In this lesson you will gain an understanding
of the Procurement processes and how
Procurement is integrated within other
After completing this lesson, you will be able
– Outline the tasks associated within the
– Explain how SAP within mySAP ERP supports
the key processes in Procurement
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
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.
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
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
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.
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
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 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
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
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
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
The system updates the purchase order history and
Financial Accounting initiates payment for the open
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:
– The system issues the message directly from the queue, in
other words, as soon as you save the document.
– 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.