partner functions are also possible.
Using Plant conditions, we can specify separates prices and conditions for each receiving
Plants.
Distributed Contracts (DK) – Contracts at different Plants operating on different (ERP)
systems which are accessible through ALE
SCHEDULING AGREEMENTS
Long term agreement with a vendor to supply material as per pre-defined condition.
Pre-defined PERIOD and QUANTIRY (NO VALUE)
PR > RFQ > Scheduling Agreement.
Centrally agreed S.As can be prepared.
M, W and U are not allowed in Scheduling Agreements
Details of delivery date and quantity are maintained through Delivery schedules
Schedule line can be created automatically through MRP run, but for this
1. Define Scheduling agreement as a Source of supply for the material.
2. Auto schedule line selection source list Select option 2 in MRP Column (in
Me01)
3. Auto schedule line must be allowed in MRP system
Types of Scheduling Agreements:
1. Type LA – Document type - LP
Agreement + Delivery Schedule
2. Type LPA – Document type – LPA
a) Agreement + Delivery Schedule + Forecast Schedule + Release
documentation
b) Agreement + Delivery schedule + Forecast schedule + Release
documentation + JIT Schedule + Release documentation
3. Type – LU – Stock transfer scheduling agreement
FRC (forecasting) Schedule gives a medium term overview of requirements
JIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/
Hourly basis.
Release documentation requirement is SET by fixing release documentation
indicator in Customizing
For JIT scheduling, JIT is Indicator to be set in Material Master record
We can post a Goods receipt against a scheduling agreement directly in MIGO
Creation Profile
1. Optional data from Vendor master record
2. Release creation profile is for each scheduling item
3. It is customized on a Plant specific basis
4. It determines the periodicity of SA release and aggregation of schedule line
quantities
5. Tolerance limits are in release creation profile (RCP) and set it during
customizing
Aggregation schedule – Total scenario in a specific time period
Firm, Trade off & Planning Zones –
1. FIRM ZONE – Immediate – Vendor can go ahead with manufacturing. The
Purchaser is liable for total quantity
2. TRADE OFF ZONE – Near future requirements. Vendor can go ahead with
mobilization of requirements. But the liability is limited to the purchased raw
materials/ semi finished goods
3. PLANNING ZONE – No liability by the Purchaser
Firm and trade off zones details are forwarded to the Vendor along with FRC and JIT
Schedules for getting more clarity of Scheduling Agreement.
The procedure is
A. At IMG level –Maintain release creation profile against your Plant. Here you are going
to maintain
1. General Parameters like Creation strategy for JIT & FRC Schedules
2. Aggregation Horizon – Daily or monthly aggregation in Days for both JIT & FRC
3. Creation periodicity – Daily/ Weekly/ Monthly for JIT & FRC
4. Tolerance profile, etc
B. Transaction level
1) Create Scheduling Agreement – ME31L. Attach the creation profile in the Scheduling
Agreement at Item > More functions > Additional data
Please see that the Material Master is having tick for JIT Schedule &
2) Maintain Delivery schedule – ME 38
3) Create the release documentation – ME84. Select FRC & JIT Schedule and process and
see that FRC and JIT Schedules are created
4) If you want to see the schedules, go to ME9E
SOURCE DETERMINATION
Source can be a Vendor or an Outline agreement.
By Source list, we are defining preferred or allowed sources for a material.
By Quota, we are specifying the share of total requirement over a specified PERIOD from
each SOURCE.
Source determination at PR level
If the material is with master record, during creation of PR, Prices will be taken
from the material Master, EVEN IF, we maintain a different price in Info record.
But the vendor will be selected from Info record
Case. Source list is maintained for Vendor A & Info record is for Vendor B
While creation of PR, system will select A as the source, if the source list selection
is opted in the material Master, otherwise, B will be selected.
For fixing a Vendor in a source list, the info record for that Vendor is TO BE
maintained.
If we have maintained a source list for a material we have to select that Vendor for
placement of PO. So check the requirement display before maintaining a Source list
for a material.
INFO RECORD is a MUST for automatic source determination at PR level.
Source determination function is available ONLY for PR
SOURCE LIST
Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for
a PERIOD (Validity)
MRP Indicator in Source list considered while material Planning
If source list requirement is defined at Plant level, then system will not allow
creating a purchasing document without Source list.
Source list can be for a Material (at Material Master) or Plant (at customizing)
Source List analysis – List out materials which are NOT having source list in the
Plant
ONLY ONE FIXED Source is allowed fro a material within a Validity period
Source list can be maintained –Manually/ From Outline Agreement / From
Purchasing Info Record/ Automatic generation.
Source list can be made referral (of another material)
If the selection of source list is auto, we can have single or collective procedure.
Can be from Out line agreement/ Info record
We can create a Source list for a MATERIAL GROUP (for contract – W)
EXCLUSION INDICATOR – Set for excluding a source in the source list
7 INVENTORY MANAGEMENT
MOVEMENT TYPE
- A 3 digit key used to differentiate between goods movements in R/3 system.
- It is having several control functions in Inventory Management
1. Plays a central role in automatic account determination
2. Determine which stock or consumption accounts are to be updated in FI.
3. Determines the format of the screen where we enter documents and how the
quantity fields are updated.
Valuated Good Receipts
Auto creation of storage location- If it is set in customizing for Plant & Movement type, the
storage data is created automatically during the first goods movement.
Auto creation of storage location happens if the given quantity is to be posted in to normal
storage location.
Auto storage location will NOT be created for goods movements in SPECIAL
STOCKS
Stock types
1. Unrestricted – Available for MRP & Available for withdrawal
2. Quality Inspection – Available for MRP but NOT available for withdrawals
3. Blocked – NOT available for MRP & Withdrawal
4. Restricted stock. -As per the batch requirement in Batch Master
Stock Indicators are the indicators for differentiate between stock types on goods receipt
1 – Unrestricted stock
2 – Quality Inspection stock
4 – Blocked stock
STOCKS
During goods receipt, a material and accounting documents are generated and it updates
the Purchase order history
After GR is posted against a particular movement type, the Quantity, Material,
Movement type and Organizational level CAN NOT BE CHNAGED. If any errors,
reverse or cancel the document
We can post withdrawals & Consumption ONLY from UNRESTRICTED Stock.
If we want to withdraw material from QI/ blocked, we have to first transfer post it to
Unrestricted and then withdraw it.
Plant stock & Storage location stocks views will appear automatically in material
master after booking material movements.
Stock Transfer Vs Transfer Posting
Stock Transfer involves physical movement of goods but transfer posting need not be
In transfer posting ONLY Material document is generated (NO Accounting
document)
Movement type is the key control factor in both the cases.
Quality
Inspection 322
350
349 321
Blocked 343 UN Restricted
344
Document principle applies to Inventory management.
A document is the proof of that transaction involving stock changes has taken place.
Documents are stored in the system
Material Document Vs Accounting Document
A material document consists of Header (Posting date, created by, etc..) and item
level details like quantity, material, storage location, etc
Accounting document consists of Header (General data like posting date, posting
period, currency, etc.) and item level details like G/L account number, amount, etc.
Material document and accounting documents are INDEPENDENT documents
We can identify the material document by the material document number and
document year. The Accounting documents are identified by the accounting
document number, company code and a Fiscal year.
In Accounting document, the number ranges are assigned to a Document type.
But for material document, the number ranges are assigned to a
TRANSACTION / EVENT TYPE
Goods Movement Transaction/Even type Document type
GR for PO WE WE or WN
GR for others WF WE
GI/ TP/ Others WA WA
GI for deliveries WL WL
We cannot change a document once it is posted. Some additional information like
texts can be added. So we use reversal for correction
EFFECTS OF A GOODS RECEIPT
1. Stock Value updated in the Material Master
2. Material and Accounting documents are generated
3. Creation of an Inspection lot, if the material is Quality activated
4. Stock and consumption accounts are updated
5. Transfer request is created, if Warehouse Management is activated
6. Purchase Order and PO History is updated. RFQ, PR also updated
Stock Overview
For each organizational level, Client/ Co code/ Plant/ Storage location / Batch/
Special stocks
It’s a STATIC display of stocks. Planned data are not available
VALUATION CLASS
It is the grouping of materials to determine which stock accounts are to be updated
upon goods movements
For automatic account determination, R/3 system works with Valuation Class.
It is fixed at Accounting view of material master
Material Valuation is depends on Price Control (Standard or MAP) and goods
movements (GR/GI/TP)
GR/ IR clearing account depends on the PO price
Changing of the price control from standard to MAP is always possible.
Delivery costs – Planned and unplanned
Unplanned delivery costs are directly booked through MIRO, so the valuation done at GR
is NOT Correct if the transaction is having an unplanned delivery cost
Goods receipt can be for with reference to
1. Purchase Order
2. Order
3. Others
The stock display will be as follows
GR from Stock detail as per system
Purchase Order Open PO quantity
Order Open order quantity
Reservation Planned receipts
ENJOY Transaction – MIGO
MIGO transaction is combining following 7 transactions in single code
1. MB01 - GR for known PO
2. MB0A – GR for Unknown PO
3. MBRL – Return Delivery
4. MBSF – Release of blocked stock
5. MBNL – Subsequent delivery
6. MBST – Cancel Material document for GR
7. MB02/ 03– Change & Display Material document
GR of Blocked Stock (Movement type –103)
It is the conditional acceptance of goods. While we post the material into GR blocked
stock-
1. Quantity is posted to Stock
2. Material is NOT VALUATED
3. The transaction will be available in PO History
4. The material is NOT available for MRP
GR STOCK Unrestricted use (101)
Quality Inspection (101+X)
Valuated Blocked (101+S)
GR Blocked stock (103)
When GR blocked stock is released (MBSF), then it is valuated automatically. It will have
the same effects of an ordinary GR.
While accepting the GR blocked stock to Plant unrestricted stock(105), you
can refer the material document of earlier GR or Purchase Order
Goods Receipt in to QI stock (101 +X)
Pre-requisites
1. Quality inspection indicator in material master
2. QI indicator in Additional data in PO (Header). It will automatically copied from
material master
3. Set QI indicator in GR at item level
Possible movements for QI stocks
1. Transfer to Unrestricted stock and its reversal
2. Transfer to GR blocked stock & its reversal
3. Transfer to Blocked stock and its reversal
4. Transfer to Sampling and its reversal
5. Return delivery to Vendor and its re-receipt
OTHER GOODS RECEIPTS
1. Initial entry of stock balances – Movement type – 561/ 563/ 565
2. External Good receipts without PO (Movement type –501)
3. Internal Goods receipts without production order (Movement type –521)
4. Good receipts for By-products (Movement type – 544/542)
5. Good receipt for Free of Charge (FOC)- Movement type -511
6. Returns from customers (Movement type – 451)
DELIVERY COMPLETED INDICATOR
The delivery completed indicators are fixed in PO & GR.
After setting the delivery completed indicator at GR, the open order quantity
becomes ZERO. But still we can post new GRs against it. But the open order
quantity WILL NOT CHANGE.
If we change the quantity of a delivery after posting the GR, the system DOES
NOT CANCEL the delivery completed indicator automatically. But it issues a
warning message.
If an order quantity/ return delivery quantity reduces the delivered quantity below
the tolerance limit, the system cancels the delivery completed indicator. But issues a
message “ Delivery completed indicator has been reset”. Thereafter we have to
manage it manually.
Standard R/3 system does not accept Over deliveries
For accept over deliveries, you have to select unlimited delivery in PO or properly
set the over delivery tolerance
GRs valuated on the basis of the incoming quantities in the Order price unit
Invoice verification is also based on the GR qty in the order price unit.
If you want to restrict a GR upto a certain date, enter that date in Latest GR date in
“Delivery” tab of item
RETURN DELIVERY
Return delivery can be created with reference to a material document or Purchase Order
Receipt by Return Substitute
Delivery by Delivery
101 122 123
103 124 125
105 122 123
If you receive a substitute delivery, after you have returned the goods to a Vendor, it is
ADVISABLE to reference the associated return delivery by using a reverse posting when
you post a new receipt
122- Return delivery from Warehouse
It results into 1. Material document created
2. Stock accounts updated
3. Purchase Order update
124 – Return delivery from GR Blocked stock
It results ONLY in creation of a material document as a proof of return
Return delivery in GR based Invoice verification
Uses the material document to reverse
If invoices are settled and then you are returning, please ensure that
Invoices should be cancelled
In customizing, for each MOVEMENT TYPE, you can specify Reversal and return
delivery movement type and transactions in case of GR based IV
Difference between Reversal & Return delivery
Reason for movement is optional in the case of reversal, but mandatory in return
delivery.
Return delivery slip is not required for reversal but mandatory for return delivery.
Both operate on different movement types.
Movement type –161
It is used to assign in a PO so that while posting the GR, the qty in the GR will be
automatically removed from the stock. It is generally used for exchange of materials.
Quantity Distribution facility at GR
We can distribute the incoming quantity in GR to
1. To several storage locations
2. To several Movement types
3. To several stock types
4. To several Batches
Note – Batch selection list DOES NOT work with SPECIAL STOCKS
Goods Receipt of Non-valuated goods
The receipt of goods to unrestricted stock. We can directly issue it for consumption
Automatic PO generation at GR
We can configure the system in such a way that system creates PO in background
during the receipt of Goods which is not having any PO. We can do the invoice
verification afterwards.
In Customizing for organizational structure, the plant must be assigned a purchasing
organization in the step Standard purchasing organization - assign plant so that the
system can determine the purchasing info records.
Automatic POs are allowed only for movement type 101 & 161 in standard system.
The customization for these movement types are to be there for automatic PO
creation
System valuates the GR with the price defined in purchasing info record.
MIGO transaction is supporting automatic PO. It is available in MB01
In Vendor Master the purchase group default data for material to be maintained
Automatic PO is only possible for valuated goods
Pre-requisites for automatic PO are;
1. Selection in Material Master
2. Selection in Vendor master
3. Info record should be available
4. Valuated good receipt
5. Automatic PO selection for Plant & Movement types (101& 161)
If a PO is generated in the background for the return item (movement type –161).
This PO is required if you want to carry out invoice verification for the credit
memos, issued by the Vendor for this return
GOODS ISSUE
TO
FROM
Ware House To Cost Center
Consignment GOODS ISSUE To Asset
GOODS ISSUE
Pipe Line To Sales
To Order
To Sampling
To scrapping
Sampling Materials are treated as scrapped. But the value of sampling material
posted from the material stock account to the Quality Inspection stock account.
But while scrapping material, the material will be posted to Scrap account and it
debits to the cost center.
Issue to sampling and scrapping are different.
We can change the movement type while goods issue.
Goods can be issued to reservation and BOM
While goods issue, we can have collective entry with different account assignment
also.
System WILL NOT update the consumption statistics in Material Master, if you
post goods movements using special stock types – Sales Order Stock and Project
Stock
We can set final issue indicator while issuing against a reservation
Stock determination is a function that can be used on a cross-application basis.
We CAN issue goods from Quality inspection and Blocked stock ONLY for
SCRAPPING or SAMPLING
Reversing a planned goods issue
Can be reversed with reference to a Material Document OR to a reservation
A Material document (Reversal) will be created
An accounting document will be created
Stock will be updated (increased)
Consumption will be reduced
While issuing a material for scrapping,
- Relevant stock reduced
- Value posted from stock account to scrap account
- Price is taken from material master
o Movement type Consumption for
201 Cost center
221 Project
231 Sales Order
241 Assets
251 Sales
261 Production order
281 Network
291 All account assignments
GR/ GI SLIP numbering
We can have GR/GI slip number in addition to the Material and accounting
document numbers
It is a statutory requirement for some countries like Italy
It can be assigned Internally/ externally by each Plant or Storage Location or
Movement type
Options – 1) Include the filed for the GR/GI slip number in the SAP script form
2) Call up form –MB-XAB using transaction MBXA
Then customize it “Print report” SAPLMBXA in print control
Serial numbers should be active for the Plant
In stock transfer (Plant to Plant) of material with serial number is only possible if
the same profile is assigned to the material in both the Plants
Returns to Vendor
Movement type Functionality
102 Reversal of GR due to any clerical mistake
122 Returns to Vendor – due to any reason like damage
124 Returns to Vendor – from GR blocked stock
161 Returns to vendor – For the exchange of another material
NOTE : To carryout stock transfer from Plant to Plant for a material that is subject
to SPLIT VALUATION, you HAVE TO USE 1STEP or STO
SPECIAL STOCKS
Special stocks that are managed separately becoz they are not belonging to your company.
The special stocks and special procurement types are of 2 types
1. Company owned special stocks
2. Externally owned special stocks.
1. Company owned special stocks
The special stocks that are owned by the Company stored with Vendor or customer.
1. Stock material provided to Vendor/ subcontractor
2. Consignment stock at Customer
3. Returnable packaging at Customer
These Materials are managed at PLANT LEVEL. NOT at Storage location level. Only 2
types of stocks are possible. Unrestricted / Quality Inspection
2. Externally owned special stocks
Stocks owned by Vendor/ Customer and stocked at your place.
1. Vendor Consignment
2. RTP (returnable Transport Packaging
3. Sales Order Stock
4. Project Stock
These materials are managed at STORAGE LOCATION LEVEL
All the 3 stock types, UR/ Blocked/ QI are allowed
8 SPECIAL PROCUREMENT TYPES
1. Consignment (K)
2. Sub Contracting (L)
3. Stock Transfer using Stock Transport Order (U)
4. Third Party Processing (S)
5. RTP (R)
6. Pipeline Handling (P)
CONSIGNMENT PROCESS
When buying goods as a Consignment, the ordered goods still belong to Vendor, even after
delivery. The goods become your property ONLY after they are consumed. The quantities
consumed are periodically settled.
The Ownership of the material is with Vendor but storing at client’s premises
The stocks are NOT VALUATED, but available for MRP
The ownership of the material transfers to the client ONLY after issuing/
transferring it from the consignment stock
Consignment liabilities are settled periodically (thru MRKO) based on the
consumption statement by the vendor
The prices of consignment stocks are defined in Info record and maintained
periodically
We can use the conditions in Purchasing
CAN maintain ANY unit of measure with proper definition of conversion factor
in material master
Physical Inventory of Consignment stock is possible
Consignment stocks are managed at STORAGE LOCATION level
There will NOT be ANY VALUE in consignment purchase orders
In PO, No Price, No conditions, No Invoice receipt requirement but GR
requirement
Stock movements are possible.
Consignment stocks can be displayed by Tcode – MB54
We can issue the consignment material from Consignment stock using movement
type – 201+K
Item category ‘K’ is used for consignments
We can post GRs for consignment WITH or WITHOUT reference of a PO. But
the consignment prices are to be maintained before GR
Consignment stocks can be managed at Unrestricted/ QI/ blocked and we can do
the transfer posting between them.
But we can withdraw the consignment from UNRESTRICTED ONLY
Goods Issue from consignment unrestricted stock results in a liability to the
consignment vendor
We can enter the invoice for consignment WITHOUT reference to a PO. Debits
are posted to the “Liabilities from consignment stores” G/L account to which the
credits were posted upon “Goods issue from consignment” G/L account
Consignment info record- The info record of consignment with different Plants
(different prices at each plant) is having a SINGLE INFO RECORD number
Info record should be created BEFORE creating a PO/ GR.
Process of Consignment Procurement & Settlement
1. Creation of Info record – ME11
2. Create Purchase Order – ME21N
Standard procedure.
Item category –K
GR to consignment store
Invoice Receipt is NOT required
No Price in PO
3. Goods Receipt – MIGO – Receipt of Material to consignment store
The movement type – 101+K
Please note that the GR can be with or without GR. Item will be in special stock
while posting the GR
3. Transfer Posting – MB1B. Transferring the material to own stock
The movement type – 411K (the step is Not Mandatory)
4. Goods Issue – MIGO
Goods Issue from consignment store to movement types – 201/231/ 241/ 251/ 261
Note – We can directly issue the material from consignment stock using movement type
201+K, without transferring to company’s stock.
Process of Physical Inventory of Consignment
1. Creation of Physical Inventory document – In the create screen enter ‘K’ in special
stock field
2. Enter Physical Inventory document
3. Post the differences – If you want to include QI/ blocked stock, enter a new material
number and enter the relevant stock type in the filed of “STY” and post the
difference as per your settings
SUBCONTRACTING PROCESS
The vendor receives the components from which he produces the finished product
mentioned in the PO. The components are listed in the PO and can also be determined by
the system via BOM
You order an end product from a vendor and specify in the PO with components,
you will send to vendor to manufacture the end product
Issue of components to the vendor and good receipt of finished product with
consumption detail of components
Vendor invoice is posted against the purchase order
A subsequent adjustment for excess/ under consumed components can be made.
Item category ’L’ is used in the PO, and several components can be attached to the
Po
We can enter the components by manual or thru BOM explosion
System automatically creates reservation for the MRP relevant components
The purchase order price will be the price of subcontracting services
Conditions of subcontracting can be stored in Purchasing info record for
subcontracting
We can link services specification with subcontracting items
The components with subcontractor (after issuing it) are managed as a special stock
to the vendor. This stock is VALUATED and AVAILABLE for MRP as the
components are your property. It is not allocated to a specific storage location becoz
its still your property
We can monitor subcontracting stock by evaluations
Goods issues are made, 1. With respect to a Subcontracting PO 2. From the list of
all the material of a subcontracting vendor
We can do the process of subcontracting thru SD. Through delivery and shipping
Good receipts are posted with respect to Subcontracting order item
Consumption of components posted at GR and subsequent settlement is possible
with respect to PO
Invoice verification is same that of standard process.
The account postings at subcontracting at GR & invoice verification are;
SUBCONTRACTING SCENARIO
Order - SF Material
Component - Raw Material
A. At Goods Receipt
1. Stock account of SF Product - Debited @ (Order price + Valuation price of SF product)
2. Cost of Goods Manufactured - Credited @ (Order price + Valuation price of SF product)
3. Stock account of Raw Material - Credited @ Valuation price of Raw material
4. Consumption Account - Debited @ Valuation Price of Raw Material
5. GR/ IR Clearing Account - Credited @ Order Price
6. External Labor Account - Debited @ Order price
B. At Invoice Receipt
1) If there is NO deviation Price in Vendor invoice
Invoice Value = Order price
1. GR/ IR Clearing Account - Debited @ Order Price
2. Vendor account - Credited @ Invoice Price (Order price)
2) Invoice Value = Order price + deviation price from PO
1. Stock account of SF Product - Debited @ deviation amount in invoice
2. Cost of Goods Manufactured - Credited @ deviation amount in invoice
3. GR/ IR Clearing Account - Debited @ Order Price
4. External Labor Account - Debited @ deviation amount in invoice
5. Vendor account - Credited @ Invoice Price (Order price + deviation amount from PO)
i. Stock account fro Finished goods -
ii. Stock account of raw material
iii. GR/ IR clearing account
iv. Vendor account
v. Cost of goods manufactured
vi. Consumption account (for components)
vii. External labor account
We can enter the material that is to be produced as a subcontract item in the
scheduling agreement
By the issue of components (thru transfer posting), the stock of components WILL
NOT reduce from your stock. The stock will be produced at the time of receipt of
Goods receipt of finished product
CS01 is used for creating BOM/ components
1. The order of the end product in PO. The components are attached to the item n PO
2. In Inventory management, components are posted to the stock of material provided to
the vendor
3. Vendor supplies the end product with consumption details of components and it will
posted to the system while GR’
4. Any balance (+ or -) of components are done at subsequent adjustment transaction
5. Vendor submit his invoice for the services rendered and invoice will be posted in MIRO
Process of Subcontracting Process
1. Creation of Info Record – ME11. Service with price of service
2. Creation of Purchase Order – ME21N – Creation of PO with Item category ‘L’.
Attach components to the item in PO
3. Transfer Posting – MB1B – Transfer the components from your store to the
subcontractor using the movement type – 541
4. Goods Receipt – MIGO – receive the end product (and components) to Stock by
using the movement type – 101 for main material and 543 for components
5. Subsequent Settlement – MB04 – Subsequent adjustment of components, if any
(other than the entry happened during GR). Movement type 544 for components
and 545 for by product
6. Invoice verification – MIRO – Normal process for invoice verification of vendor
services
The Master record of end product and components are to be made available before the
creation of PO
The components with subcontractor / Subcontractor stock is your stock. It is available
for MRP and it is valuated, it is managed at PLANT LEVEL.
BLOCKED STOCKS are not allowed for subcontracting (Components). But we can
transfer the stocks between these 2 (UR&QI) stocks
Subcontracting in Inventory Management (Facilities)
1. Provision of components
2. Goods receipt of final product with consumption details of components. We can
adjust the components at Goods receipt
3. Subsequent adjustment of components
4. Allowed transfer postings
a) Plant to Plant – 1step (301)
b) Material to Material (309)
c) Between Unrestricted and QI ( 321 & 322)
Provision of components
Posting from Unrestricted stock – Can be with respect to a PO or Without PO
The components can be delivered by another vendor
Issue PO to a Vendor for supplying the components, the delivery address
should be the address of subcontracting vendor. Enter the check box provision
at PO. When you are getting the information that the Vendor is supplied the
components to your Subcontracting vendor. Make a Goods receipt
(STATISTICAL GOODS RECEIPT) in the system so that the stock
position will be updated
The Goods receipt for a Subcontracting Order is VALUATE the material at
Subcontracting Price PLUS the value of the components consumed
Subsequent adjustment
In this transaction the consumption account is already posted is available / displayed
as a second line for each item
Use + or - sign to adjust the components. The movement type is 544.
Subsequent adjustment is possible ONLY for subcontracting orders (L)
Receipt of a BY PRODUCT generated during subcontracting
The by products are entered in the subcontracting Purchase Order as components
with NEGATIVE quantity
While receiving the good at GR, system automatically posts the receipt of
byproducts
1. In the material document you can identify the by product by the
movement type –545
2. By products are posted to the ‘Stock of material provided to the Vendor”
Due to the receipt of byproduct, the value of end product will be REDUCED.
To transfer the byproduct quantities from the “Stock of material provided to
Vendor” to Unrestricted stock, make a transfer posting using the movement type
–542
Subcontracting for Sales Order stock and Project stock
An account will be assigned to a sales order or a WBS element
STOCK TRANSFER USING STOCK TRANSFER ORDER
Advantages of stock transfer with STO w.r.to transfer posting
1. Good receipt can be planned in receiving plant
2. Can include an additional vendors (freight, etc) in Stock Transport Order
3. Delivery costs can be entered in STO
4. It’s a part of MRP – PR created via MRP can be converted to STO
5. Goods Issue can be done through Shipping delivery
6. GR can be posted directly to consumption
7. Total process can be monitored through PO history
PLANT to PLANT STOCK TRANSPORT ORDER
1 Step 2 Step Without SD With SD With Billing
ORDER TYPE
Area - MM-PUR UB UB UB
MOVEMENT TYPE 301 (Transfer 643 & 101
Area -MM-IM Posting) 303 & 305 351 & 101 641 & 101 645 for 1 step
DELIVERY TYPE
Area - SD NL NLCC
BILLING TYPE
Area - SD IV
DOCUMENT TYPE
Area - MM-IV RE
PRICE Valuation Price Valuation Price Valuation Price Valuation Price Pricing in SD & MM
PLANNING Via Reservation Purchase Order Purchase Order Purchase Order
Stock in Stock-in-Transit
STOCK after GI Transfer Stock-in-Transit Stock-in-Transit Company code
DELIVERY COSTS Possible Possible Possible
Company code Revenue account &
CROSS-Company Company code Company code Company code clearing GR/IR Clearing
Code Via clearing account clearing account clearing account account account
STOCK TRANSFER – PLANT to PLANT – 1 Step
Carried out ONLY in Inventory Management
Entered as a transfer posting – MB1B
Can be planned by reservation
The quantity of unrestricted stock entering in sending plant posts IMMEDIATELY
to unrestricted stock of receiving Plant
Postings are valuated at the price of sending plant
If it is between 2 company codes, it will create 2 accounting documents at the time
of goods issue
STOCK TRANSFER – PLANT to PLANT – 2 Step
Carried out ONLY in inventory management
Transfer posting CAN NOT be planned through a reservation
Goods issue sending plant > Stock-in-transit of receiving Plant > Goods Receipt of
receiving Plant.
Transfer posting (Goods issue-1step) is valuated at the price of sending plant
If it is between 2 company codes, it will create 2 accounting documents at the time
of goods issue. If any offset, will post to Company code clearing account
We can request and monitor stock transfer in purchasing through a PR, STO &
Scheduling Agreement
For stock transfer scheduling agreement use document type –LU and item category
-U
STOCK TRANPORT ORDER WITHOUT SD DELIVERY
Goods Issue Sending Plant > Stock-in-transit of receiving plant > Goods receipt of
receiving Plant
Delivery costs CAN BE entered in ST Order
Transfer posting (Goods issue-1step) is valuated at the price of sending plant
If it is between 2 company codes, it will create 2 accounting documents at the time
of goods issue. If any offset, will post to Company code clearing account
Process Flow
1. Creation of ST order in receiving Plant for sending plant with a
document type UB in ME21N
2. Posting a goods issue through transfer posting –MB1B at sending plant
with a movement type –351
3. Posting a goods receipt – MIGO at receiving plant with movement type
–101
4. Invoice verification at receiving plant – Normal MIRO
STOCK TRANSPORT ORDER WITH DELIVERY
Carried out in Purchasing (entering the STO), Shipping (delivery at sending Plant)
and Inventory management (GR at receiving Plant)
Other characteristics are same as that of STO without delivery
Process Flow
i. Creation of STO at sending Plant
ii. Post goods issue through delivery (VL 10B or 10F) at sending plant with
movement type 641
iii. Goods receipt (MIGO) at receiving plant with movement type -101
STOCK TRANSPORT ORDER WITH DELIVERY & BILLING
The transfer posting in NOT VALUATED at the valuation price of the material of
sending Plant. But defined in both the sending and receiving plant using conditions
Possible ONLY between plants at DIFFERENT COMPANY CODES
The areas are – Purchasing (STO), Shipping (sending Plant delivery and goods
issue), Billing Plant (Creation of Invoice at sending Plant), Inventory management
(Receiving Plant goods receipt) and Invoice verification (MIRO at receiving plant)
Goods Issue through Delivery > Stock-in-transit Company code at receiving Plant >
Goods receipt at receiving plant
Prices in purchasing as per the conditions maintained in Info record and inter
company pricing procedure
Goods movements are valuated as per the accounting documents generated.
4 Accounting documents are generated
a. Goods Issue at sending Plant
b. Goods receipt at receiving Plant
c. Billing at sending Plant
d. Invoice verification at receiving plant
Process Flow
a. Creation of STO in receiving Plant for sending Plant. Document type –UB
and item category -U
b. Post delivery in sending Plant (Movement type –643)
c. Creation of billing document in sending plant
d. Post GR at receiving Plant
e. Post invoice at receiving Plant
GENERAL –INFORMATIONS ON STO
Pre-requisites for Goods Issue in Shipping
b. In customizing in Purchasing, a delivery type (NL for STO with delivery and
NLCC for delivery & billing) must be assigned to the PURCHASING
DOCUMENT TYPE (UB)
c. Customer number for receiving plant to be created and that MUST be maintained in
customizing in STO
d. In SD customizing, shipping point determination MUST be maintained
e. In material master, shipping data MUST be maintained
To display the stock-in-transit, we can use MMBE and MB53
Posting of GR for STO to a blocked stock is NOT POSSIBLE because the stock-in-
transit is already valuated
No accounting document will be generated for a GR of STO
CROSS COMPANY STOCK TRANFER
We can do a cross company stock transfer in 3 ways
a. Stock transfer between 2 plants by 1 step or 2 step
b. An STO without delivery via shipping
c. STO with delivery via shipping (possible for plants in different company codes)
In all cases the value of transportation is posted to a company code clearing account in both
the plants. The stock transfer is valuated at the valuation price of the material in sending
plant
Valuation of stock transport with billing- INTERCOMAPNY – EXAMPLE
Plant P1 orders 10Kg of material from Plant P2
Value of the material at P1 – 10
Price for inter company billing at P1 – 12
STO order price – 11
Plant Transaction Value Account Remarks
P1 Goods Issue 100(-) - Stock Account (at price of P1)
100(+) – Change inventory stocks (at price of P1)
P1 Billing 120(-) – Sales revenue (Price –Inter Co billing)
120(+) – Customer clearing (Price –Inter Co billing)
P2 Goods Receipt 110(-) – GR/IR clearing ( P2 -STO Price)
110(+) –Stock account ( P2 -STO Price)
P2 Invoice verify. 120(-) - Vendor account (Billing Price)
110(+) – GR/IR clearing (STO Price)
10(+) – PDA or Stock A/c (Difference)
THIRD PARTY PROCESSING
Company
Order Pur. Order
Billing Invoice
Customer Vendor
Material
Customer places an order on your company
You are placing/ passing the same order to a Vendor
Vendor supplies the material to customer directly
Vendor submits his invoice to you
You are submitting your invoice to the customer
Process Flow (with SD component)
1. Entering a Sales Order
While entering a sales order with Item category S and account assignment ‘X’,
system will automatically creates a PR for each item in the third party sales order.
2. Entering a Purchase Order
Process the PR generated above, assign a Vendor and convert it to a Purchase Order
The delivery address in the Purchase Order will be as that of the customer
3. Delivering goods to Customer
Vendor supplies the material directly to the Customer
Can create a STATISTICAL GOODS RECEIPT in the system, but NOT
mandatory.
4. Enter the Invoice of Vendor
Invoice verification of the Vendor invoice. This CAN be a mandatory requirement
as per the customized settings (If customized for creation of billing document after
the posting of Vendor invoice)
5. Creating Billing document for the Customer
Billing document is created in SD.
Depending on the BILLING RELEVANT INDICATOR set for this item category
in SD
The path in customizing for this is – SPRO > SD > Sales > Sales Documents
> Sales Document Item > Define Item Category > Check the details of TAS.
Billing Document cab be Quantity based on Order OR Quantity specified in
Vendor Invoice
If the customer is billed on the basis of quantity, we CAN create billing
document, IMMEDIATELY after the sales order is entered
If it is based on Vendor invoice, we CAN NOT create the billing document
TILL the vendor invoice is entered/ posted in the system
Implications of Third Party Processing in SALES
By creating a Sales order for Third party, the resulting activities in Purchasing are
1. A Purchase Requisition will be created with one or more delivery schedule
2. Purchase Requisition numbers are updated in the sales order (Item details)
3. Item is scheduled automatically after considering the delivery time and
purchasing processing time from material master
Implications of Third Party processing in PURCHASING
A PR is created automatically. We can do LIMITED changes in this automatically
created PR, like purchasing group
Order quantity / Scheduled Delivery date CAN NOT be changed manually. It can
be changed through sales order ONLY.
We can create a PR for third party processing manually using Item category –S &
account assignment –X
We can create the PO with respect to PR or manually
GR Indicator- For account assignment category –X, GR can be posted as per the
customizing.
If the Purchase Order is with respect to a Purchase Requisition, the VENDOR
ADDRESS CAN NOT be changed.
If the delivery address is same for all items, the delivery address will be printed on
Header, other-wise it will be item-wise
Implications of Third Party processing in Inventory Management
We can enter the Goods receipt, if the GR indicator is set in PO
Goods receipt for third party processing will be similar that of a GR for a PO with
account assignment
RETURNABLE PACKING (RTP) – VENDOR PROCESSING
It’s a multi-trip packaging medium
Property of your Vendor came along with material, stored at your place
It is NOT VALUATED
It is managed as a SPECIAL STOCK. So special stock data is required in addition
to material master data.
Special stock Indicator is ‘M’
The special stock data is defined for EVERY vendor at storage location level. It is
created automatically 1st receipt is posted to RTP stock.
This RTP stock can not be maintained manually, but updated automatically upon
goods movements.
RTP is an UNRESTRICTED STOCK ALWAYS
Allows a Negative stock
We CAN NOT transfer RTP stock to your own stock
At Goods receipt, the movement type for RTP ‘501+M’ is selected automatically by
the system. For returns, ‘502+M’. Can use Goods Issue –Others for returning to
Vendor with 502+M
If we want to transfer these RTP material between storage locations, system selects
the movement type –311+M
RTP stocks are available in stock displays – MMBE / MB53
PIPLINE MATERIAL PROCESSING
Material is ALWAYS available. It can be withdrawn any quantity at any time
These PIPE materials are NEITHER PRODUCED/ PROCURED Nor STORED
Pipeline movements are mandatory in all Valuation areas
For each material type, you can specify in the valuation area whether pipeline
movements are Mandatory/ Allowed.
Info record is mandatory for movements
Pipeline withdrawals are to be for a Order/ Cost center
Considered as a special stock
The special stock indicator is “P”
Withdrawals are valuated at Info record price. Withdrawals leads to a payment
liability to the Vendor and it’s Consumption history is updated.
In standard system, the same account is assigned for consignment and pipeline. But
it can be separated by settings in customizing
Process Flow
1. Creation of PIPE material. Maintain purchasing and accounting views. Price
control can be S or V
2. Creation of Info record
3. Maintain the source list (Not mandatory)
4. Posting of Goods Issue – Movement type can be – 201+P, 261+P, 281+P/
291+P
5. Settlement of Pipeline Liabilities (MRKO)
SALES ORDER STOCK
Stocks maintained for sales order
Special stock Indicator “E”
It can be Valuated / non valuated
If it is NOT valuated, it is managed via a Cost Center
Can be transferred to own stock using movement type – 411+E
PROJECT STOCK
The stocks stored for a Project till the completion of the project
It can be valuated / non valuated
It is allocated to a WBS element (Work Breakdown Structure)
Components from this stock can be issued for a WBS element
The stock is available for MRP
Managed with a special stock Indicator ‘Q’
It can be transferred to own stock using the movement type – 411 +Q
9 VALUATION AND ACCOUNT DETERMINATION
General Postings in MM
At Goods Receipt
Stock Account - Debited (+)
GR/IR clearing - Credited (-)
At Invoice Verification
GR/IR clearing - Debited (+)
Vendor - Credited (-)
At Payment
Vendor - Debited (+)
Bank cash - Credited (-)
At Goods Issue
Consumption - Debited(+)
Stock Account - Credited (-)
Valuation Area – Can be at Company code level or Plant level. SAP recommends
the valuation at Plant Level.
Valuation at Plant level is MANDATORY if we want to use Production Planning
(PP) or Product costing accounting components or retail system.
Once the valuation area is defined In the customizing, it is very DIFFICULT to
reverse it.
If you want to have a storage location for storing materials non-valuated, you can
have it through another Plant(Valuation area) where only quantity updation will
take place
The transactions in inventory management that affects accounting are Goods
Receipt, Goods Issue and Transfer Posting
These transactions can change the valuation price of the material depending on the
price control of the material
The posting of invoice verification (MIRO) also can affect the material valuation
Material Valuation during :
1. RECEIPTS – are valuated at current material price in the material master
2. a) GR for PO – GR before IR –Materials are valuated at PO Price
b) GR for PO – GR after IR – Materials are valuated at Invoice price
3. GOODS ISSUE – Goods Issues are valuated at the current price of the
material in material Master.
4. Free Delivery – Zero Value
Materials that are to be valuated should have accounting data with valuation Class
Material Price Control
1. In standard pricing (S),
Material is valuated at material master price and in case any
difference, will be posted to Price Difference Account (PDA)
Exact value available for cost accounting/ Controlling purposes
In accounting view, the difference can be displayed.
The changing of this standard price in material master is possible
2. In moving average pricing (V),
GR at PO price and GI at material master price. Receipts are valuated
at actual price (PO or IV)
In case of any difference, the difference is posted to Stock account, if
sufficient stock available (in such case, the MAP will be changed)or it
will be posted to a PDA.
System modifies the price in material master according to the
delivered price
If the data is used for cost accounting, will have fluctuations
If the material is managed at Standard price, the moving average price will be
recorded in the material master by the system
Changing of Material master price (MR21) from Standard to Moving average price
is ALWAYS possible
Changing of Material master price from Moving average price to Standard is NOT
POSSIBLE in 2 cases
1. If the material is valuated in SPLIT VALUATION
2. If the standard price is coming from COSTING and is NOT equal to the
moving average price
3. Changing fro S to V & V to S are Possible, if POs are Not created or Stocks
are not existing
Periodic Unit Price (PUP) – Price that changes periodically as a result of goods
movements and invoice postings
PUP = Value of material / Quantity of material
PUP is used in single level or multi level price determination to valuate the material
for closing period.
PUP can carryout in 3 currencies and 3 valuation areas
The valuation in current period, system uses standard pricing.
VALUATION AND ACCOUNT ASSIGNMENT
For automatic account determination
The system will automatically determine the relevant G/L accounts for each
transaction in MM.
There are several accounting transactions are linking to a single MM Transaction
We can configure the automatic account determination facility to occur within the
areas of Inventory management, Invoice verification and material valuation
Valuation area to be set before creating a material
Company code chart is assigned in FI module
Levels of valuation in automatic account determination
1. Chart of Accounts/ Company Code
2. Valuation area
3. Material Type/ Valuation class
4. Transactions (Movement type)
1. Chart of Accounts – Influencing Factors
Chart of account is assigned to company code
Used as a key factor for account determination to enable a differentiation for
the purpose of G/L account assignment
Configure separately for automatic account determination
Financial accounting, Cost & Revenue accounting uses the optional chart of
accounting
2. Valuation Area- Valuation Grouping code – Influencing factors
Key for account determination that enables a differentiation for G/L account
assignment WITHIN Chart of accounts
By Valuation grouping code, dependency of accounts on Valuation area
If a valuation grouping code is there assign a code for each valuation area
Valuation Area is the level at which the materials are valuated
If the valuation is at company code, G/L account CAN NOT be assigned
according to Plant
We can assign a totally different G/L accounts to Plant if it is having a
separate Valuation grouping code
CHART OF ACCOUNTS
COMPANY CODE
PLANT
VALUATION
GROUPING CODE
3. Material Type – Material – Influencing Factors
It’s a key in account determination that enables a differentiation for G/L
Account assignment depends on Material
Material is assigned to a Valuation class, which depends on a Material type
More than 1 material type is allowed for a valuation class
MATERIAL TYPE A/C ASSIGNMENT VALUATION CLASS
CATEGORY
Raw Material –ROH 3000
Finished Goods – FERT 0001 3001
Oper.Supplies –HIBE 3002
4. Transaction – Influencing Factors
It’s a key for account determination that symbolizes the transaction
Posting transactions will define the relevant accounting
Posting records are assigned to each Movement type to each invoice
verification
a. Account grouping
Depending on Movement type and special stock indicators, we can assign an
account grouping for individual transactions.
We can use the rules to define its configuration of automatic postings for a posting
transaction depends on
1. Valuation Grouping code
2. Account grouping
3. Valuation class
COMPANY CODE Chart of Accounts
Valuation Area Valuation Grouping Code
Material Material Type
1
2
General
Account Category Ledger
Reference ACCOUNT
3
Valuation Class 4 5
Business Value
Transaction String Transaction
(Movement Type) Event Key
Account Modifier
ACCOUNT DETERMINATION – Specific Information
Account determination is required if the system is to fulfill its integration promise and post
financial transactions at the same time as the relevant operational transaction.
Accounts are determined differently, depending on which functional area you are using:
MM: The process of account determination varies depending on whether
the transaction involved has a movement type such as inventory management
or whether there is no movement type such as invoice verification and valuation.
Account determination in SD uses the condition technique.
This chapter looks at the account determination of MM transactions w. and w/o movement
type only.
You can do most of the settings relevant for the account assignments for MM transactions
either in the configuration menu for "valuation/account assignment" (settings for MM
transactions w. movement type) or in the configuration menu for "invoice verification"
(settings for MM transactions w/o movement type). You will get to the same tables but
there are different simulation functions.
It is also possible to access these tables via the configuration menu for accounting.
The valuation area is the level at which material valuations are carried out. In the MM
application transactions, the valuation area is hidden. In customizing, you can choose
whether the valuation area equals the company code or the plant. This setting must be
carried out before creating materials and before entering transactions in MM inventory
management. If PP is active the valuation area must be on plant level !
Grouping of organizational entities
The allocation of a company code to a chart of accounts is carried out in the FI
customizing. The chart of accounts to be used is determined for each company code.
The valuation grouping code facilitates the allocation of G/L accounts with as little effort
as possible. Valuation areas to be treated equally in terms of account assignment must be
defined with the same valuation grouping code. Valuation grouping codes either serve as a
means of fine differentiation within a chart of accounts or they correspond to a chart of
accounts.
When making the basic settings for valuation, you can specify whether the valuation
grouping code is active.
Grouping of material master entities
Account category reference is the grouping term for account determination depending on
the material type.
Several valuation classes can be allocated to one account category reference.
Each material type is allocated to one account category reference. When maintaining the
accounting data of a material of this material type, you can select one of the valuation
classes that are defined for the corresponding account category reference.
The G/L account determination for a material is carried out according to the settings for
this valuation class.
Via the Account category reference
You can define the same G/L account determination for all materials of one or even several
material types.
But you can also specify that different G/L accounts are determined for different materials
of a material type.
INVOICE VERIFICATION
Invoice verification process the invoice in FI. By posting an invoice the data in MM & FI
are updated.
UPDATION IN UPDATION IN
MATERIALS MGT. ACCOUNTING
1. PO Update 1. G/L accounts update
2. PO History updates 2. Assets update
3. Delivery cost updates 3. Cost center update
4. Mat Master update 4. Projects update
5. Vendor master update 5. Orders update
Invoice verification works in conjunction with Purchasing and Inventory management
We can post an Invoice with respect to
1. A Purchase Order
2. A Service Order
3. A Goods Receipt
While posting an Invoice in the system, system will
1. Vendor account and GR/IR clearing accounts are updated
2. MAP and Value will be updated in Material Master
3. PO History updated with GR, Down payment, Invoice
GR/IR clearing account is debited and Vendor is credited
In MAP price control, if the PO Price and Invoice prices are varying from the
material master price, then the difference is distributed to the stock (If sufficient stock
available or it will post to price difference account). So the price in material master is
fluctuating with respect to invoice posting
In Standard price control, the difference is booked in price difference account and the
material master price is CONSTANT.
GR based Invoice verification is set at – PO, - Vendor master record
Conventional Invoice Verification Logistics Invoice verification
1. Material is directly posted to 1. It’s a distributed system
material & G/L account
2. ONLY FI document is created 2. Unlimited multiple selection
3. Unplanned delivery cost postings 3. Option of IV in background
is NOT possible 4. Invoice reduction facility
5. FI & MM Documents on posting
BASIC INVOICE VERIFICATION PROCESS
Structure of Invoice verification screen
1. Transaction Area – Defines the entry for Invoice/ Credit memo
2. Header Area
3. Allocation area – Assign reference (PO or delivery note, etc.)
4. Invoice Items
5. Vendor data
6. Balance area
7. PO Structure area
Basic Invoice structure
1. While referring the PO number, the following information are copied by the system from
the PO
- Vendor detail
- Payment
- Currency
- Bank information
- Invoice items, etc.
2. From PO History, the following information are derived
- Quantity
- Amount
3. System proposes -RATE OF TAX –as per the settings
4. We have to ENTER
- Document date
- Purchase order number
- Invoice amount
- Tax amount
- Terms of payment (default)
- The terms of payment can be changed at MIRO level
A. Selection of Invoice for
B. Payment Block for
C. Posting type selection for
D. Allocation -Invoice posted against
E. Reference F. Display Variant selection
A. Invoice selection for - OPTIONS
1. Invoice
2. Credit Memo
3. Subsequent credit
4. Subsequent Debit
B. Payment Block for (In Payment tab of Header)
1. Blocked for payment
2. FREE for payment
3. Invoice verification
4. Payment clearing
C. Posting Type selection for (Details tab in Header)
1. Asset posting
2. Accounting document posting
3. Net asset posting
4. Customer Invoice/ Payment
5. G/L account posting
6. Vendor account document/ Invoice/ Payment
7. Vendor credit memo
8. Subsequent credit settlement
9. Gross Invoice receipt
10. Net Invoice receipt
D. Allocation – Invoice can be against a
1. Purchase Order/ Scheduling agreement
2. Delivery Note
3. Bill of lading (Delivery costs)
4. Service Entry Sheet (SES)
5. Vendor
6. Transportation/ Service Agent
E. Reference of
1. Goods/ Service items
2. Planned delivery costs
3. Goods/ Service items + Planned delivery costs
F. Display variant selection
1. Accounting assignment ( Cost center/ Asset/ Order)
2. All information
3. Invoice reduction
4. Purchase Order - Order price quantity
5. Purchase Order History
6. Purchase Order delivery note
7. Purchase Order entry sheet
8. Purchase order – Jurisdiction code
9. Services
10. Shipments
11. Aggregation
- Configurable material
- Delivery note
- Material
- Plant
- Purchase Order
Unplanned delivery cost will be posted as DEBIT MEMO in invoice entry sheet, if
the invoice is separately for unplanned delivery cost
In the payment block option in ‘Payment’ tab of the header data, we can block the
invoice MANUALLY
If we want to post an invoice of ‘Free for payment’, use the option free for payment
We can define new display variant in customizing
Payment terms are defined in PO. While entering an invoice, the system displays the
terms as per PO, but can be changed
2. INVOICE BLOCK TOLERANCE LIMITS
Path – LIV > Invoice block > Set tolerance limits
These tolerance limits are at COMPANY CODE LEVEL and ITEM-WISE INVOICE
VALUE
Most popular types of invoice blocks are:
1. Amount of item WITHOUT Order reference (AN)
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Value -------
2. Amount of Item WITH order reference (AP)
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Value -------
3. From small difference automatically (BD)
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Value -------
4. Percentage Order price unit variance (IR before GR) - BR
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
Lower Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
5. Percentage Order price unit variance (GR before IR) - BW
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
Lower Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
6. Exceed amount quantity variance (DQ)
Upper Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
Lower Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
7. Variation from Condition Value (KW)
Upper Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
Lower Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
8. Price Variance (PP)
Upper Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
Lower Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
9. Price variance – ESTIMATED PRICE (PS)
Upper Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
Lower Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
– Do not check (Radio button)
- Check Limit (radio button) – Percentage ------%
10. Date Variance – Value x days (ST)
Upper Limit
- Do not check (Radio button)
- Check Limit –Value -----
11. Moving Average Price Variances (VP)
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
Lower Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Tolerance limit ------%
4. AT GOODS RECEIPT
If the variances are within the tolerance limit, the system displays message as per
the customizing
If the payment is automatically blocked due to the (settings) exceeded the units,
payment block is filled in the Vendor line item of the FI document
Payment block is filled in MM document when an invoice is blocked MANUALLY
(at header level of MIRO)- Not in item level
Manual block of an invoice done at tab “Payment” in header ( “Payment block” ) of
MIRO screen. In this case in Vendor line item (after posting the invoice) the reason
for block will be displayed as “A” (payment Block)
In other cases, payment block due to variance by system and manual block made in
item level (during MIRO), the reason for block (after the invoice posting) in the
vendor line item is “R” (Invoice verification)
If once the invoice is blocked, we have to clear it separately
Header Manual Block – A – In MM & FI
Other blocks – R – In FI only
BLOCKING VARIANCES
1. Quantity
2. Price
3. PO Price Quantity
4. Date
5. Stochastic
6. Quality
7. manual
1. Quantity Variances (Q)
If the Invoice qty > GR quantity, the difference posted to GR/IR clearing account. Total
payment will be released to the Vendor.
System expects another GR. At that time this additional amount in GR/IR clearing account
will be cleared.
2. Price Variance (P)
In this case the account movements depend on the Price control (S or MAP) set in material
master.
a) If IR is after GR
If the price control is ‘S’ – The difference will be posted to Price difference
Account
If Price control is “V” – The difference will be posted to the stock account, if
sufficient stock available (it will lead to the change in price of the material),
otherwise to Price difference account
b) IR before GR
System posts the variance to GR/IR clearing account.
The segregation of this amount depending on “S” or “V”, will be done at the time of
GR posting
3. PO price quantity
4. Date (D)
5. Stochastically Blocking
It is at COMPANY CODE Level
Invoices do not contain a blocking reason, can be blocked stochastically (at random)
It will be as per the customizing done for the threshold value.
An invoice blocked stochastically, system sets a payment block in vendor line item in the
FI document. Individual item WILL NOT contain a blocking reason.
6. Blocking due to QUALITY
Material is subject to Quality Management fixed in Material Master.
While posting GR, system will create an inspection lot
System will block in this case, if there in NO user decision on inspection lot/
rejected in Inspection. (To be entered in the system)
7. Manual Blocking
a) Manual blocking can be made at HEADER Level. In payments tab in MIRO screen
b) At ITEM LEVEL – In column “Ma” put the tick
If the invoice is blocked at Header level, the blocking is for total items in the
invoice
If the block is at item level, it is applicable for only that item
If the manual blocking is at Header level, the reason of the invoice blocking
will appear as “A” in MM and FI document after posting the invoice
If the blocking is at Item level OR automatic blocking by the system on any
reason, the reason of blocking will appear as “R” and will appear only in FI
document
INVOICE REDUCTION
It is an option available at MIRO to reduce the invoice and accept it.
For example,
At PO – 100Nos x Price 10 (1000)
At GR – 70Nos x Price 10 (700)
At IV – 100Nos x Price 10 (1000) and if we are opting Invoice reduction,
System will generate 2 accounting documents
1. 100Nos x Price 10 – Invoice (as per the invoice)
2. 30Nos x Price 10 – A CREDIT MEMO (for the difference value)
The invoice reduction option is available at Display variant option in MIRO
screen
The payment to Vendor will be the difference of Invoice and the credit memo
created
While posting the invoice, system will issue a message and the same can be
used to generate a letter of complaint to the Vendor
Procedure of Invoice reduction
- Select the option “Invoice reduction” in MIRO screen
- The fields in Item detail
- In “Correction ID” column, select the reason for invoice reduction like
Vendor error/ reduce invoice, etc.
- In Invoice quantity at Item detail, enter the Invoice quantity as per the
Vendor.
- In Invoice amount at Item level, enter the value as per the Vendor
- In Header, in amount filed, enter the amount to be paid to the vendor after
reducing.
In simulation, we can see the credit memo detail and Vendor payment detail
(reduced amount)
Account Movements
Purchase Order - 100Nos x Price 10
Goods Receipt - 70 Nos
Invoice receipt - 100Nos x Price 12 + 10% Tax = 1200 + 120 =1320
At Goods Receipt At Invoice Verification Credit memo
Stock Account +700 +140
GR/IR clearing Account -700 +700
Vendor Account -1320 +396
Input Tax +120 -36
Clearing account for Invoice reduction +360 -360
At Invoice verification,
Vendor account – 1320, GR/IR clearing – 700, the difference = 1320-700 =620
Out of 620,
Clearing account = 30Nos x 12 = 360
Input tax = 10% of 1200 = 120
So the amount will go to stock account = 620 – (360+120) = 140
As the invoice is accepted, the GR/IR clearing account will be cleared and the
balance amount (140) will go to Stock account
After posting the invoice reduction, we CAN NOT see the higher amount invoiced
by the Vendor in PO History. It will show the actual amount paid to the Vendor
after the invoice reduction
2 accounting documents are generated One for Invoice and the other for Credit
memo
VARIANCE WITHOUT REFERENCE TO AN ITEM
The options are
1. Total based Invoice reduction
2. Total based acceptance
3. Vendor specific tolerances
1. TOTAL BASED INVOICE REDUCTION
In this type of invoice verification, 2 accounting documents are generated
1. Suggested Quantity and Value
2. Credit memo for difference quantity and Value (Offsetting entry)
It is not reducing the invoice, but posting a credit memo for the difference
In customizing, we can allocate each Vendor to a tolerance group of LIV. For each
tolerance group, set the limits up to which invoices can be automatically reduced without
reference to a particular item. All these settings are at company code level.
(Vendor specific tolerance –Automatic invoice reduction – case 3 explained earlier)
2. TOTAL BASED ACCEPTANCE
In this case, system accept a difference (positive or Negative) between the item total it
expects and it posts the difference to a”Non operating expense or revenue” account.
In customizing, we can set this tolerance limits at Company code level.
(Vendor specific tolerance limits – Automatic acceptance of Negative differences,
Automatic acceptance of Positive differences- explained in case 1 & 2 explained earlier)
3. VENDOR SPECIFIC TOLERANCE LIMITS
EXPECTED INVOICE VALUE
SETTINGS FOR
SMALL DIFFERENCES
INVOICE INVOICE
CANNOT BE CANNOT BE
POSTED POSTED
SETTING FOR SETTING FOR
NEGATIVE POSITIVE
TOLERANCE TOLERANCES
(-) (+)
SETTING FOR INVOICE
REDUCTION
MANUAL ACCEPTANCE
We can accept the differences manually only, if the invoice is verified in the
background and containing errors
Accept the difference on header data and reprocess the invoice
While posting these invoices system will post the difference amount to the same
account.
INVOICE VERIFICATION OF CONSUMPTION MATERIALS
These invoices will not have any GR/IR clearing account as there is not any GR
INVOICES of PO WITH ACCOUNT ASSIGNMENT
The topics are
1. Enter invoice for Pos with account assignment
2. Posting Logic for invoices for Pos with Account assignment
3. Invoice posting for Blanket Pos
1. Invoices for Pos with Account Assignment
While posting the invoice, system proposes the individual current account
assignment as per the PO
In case of multiple account assignment, and partial invoice, the system will
distribute
- on a progressive fill-up basis
- Proportionately
Account assignment categories are – Asset (A), Cost Centre (K), Sales Order (C),
Order (F), etc.
Account assignment category is fixed in PO per item which is having the control of
a) you can post a GR b) you can post an invoice. The controls are fixed in
Customizing
The account assignment fixed in PO can be changed in cases (a) Defined (changes)
in customizing (b) Non-valuated GRs are defined in PO
The account assignment categories are available in SPRO at Purchasing > Account
assignment > Maintain account assignment category
The detailed settings for each account assignment categories are
i. Changeability of account assignment
ii. IR changeable
iii. Define account assignment
iv. Delivery cost separate
v. Goods receipt
vi. GR non-valuated
vii. Invoice receipt
viii. GR indicator biding
ix. GR non-valuated biding
x. IR indicator biding
Account movements for Pos with account assignment
PO - 100Nos x Price 10
GR - 50Nos
IR - 50Nos x Price 11
CASE -1 - VALUATED GR
At GR At IV
Consumption Account +500 +50
GR/IR clearing Account -500 +500
Vendor Account -550
CASE -2 - NON-VALUATED GR
At GR At IV
Consumption Account +550
GR/IR clearing Account
Vendor Account -550
If the valuated GR defined in PO, the price difference is posted to the Consumption
account
INVOICE VERIFICATION OF BLANKET PURCHASE ORDERS
It will directly post the invoice for the material / service
System will check the Value & Quantity along with the Validity period at the time
of Invoice verification
If it crosses the limits, system will block the invoice
We can enter an invoice for Blanket PO with many account assignments and
relevant amounts
DELIVRY COSTS
Planned and unplanned delivery costs
Planned delivery costs are entered at item level of the PO
Unplanned delivery costs are entered during Invoice verification
o Planned delivery Costs
Freight Customs
Fixed amount % of Value
Quantity dependent
In account movements, Freight clearing account and Customs clearing account at
GR. At Invoice verification, these clearing accounts are cleared
If there is any difference in these planned delivery costs at Invoice verification,
system will treat it as a normal price/ quantity variance and postings will be
accordingly.
Unplanned delivery costs
As per the settings in Customizing, the unplanned delivery costs can be (1)
Distributed to invoice items (2) Posting to a separate G/L account
If it is distributed to items, it WILL NOT list them separately in PO History,
will be included in the invoice amount
If it is posted to a separate G/L account, they also WILL NOT appear in PO
History
Unplanned delivery costs are posted to item in PROPORTION to the total
value in the current invoice
We can post an invoice of unplanned delivery costs alone for an invoice already
posted. It will be treated as a Debit memo.
If the unplanned delivery costs are distributed among PO items, the offsetting entry
(in case of Price difference) is post to the respective stock account or a price
difference account as per the price control for that material
The setting made at customizing for unplanned delivery costs are at COMPANY
CODE level
We CAN NOT have an unplanned delivery cost option for a Planned delivery cost
with distribute the value among the items in MIRO transaction.
To tackle the situation of unplanned delivery cost of a planned delivery cost in
MIRO, got to the item level populated value, edit there itself and put the total at
header level. Another option is to activate direct posating to G/L accounts. So it is
suggested to enter the planned delivery cost accurately to the extent possible way.
SUBSEQUENT DEBITS/ CREDITS
This option is used for the changes due to TOTAL invoice value (NOT
QUANTITY)
These postings are done AFTER a posting of an invoice
When you enter to subsequent debit/ credit system suggests full quantity, but
NO value
Subsequent debit/ Credits are flagged in PO History
Account movements in subsequent credit/ debit are stock account and Vendor
account
Case1 – If GR is posted
System makes the offsetting entry to stock account or price difference
account depending on the price control of the material and the stock position
Case 2 – If GR is NOT posted
System posts the offsetting entry to GR/IR clearing account. When the GR
is posted and this GR/IR clearing account will be cleared and posted to stock
or Price difference account as per the price control of the material and stock
position
In subsequent debit/ credit, there is no material movement
o We can enter a subsequent debit/ credit memo for a PO item only if an invoice
has been already posted
CREDIT MEMO/ REVERSALS
Credit Memo – received from Vendor if we are overcharged
It can be entered with respect to a PO
It should be posted as subsequent Credit/ debit
The value only will change/ reduce
Account movements are SAME as that of an invoice
(+) and (-) signs are available for posting the value
Reversing Invoice – Transaction code – MR8M
When you reverse an invoice, all the items in the invoice document will be reversed
We can reverse a PART of an invoice ONLY by entering a CREDIT MEMO
manually.
When we reverse a Credit memo, system creates an Invoice
We CAN NOT reverse a reversed document
Calculation of GR/IR account
= Quantity X ( Clearing Value (Total) - GR Value (1st))
(Invoice quantity - GR Quantity)
INVOICE VERIFICATION IN BACKGROUND – Transaction code – MIRA
Used for larger invoice with hundreds of line items
Enter the general data like Gross value, Taxes, Payment terms, etc
DO NOT enter item-wise details.
Save in an invoice document (without any item)
By the settlement program (RMBABG00) by system administrator in the
background, creates the items for this invoice document. Based on quantity and
value, R/3 system checks(if the total of the items and amounts already saved results
in a ZERO balance) and system posts the invoice.
Main Disadvantage is we can have cases of price differences cancel each other
without being noticed
If the invoice is processed in background and given status as “errors” are to be
cleared manually only
The invoices processed by MIRA will appear in parked invoice till the settlement
program runs
EVALUATED RECEIPT SETTLEMENT (ERS) Transaction Code - MRRS
GRs are settled directly without the vendor invoice
The system uses the information of PO and GR
ERS to be defined in Material Master
Vendor Master data and Info record should have the selection of ERS
GR based IV should be there in PO
We CANNOT use ERS for settling Delivery costs
Tax code should be SAME in PO and info record
Customizing setting for ERS for the company code mandatory
INVOICING PLAN
2 types of Invoicing plans are used
1. Periodic
2. Partial
1. PERIODIC INVOICING PLAN
Generally used for automatic settlement of invoices which is periodic in nature
Recurrent procurement transactions
Examples are Rentals, lease amounts which are fixed in nature
TOTAL VALUE of the PO item is invoiced on EACH due date. These due dates
can be suggested by R/3 system as per your plan
Invoicing plan types are defined in customizing and is assigned to the PO item,
while creating a PO
Vendor should have the ERS tick if you want to work with ERS
2. PARTIAL INVOICING PALN
Invoicing in different stages
Example is % invoicing in a construction project
In this type the total value of the item is SPREAD among the individual due dates
as per the invoicing Plan
ONLY a PART of the total item is due on a payable date
The total value of the total items is SPLIT on the dates and the values are specified
in Invoicing Plan
PRE-REQUISITES for INVOICING PLANS
1. Account assignment for the item
2. No GR or Non-valuated GR
3. Document type – FO for the Purchase Order
4. Validity period should be entered in PO
5. Invoicing Plan settings are to be defined in customizing
6. For ERS, settings of ERS
CUSTOMIZING FOR INVOICING PLANS
1. Invoicing Plan type for Periodic and Partial
2. Maintain Date IDs
3. Define and maintain Date category
4. Maintain date proposal for the Invoicing Plan type
5. Define rules for Date determination
6. Define Invoice blocks
Periodic Partial
1. Validity period 1. Starting date
2. Periodicity of Invoicing date 2. Reference invoicing Plan number
3. Maintenance 3. Maintenance
RELEASE OF BLOCKED INVOICES – Transaction Code – MRBR
Invoices can be released manual and automatic
While releasing a blocked invoice, we can change the baseline date for the payment
Basic invoice blocking reasons are Q- Quantity, D- date, P- Price, T – Quality
Automatic release of blocked invoice done in background by running the program
RM08RELEASE
Procedure of manual release
1. Select that particular invoice in MRBR transaction
2. Keep the cursor on the reason (X) and click on the flag icon for
deleing that particular blocking reason. Then it will change to green
in color
3. Click on ‘Save change” icon. The invoice blocking is removed. The
particular invoice will disappear from the list
GR/IR ACCOUNT MAINTENANCE
The GR/IR clearing account is cleared only if the invoiced quantity and delivered quantity
are equal.
If it is NOT equal the system expects invoice/ material. And if the material is not coming,
we have to clear this account manually.
List of GR/IR balances are available in transaction code – MB5S
GENERAL CUSTOMIZING SETTINGS OF INVOICE VERIFICATION
1. Messages
Path – LIV > Define attributes of system messages
Warning & error messages
User defined messages
2. Automatic Postings
OBYC transaction and Group – RMK for MM accounts
3. Document type & Number ranges
Path – LIV > Incoming Invoice > Number assignment
There are 2 types of transactions
1. Manual Invoice entry – RD
2. Automatic by ERS/ EDI/ reversal – RS
Accounting Document types
1. Gross Posting – RE
2. Net Posting – RN
Number ranges are defined per document type and for a fiscal year
4. Taxes & Currencies
Path – Fin. Accounting > FA Global setting > Taxes in sale & Purchase > Basic settings
1. Tax code – For each company code
2. Set unplanned delivery cost distribution
3. Set postings of exchange rate differences
5. PO Text types – general messages
6. ITEM LIST VARIANTS
7. Duplicate Invoice check
If we have selected duplicate invoice check in Vendor master record and while
entering the invoice, there is an entry in the field ‘REFERENCE”, by which R/3
system always checks for an invoice entry already made for this vendor with same
data. The data checked by the system are :
1. Company Code
2. Vendor
3. reference
4. Document date
5. Amount and currency
In customizing, we can decide if the system has to take care of Company code/ the
reference and dates as check criteria
8. Invoice Blocks
9. Message determination in LIV (standard condition technique)
10 GENERAL INFORMATIONS on LIV
Most of the data related to LIV are stored in Tables – EKBE, RBKP & RSEG
Data for LIV are
1. Master data – Material master, Vendor Master & Accounting data of G/l
Account
2. Transactional data – Purchasing documents, Material document &
Accounting documents
If you post an invoice without checking the invoice items, variances in individual
documents can cancel each other without your notice
Invoice can be posted directly to a G/L account OR material account by activating
direct posting to G/l account and Material account in Customizing
If Vendor is NOT CREATED, system will post the amount to ONE TIME
VENDOR Account
Automatic settlements facility is available for
1. Consignment & Pipeline
2. ERS
3. Invoicing Plan
4. Revaluation
ALLOCATION FEATURE in Invoice verification (MIRO)
ALLOCATION TO MORE CRITERIA TYPE OF INVOICE ITEMS
Purchase Order/ Sch.
1Agreement 1 Multiple allocation 1 Goods & Services Only
2 Planned Delivery costs only
Goods &services + Planned
3 delivery costs
Delivery Note (GR based
2IV) 1 Multiple allocation 1 Goods & Services Only
2 Selection Vendor
3Bill of Lading 1 Multiple allocation 1 Planned Delivery costs only
2 Selection Vendor
Service Entry Sheet
4(SES) 1 Multiple allocation 1 Services Only
5Vendor 1 Plants 1 Goods & Services Only
2 Deliveries 2 Planned Delivery costs only
Goods &services + Planned
3 Returns 3 delivery costs
4 Time Periods
6Transport Agent 1 means of transport 1 Services Only
2 Partner
3 Freight Cost number
Invoice verification of ONE time Vendor – Same as that of LIV but, the system
proposes the address data for the invoicing party and OTV button for Vendor data
screen area. Collective accounts are set up for One time vendors. These accounts
are used for more than 1 vendor so the master record does not contain any vendor
specific data. SO the details are to be entered in Purchasing OR Invoice verification.
The procedure of Invoice verification of ONE TIME Vendor is
1. In the Vendor data of MIRO screen, choose OTV (One Time
Vendor) and enter address, Bank data, etc.
2. Enter the relevant invoice data
3. Post the invoice
If you are having 2 types of operations – Domestic and Foreign, you have to have 2
one time vendor master record
While posting an invoice verification of FREE GOODS, (511) Qty, MAP, total
value will be changed/ updated in material master
If there is different payee, the option to enter this are (1) At the time of Invoice
verification (2) AT the time of Payment program run
Work List is used in the application of (1) enter invoice (2) Park the invoice
GR based IV can be used for invoice against PO and invoice against Delivery note
Automatic amount correction –
When quantity changes occur, you can perform automatic correction of an
ITEM AMOUNT using the USER PARAMETER –RBB.
For enter invoice and park invoice set the user profile RBB in SAP easy menu
in Parameter tab and in value column put 12 Blanks and ‘X’ for the 13 th and
then save.
In easy Menu – Go to SYSTEM > Maintain User Profile, > Set Data, will get
parameter Tab
Invoice reduction – Correcting quantities or Values
Tax – We can configure whether we want to take into account tax postings (a) Only
in Invoice document (b) Invoice document + Credit memo
While SIMULATING, following POSTING LINES are NOT DISAPLYED
because they are NOT determined while simulating the document
1. Posting for withholding Tax
2. Multiple Vendor line items due to SPLIT TERMS of Payment
3. Multiple documents due to cross-company code postings
In simulation we can switchover currencies, if there are more than one currency
involved
Duplicate Invoice Check
System checks only FI document created in LIV. ONLY for INVOICES
It will NOT check the Credit memos/ Subsequent Credit or debit
Checking will be done in FI document for – Company code, Vendor, Currency,
Document date & reference document number
Duplicate invoice check can be fixed for
1. Reference document number
2. Company code
3. Invoice document date – It will check here for
i. Invoice date
ii. Gross amount
iii. Currency
iv. Vendor
You CAN NOT REDUCE the invoice while in PARKING
Invoice verification in background is used for
1. Invoice with mass amount of data for which ITEM CHECK is NOT
mandatory
2. Invoicing referring to transactions NOT YET ENTERED
Program – RMBABG00
ACCOUNT DETERMINATION in LIV DEPENDS ON
1. Information from entries
a) Vendor account
b) Amount
2. Material Master record
a) Valuation class
b) Price control
c) Material account
d) Stock details
3. Posted Document
a) Purchase Order Price
b) GR is posted or not
4. System settings
a) Gross/ Net posting
b) G/L account details
If One invoice refers MORE THAN 1 PO, then the system suggests the TERMS of
PAYMENT of the FIRST PO
If Quality management is active, SAP recommends GR based Invoice verification
Invoice blocks indicators
1. Q – Quantity Variance
2. P - Price variance
3. D – Scheduled date
4. G – Order price quantity variance
5. I – Quality
6. O – Others (item amount check)
If an invoice for a Blanket PO is blocked due to DATE variance CANNOT be
released automatically.
If an invoice is blocked (a) Blocking manually at header AND (b) item having
block due to variances, the system will display this invoice block as –DUE to
VARIANCES
Planned delivery costs are on ITEM basis
We CAN NOT differentiate between UNPLANNED DISTRIBUTED DELIVERY
COSTS and PRICE VARIANCES at PO History
Even system will not display the unplanned delivery cost that posted to a separate
G/l account in PO History
System WILL NOT CHECK the maximum amount of the prices for unplanned
delivery cost
Subsequent Debit/ Credit
System records every subsequent credit/ debit in PO history
Subsequent credit/ debit are VALUE basis
Total based Differences – Vendor specific tolerances
1. Total based invoice reduction
Posting to Invoice reduction clearing account
2. total based acceptance
Posting the difference to Expense/ revenue account
3. Manual acceptance
as per customizing
Credit memos can be created using ERS
Planned delivery costs CANNOT be processed with ERS
Program used for ERS – RMMR1MRS
Revaluation – To determine the difference values on the basis of price changes that
retro-actively valid and to create settlement documents for them
Pre-requisites
1. It should be with respect to a PO/ Sch. Agreement item
2. The item should not be deleted or blocked
3. GR based IV
4. Flagging for revaluation in Vendor Master
5. Customization
PO History – History category of revaluation – NeuB
CHECKS before posting of a CREDIT MEMO
1. Maximum Value – It should be less than earlier invoice value
2. Maximum Quantity - It should be less than earlier invoice Quantity
3. EQUAL – It will leads to a FULL REVERSAL (It will not create
credit memo)
Advance payments/ Down payments (F-58) are NOT updated in PO History
If an item out many item in an invoice is cleared for payment and other items are in
blocked for other reasons, the ITEM-WISE RELEASE is NOT possible
Automatic Payment Program (APP)
Credit Master Basic Parameters Online parameters Invoice document
PROPOSAL RUN
PAYMENT RUN
PRINT RUN
MESSAGE DETERMINATION PROCESS
1
Message Determination SCHEMA PURCHASE ORDER
PO - RMBEFO Vendor - VVVVV
Pur. Orn - XXXX
2
MESSAGE TYPES
1. New Printout - NEU
2. Reminder - MAHN
MESSAGE TPYE
ACCESS SEQUENCE
3 ACCESS SEQUENCE
4 1. Doc Type/ Pur Orgn./ Vendor
2. Document type
RECORDS OF MESSAGE TYPES MESSAGE HEADER
1. NO valid record exists Message Type Printer
2. Valid Record exists NEU 1DRUCKLF 123
5
PRINTER
1. Output immediately
2. Number of copies -2
CUSTOMIZING of MESSAGES in PURCHASING
1. Texts for messages. – We can maintain any text if required. Separate options for
a. Document header
b. Document Item
c. Document Supplement
d. Change Texts
e. Headings
For
1. RFQ
2. Purchase Order
3. Contract
4. Scheduling Agreement
5. Purchase Organization
2. Forms (Layout sets) for Messages
Adjust forms separately for
1. Purchase Organization
2. RFQ
3. Purchase Order
4. Contract
5. Scheduling Agreement Delivery schedule
3. EDI
1. Set-up partner profiles
1. Bank – B
2. Benefits Provider – BP
3. Customer – KU
4. Vendor – LI
5. Logical system – LS
6. Partner type –US
2. Profiles for sending Stocks/ Sales data
4. Output Control
1) Condition Tables for RFQ, PO, Outline Agreement/ Sch. Agreement release
Select the Tables
1. Purchase Order Type
2. Purchase Organization
3. Vendor
Condition Tables – General)
025 – Document type/ Purchase Organization/ Vendor
026 – Document type only
027 – Purchase Organization / Vendor EDI
987 – Purchase Organization
Variants available for selection of condition tables are:
1. Company Code
2. Purchase Organization
3. Inter company
4. Ordering address
5. Purchase document type
6. Purchase group
7. Supplying Plant
8. Vendor
2) Access Sequence – it is CROSS CLIENT
Define access sequence for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery
0001 - Document type/ Purchase Organization/ Vendor (025)
Access for inbound delivery should be delivery type
3) Message (Output Type) Type
Define message types for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery.
Standard message types are
1. NEU – New PO printout
2. AUFB – Dunning Order confirmation
3. ERIN – reminder
4. MAHN – Dunning
For each message (output type) type,
Processing routines like
a. Print
b. Fax
c. EDI
d. ALE are to be fixed
For each processing routines, the partner functions like
a. Ordering address
b. Vendor
c. Delivering Plant, etc are to be assigned
4) Requirement of Output control
Keep the tick for make it active
5) Message determination Schema
Schema (Procedure) to be attached for each of
RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery
6) Partner roles per message type
Define partner role for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery
5) Assign output device to Purchasing group
Attach printer/ output device to each purchasing group
6) Field relevant Purchasing document changes
Detailed selection of filed names in the documents
11 RELEASE PROCEDURE
Key terms in release procedure
1. Release strategy – It controls entire release procedure/ approval process. It contains
release conditions, release codes and release pre-requisites
2. Release Condition – It determines which release strategy applies for a situation
3. Release Codes – Represents an individual/ Deptt. That must give their approval. It’s
a 2 character key. These release code should be attached to a release object (‘2’ for
Purchasing documents)
4. Release pre-requisites – It will tell the system the order in which approval process
will take place.
5. Release Status/ Indicator – The code represents the release status of a document
Release procedure can be WITH and WITHOUT Classification
ONLY PURCHASE REQUISITION is having the facility of release procedure WITH
and WITHOUT classification. All other can have ONLY WITH CLASSIFICATION
Release can be applied to TOTAL items (HEADER LEVEL)and also can be by
ITEM-by-ITEM (ITEM LEVEL). It is determined by the DOCUMENT TYPE
Purchase requisition is the ONLY purchasing document that having the facility of
ITEM LEVEL release strategy. All others are at HEADER LEVEL only
We can cancel a previously affected release and reset the former release status.
A Release strategy can include up to EIGHT Release points
A release condition must be defined as classification characteristic (Eg. Plant/ Gross
Amount). The part of the characteristic definition is a link to a FIELD of the
COMMUNICATION STRUCTURE (CEBAN – for PR or CEKKO – for external
purchasing documents). The classification characteristic should have the attribute
“Multiple Value” so that you can not only maintain the characteristic value but can
enter several values, if necessary
Group together all characteristic that we wish to use in release strategy for PRs or
external purchasing documents in a class. The class must be assigned to class type
‘032’. This release class is assigned to the release object in customizing
Pre-requisites for release strategy customizing
1. Release class type ‘032’
2. Release characteristics (WERKS –Plant, GNETW – Net PO value, etc)
Process flow of Release Strategy
1. Create/ Edit characteristics
Create characteristics for the release strategy control objects like Plant/ Total PO
Value/ Invoice value, etc. Table –EBAN for PR & CEKKO for purchasing documents
2. Create/ Edit class
Name a class, create it in class type ‘032’
In basic data tab, you can enter the validity of this class.
In characteristics tab, enter the characteristics created in step 1 along with Data type,
Number of character, decimal points, unit of measurement, etc.
3. Set-up Procedure with classification (Do it in a sequence)
1. Create release group/ Code
It’s a 2 digit key and is to be assigned to a release object‘2’.
Provide the overall release tick
Enter the class created in step2
2. Release codes
In each group/ code, enter the release codes.
Workflow is also can be attached here
3. Release Indicator
Define the release indicator here, like released, under process, blocked
Changeability options are available here
You can assign the % value change against each release indicator
Changeability Indicators available in standard system are:
1. BLANK – Changeable, new release in case of new strategy
2. 1 – Cannot be changed
3. 2 – Changeable, No new determination of strategy
4. 3 – Changeable, New release in case of new strategy
5. 4 – Changeable, new release in case of new strategy OR value change
4. Release strategy
Different strategies are to be created for each release groups/ Codes
1. Release pre-requisite – Select the appropriate check boxes for each
strategy
2. Release statuses – Attach the release indicator for each step in each
strategy
3. Classification – Enter the specific values for the characteristics created ion
step1 for each strategy
4. Release Simulation – Simulate and see for errors by the system
12 PRICING PROCEDURE
Time dependent conditions
We can specify in customizing via Document type whether time dependent (TD) or
Time Independent (TID) conditions can be maintained for Outline Agreements
Conditions in Purchase Order are Time independent
TD conditions can be maintained for
1. Plant specific
2. Purchase Organization specific
3. Reference Purchase Organization specific
4. Info Record
5. Outline agreements
6. General conditions
TD conditions can be limited to a VALIDITY PERIOD
Price/ quantity scaling
We can specify the limits for TD conditions
TD conditions from info record or Outline agreements are accepted as default
values in Pos
Maintaining TD Conditions
Conditions can be maintained using master data menu in purchasing. But SAP does not
recommend it. But maintain them in the relevant documents or in the info records
1. Using Master data menu for maintaining TD conditions
a) Master data > Conditions > Prices
b) Master data > Conditions > Discounts/ surcharges
- per Vendor
- per Condition group
- per material type
- per invoicing party
Condition types – Vendor discount – RL01
- Group discount – RGRO
- Miscellaneous – MAR1
- Accounting discount – REST
c) Master data > Conditions > Other
Condition types – GAU2, NAVS and you can create your own here
No Access sequences for supplementary conditions.
Eg. Material specific discounts & surcharges
No Separate price determination for PB00. They are found using condition record for the
gross price. PB00 is NOT having any access sequence
CONDITION TYPES.
Each condition type is defined with
1. Condition class
2. Calculation Type
3. Condition category
4. Access sequence
Individual conditions are described by condition types
Examples like Gross Price, Freight, etc
Condition types are defined together with their CONTROL PARAMETERS in
customizing.
Condition types are differentiated broadly by their Condition class and finely by
Condition Category
Condition type stipulates how the R/3 system calculate the condition value
‘+’ or ‘-‘ sign determination whether a condition is treated as + or –
-ve amounts are Discounts
+ve amounts are Surcharges
Scale basis foe scales depend on condition type. Scale can be on quantity or value
Access Sequence is assigned to a condition type (Not mandatory)
Access sequence is a search strategy that enables you to specify the order in which
condition tables are to be searched for relevant entries for a condition type
In standard SAP R/3 system
No access sequence is attached for Discounts and surcharges (RA00, RA01..)
because they DO NOT HAVE ANY SEPARTE VALIDITY PERIODS.
They are maintained at the same time as the Gross Price (PB00) and their
validity period is always the same as the validity period of Gross Price
Some of the condition types and its control parameters are;
Goss Price – PB00
Condition Class – Prices
Calculation type – Quantity dependent
Condition Category – Basic Price
Access Sequence – Gross Price
Freight – FRB1
Condition Class – Discount / Surcharges
Calculation type – Fixed amount
Condition Category – Delivery Costs
Access Sequence – Not applicable
CASH DICOUNT - SKTO
Condition Class – Discount/ Surcharges
Calculation type – %
Condition Category – Cash Discount
Access Sequence – Not applicable
The CONTROL FUNCTIONS of condition types are
1. Condition Class (Price or Discount, etc. )
2. Condition Type ( Quantity or Value or % or fixed, etc. )
3. Condition Category (Gross or delivery cost, Etc)
4. Access Sequence (Gross Price, etc)
CUSTOMIZING CONDITION TYPES
Condition types defines the properties and characteristics of a Pricing element
Condition types are defined in customizing
We should not change the standard condition type available in the standard system
If a new condition type with a validity period is created, it must have an access
sequence assigned to it
A condition class and a calculation type must be assigned to a Condition type along
with a Condition category
Condition types can be defined as a HEADER CONDITION or ITEM CONDITION
or GROUP CONDITION
Condition amounts/ Values CAN be changed or deleted by change option by manual
entry
A CALCULATION SCHEMS (PRICING PROCEDURE) for supplementary
conditions must be assigned to the Condition type for the Gross Price
Scaling facility and upper & Lower limits are available for condition types
Options in Condition type (General)
1. CONTROL DATA 2. GROUP CONDITION
1Condition Class
A Discount/ Surcharge 1Group condition
B Prices 2Group condition routine
C Expenses 3Rounding difference comparison
D Taxes
E Extra Pay
2Calculation Type 3. CHANGES WHICH CAN BE MADE
A Percentage
B Fixed amount 1Manual Entries - No Limitation
C Quantity A Free
D Gross Weight B Auto entry priority
E Net weight C Manual entry priority
F Volume D No manual entry priority
3Condition Category
A Packaging
B Delivery cost
C Insurance
D Taxes
E Cash Discount
F Freight
G Cost
4Rounding Rule
Commercial
A Round up
B Round down
5Structure condition
A Condition to be duplicated
B Cumulation of condition
6+' or '-' sign
ACCESS SEQUENCE
It’s a search strategy that enables you to specify the order in which Condition tables
are to be searched for relevant entries for a condition type.
It is assigned to a condition type
The order of access is determined by the order of the condition table in the access
sequence.
The EXLUSIVE INDICATOR determines that the search for further entries in
condition tables is interrupted if an access was successful and a relevant entry was
found
Condition types WITH VALIDITY period SHOULD HAVE an access sequence
We CAN NOT assign an access sequence to a HEADER CONDITION
EXCLUSION OF CONDITIONS
Define Condition Exclusion
In this step, you define the condition exclusion process.
If several condition records are valid in the price determination process, you must define
rules stipulating which conditions are selected and which are disregarded. To do this, use
the condition exclusion mechanism.
The exclusion of condition records is controlled via exclusion groups. An exclusion group
is a list of condition types that are compared with each other during the price determination
process. The result may be the exclusion of a whole group of conditions or the exclusion of
individual conditions within a group.
The result of the price determination process can thus be influenced with regard to a
desired criterion (for example, the lowest price) by the exclusion of certain condition types,
whereas others are taken into account in this process.
Example
You can define a condition exclusion process that determines the most favorable
price and excludes less favorable but fundamentally possible pricing results. The
lowest price then overrides the condition type priorities that would have been
dictated by the access sequence.
In the calculation schema you define the procedure by which selection within or between
the condition exclusion groups takes place. The following possibilities are available:
Selection of the most favorable condition type within a condition exclusion group.
Selection of the most favorable condition record of a condition type if more valid
condition records exist (for example, selection from different condition records of
condition type PR00)
Selection of the most favorable of two condition exclusion groups (in this case, all
condition types of the two groups are cumulated and the totals compared with each
other)
The tables for the exclusion of conditions are supplied empty. You must therefore work
through the following points if you wish to use the condition exclusion facility:
Define condition exclusion groups
Assign condition types to condition exclusion groups
Enter condition exclusion groups in the calculation schema and define a procedure
for the determination of the condition types to be excluded.
Activities
1. Create a condition exclusion group by entering an alphanumeric key that is max.
four characters long, together with a description.
2. Assign the condition types to a condition exclusion group. A condition exclusion
group can contain any number of condition types.
3. Enter the condition exclusion group in the calculation schema that you will be
using for price (or cost) determination purposes.
4. In the process, note the sequence (consecutive numbers) in which the exclusion
groups are to be processed.
You can use two exclusion groups for condition exclusion purposes. In this case,
you must choose procedure "C", which determines the lowest price between two
exclusion groups.
Condition records in Condition Tables
Conditions are stored in the system in a condition record
Condition tables enables you to vary the key structure of condition records
Key fields of condition tables are (generally)
1. Vendor / Material / Purchase Organization / Info record category
2. Vendor / Material / Purchase Organization/ Plant / Info record category
3. Vendor / Material / Purchase Organization / Info record category/ Order
Unit
4. Purchase Document / Item / Plant
The entries in Condition tables are Key part or DATA part
Data part contains the number of condition record
Conditions are stored in following tables
1. KONP – Time dependent conditions – Item
2. KONH – Header Conditions
3. KONM – Quantity scales
4. KNOW – Value scales
We can creates new condition tables. The numbering should be between 501 to 999.
We can select the required filed from “Field catalogue”
We can include the fields of Communication structures like – KOMK, KOMP &
KOMG
PRICING PROCEDURE (Calculation SCHEMA)
It is the frame work for determining the purchase or valuation price, which groups
together all the condition types that are relevant to this particular process
The Pricing procedure defines
1. Permissible condition types
2. Condition type for which conditions are to be adopted automatically
(Manual indicator)
3. Condition types for which the Net price calculation is applied (Statistical
Indicator)
4. Order in which the condition types are taken into account in the calculation
of Net or effective price
5. Condition types for which subtotals are calculated
6. Requirements that must be satisfied before a certain condition type is taken
in to account
Sequence of conditions
The step numbers of the condition type in the pricing procedure determines the
sequence in which condition types are to be taken in to account in the calculation of
net or effective price.
This sequence CAN NOT be changed in the document, even if Condition types are
entered manually
Condition type assigned to the same step in the procedure are sorted by means of a
counter
With these condition types, the order of manual entry decides the point at which the
condition type is taken in to account in the procedure for effective price
You can limit the value of condition by fixing the lower and upper limits of a
particular condition in customizing (Define Limits)
If any condition in the schema is not having an access sequence, then the manual
tick is a mandatory requirement. If we are not giving the manual tick, this condition
type will automatically populated in your document
SCHEMA DETERMINATION
The system will pick-up the pricing procedure as per the settings made in
customizing for schema determination.
Schema Purchasing Organization, Schema group vendor (Attached in Vendor
master) and the assignment of pricing procedure for this combination
The schema group of Stock transport order depends on
o Purchasing Organization
o Document type
o Supplying Plant
Schema assignment for the calculation of MARKET price in Vendor evaluation
depends on Purchase Organization
The pricing procedure for external service management depends on the
DOCUMENT TYPE
A uniform pricing procedure per document type
INFO RECORD and ORDER PRICE HISTORY
Info record can be created manually or auto thru documents
If Info record is created manually, the GROSS PRICE and supplementary
conditions (Discounts & Surcharges) CAN BE maintained for a certain validity
period
If an info record is generated from a Contract, the gross price and
supplementary conditions are adopted in the info record
If an info record is generated from a PO or Scheduling Agreement, the
conditions ARE NOT ADOPTED in to the info record. But adopted to
ORDER PRICE HISTORY
If an info record conditions exists and valid, they are suggested when a new PO is
created
R/3 system uses the PO History data, if the valid info record is NOT available
In info record list, displays a distinction is made between
Info record conditions – Head word “CONDITION”
The conditions in Last PO – Head word “Purchase Order”
HEADER, GROUP & ITEM CONDITIONS
Item Condition – Conditions relating to a single item of document
Header condition - % or Fixed amount – Conditions applicable to all the items in
the document
No automatic price determination process carried out for Hearse condition. So
there is No access sequence for header conditions
Group condition – is a condition relating to several items of a document.
The condition values (price/ Order quantity/ Weight/ Volume) of the relevant items
are added and the total used as the condition basis
Assigning of condition type to header or group condition is defined in customizing
of condition type
If a header condition is Fixed amount, the value will be distributed to all the items
proportionately
If the header condition is in %, the value will be distributed to all the items by the
same %
The group condition value will be proportionately distributed to all items in the
document
The scale value of group conditions are applicable to the basis of cumulated item
values
Logistics Information System
You can create a filed catalog in MC18 and pull it during MC21 or directly MC21
There will be 2 different application areas in MM
02 for PURCHIS and 03 for INVCO
Path in Easy Menu – Tools > ABAP workbench > Development > Work flow > Reporting
> Workflow information system > Environment > info structures (MC 21/22/23) &
Updating (MC24/25/26)
1. Create Info structure – MC21
Initial screen
The info structure number should be in between S500 to S999
Attributes taken as standard and planning possible selected
Next screen
See the status as not saved
a) Now we have to select the characteristics and key figures of characteristics
3 Characteristics selected – Plant, Vendor & material
b) Now we have to select key figures for these characteristics
1 Key figure total valuated stock selected
c) Save the Info structure (save as a local object)
d) Check the info structure – See that there should not be any error message
e) Now generate the info structure by clicking the icon – See that there should not be any
error message
f) Save the info structure
2. Create Update the Info structure – MC24
Initial screen
Now we have to mention rules for key figures & characteristics
a) Rules for key figures
Clicking on rules for key figures, a pop-up comes. You can click on suggest rules so that
system will suggest the entries or you can enter directly
Select copy
b) Rules for characteristics
System automatically suggests the table name & filed names
Copy it
c) Generate – Click on generate icon. See that there should not be any error message
d) Update – Click on update icon
System will show all info structures.
Select the respective one and look for details
In the pop-up enter the parameters for updation
Now save the updation
Again generate and check for any errors. Save and go back
Now the info structure is ready. You can view it through transaction code – MCSK for
inventory) and MCSJ for Purchasing
Select MCSK in our case, system will call the above info structure and field will be
populated as per your requirement
Early Warning System
1. Create an exception in MC/1 transaction
Select an area and give a Name. The structure Name should be SXXX
(below200)
Choose characteristics
Choose Key figures
Give the requirements for early warning
Give the detail of follow-on processing – Mail ID , etc
Select each characteristic and give the Value (Plant – 0001, etc)
2. Create the exception through a transaction- System will send a message as per
the configuration
