Logistics by yaoyufang

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Lesson Overview
   In this lesson you will gain an understanding
    of the Procurement processes and how
    Procurement is integrated within other
Lesson Objectives
   After completing this lesson, you will be able
    –   Outline the tasks associated within the
        procurement cycle
    –   Explain how SAP within mySAP ERP supports
        the key processes in Procurement
Business Example
   Your company, IDES, needs materials for
    their production processes.
   Materials are procured directly for stock.
    IDES employees can procure consumable
    materials directly from online catalogs.
Procurement Process Overview
   Procurement in mySAP ERP covers not only
    traditional processes such as requisitioning,
    purchase order management, and invoice
    verification, but also catalog-based self-service
    requisitioning for maintenance, repair, and
    operations (MRO) materials and services.
   This catalog integration is expanded to maintenance
    operations and project management.
   Procurement in mySAP ERP improves procurement
    processes by facilitating plan-driven and ad hoc
    purchasing, complete inventory management, and
    intelligent reporting on all procurement activities.
   In addition to providing supplier relationship
    management tools, mySAP ERP enables supplier
    selection and qualification, contract negotiations, bid
    invitations, and vendor evaluation.
   Support for process variant optimization
    allows individual categories of material or
    services to be procured in the most
    appropriate way; for example, the
    subcontracting process supports the delivery
    of components required by outsourced
    manufacturing steps, and procurement
    through invoicing plans helps improve rental
    and leasing processes.
   The basic Procurement (or Purchase to Pay)
    cycle for a service or material consists of the
    following phases:
Determination of Requirements
   Material requirements are identified either in
    the user departments or via materials
    planning and control.
   You can enter purchase requisitions yourself
    or they can be generated automatically by
    the materials planning and control system.
   This can cover both MRP and the demand-
    based approach to inventory control.
   The regular checking of stock levels of
    materials defined by master records, use of
    the order-point method, and forecasting on
    the basis of past usage are important
    aspects of inventory control.
Source Determination
   mySAP ERP helps you identify potential
    sources of supply based on past orders and
    existing longer-term purchase agreements.
   This speeds the process of creating requests
    for quotation (RFQs), which can be sent to
    vendors electronically via EDI, if desired.
Vendor Selection and Comparison of
   The system is capable of simulating pricing
    scenarios, allowing you to compare a
    number of different quotations.
   Rejection letters can be sent automatically.
Purchase Order Creation
 The purchase order adopts information from the
  requisition and the quotation to help you create a
  purchase order.
 As with purchase requisitions, you can generate
  purchase orders yourself or have the system
  generate them automatically.
 Vendor scheduling agreements and contracts (in the
  SAP system, types of long-term purchase
  agreement) are also supported.
Purchase Order Follow-Up
   The system checks the reminder periods you
    have specified and, if necessary,
    automatically prints reminders or expediters
    at the predefined intervals.
   The system also provides you with an up-to-
    date status of all purchase requisitions,
    quotations, and purchase orders.
Goods Receiving and Inventory
   Goods receiving personnel can confirm the
    receipt of goods simply by entering the
    purchase order number.
   By specifying permissible tolerances, buyers
    can limit over- and under-deliveries of
    ordered goods.
Invoice Verification
   The system supports the checking and matching of
   The accounts payable clerk is notified of quantity
    and price variances because the system has access
    to purchase order and goods receipt data.
   This speeds the process of auditing and clearing
    invoices for payment.
Purchase Orders
   A purchase order is a formal request to a
    vendor to supply certain goods or services
    under the stated conditions.
   You can create purchase orders without
    reference, or with reference to a purchase
    requisition, a request for quotation, or
    another purchase order.
   When you enter the purchase order data, the system
    suggests default values.
   For example, the system suggests the ordering
    address, as well as the terms of payment and freight
    (incoterms) from the vendor master record.
   If you have maintained a material master for a given
    material in the SAP system, the system suggests the
    material short text or the material group, for
   If a purchasing info record already exists in the
    system, the system copies a price proposal to the
    purchase order.
   You can either send the purchase order to a
    vendor or carry out a stock transport order in
    another plant belonging to your company or
   In both cases you can take into account the
    associated freight costs in the purchase
Self-Service Procurement
   Self-Service Procurement allows employees
    to create and manage their own requisitions.
   It relieves your purchasing department of this
    administrative burden while making the
    procurement process both faster and more
   Providing catalogs of the most frequently ordered
    materials ensures that employees can easily
    manage their own purchase orders in accordance
    with your organization's rules.
   Self-Service Requisitioning means purchasing non-
    strategic goods, that is, goods not directly linked to
    the value chain (often called MRO: maintenance,
    repair, and operations items).
   This includes, for example, office materials, work
    clothes, and IT equipment.
Posting a goods receipt to stock with reference
  to a purchase order has a number of
  advantages for you, including:
  –   The goods receiving point can check whether the
      delivery is the same as the purchase order data,
      that is, whether the goods that were ordered have
      been delivered.
   The system suggests data from the purchase
    order when you enter the goods receipt (for
    example, items and quantities).
   This makes it easier to enter the goods
    receipt and check over-deliveries and under-
    deliveries when goods arrive.
   The purchase order history is automatically updated
    as a result of the deliveries.
   The purchasing department can send a reminder
    about late deliveries.
   When you post a goods receipt to the warehouse,
    the system creates a material document containing
    information such as the material delivered and the
    quantity delivered.
   The system also records the storage location for the
    materials you place into stock in the plant.
   In transactions relevant for material
    valuation, the system creates at least one
    accounting document that records the effects
    of the goods movement on the value of the
Invoice Verification
 The procurement process is concluded by the
  invoice verification process, during which invoices
  and credit memos are entered and the contents and
  prices are checked for accuracy.
 However, payment and evaluation of invoices is not
  part of invoice verification; the appropriate
  information for these tasks passes on to other
 Invoice verification, therefore, creates a link between
  Procurement and Accounting.
   When you enter an invoice with reference to
    a purchase order, the system suggests data
    from the purchase order and the goods
    receipts for the purchase order (for example,
    vendor, material, quantity still to be invoiced,
    terms of payment, and so on).
   If there are discrepancies between the purchase
    order or goods receipt and the invoice, the system
    warns the user and, depending on the system
    configuration, blocks the invoice for payment.
   The posting of the invoice completes the invoice
    verification process.
   The system updates the purchase order history and
    Financial Accounting initiates payment for the open
    invoice items.
   You can issue all purchasing documents as
   Each time you create an RFQ (Request for
    quotation), purchase order, contract, or scheduling
    agreement, the system can create a message from
    the document affected.
   This message is then placed in the message queue.
   The message queue contains all messages
    that have not yet been transferred to the
   To issue the message (by printing, e-mail,
    fax, or EDI) from the message queue, you
    have the following options:
   Issue immediately:
    –   The system issues the message directly from the queue, in
        other words, as soon as you save the document.
   Issue later:
    –   Either you schedule a background job that processes the
        message queue in determined intervals, or you start the
        issue directly from the purchasing menu.
    –   As a rule, you issue the messages using the background
        job and start the issue manually only as an exception (such
        as for rush orders).
   For the message issue, you can specify which
    header texts and item-based texts the system
   The header text is printed at the top of the purchase
    order and contains general information.
   Item texts describe a purchase order item in more
   You can also include and issue standard texts.
   In the ordering transaction, you can display a
    document on your screen before printing it.

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