Procurement Processes EGN 5620 Enterprise Systems Configuration Fall

Procurement Processes EGN 5620 Enterprise Systems Configuration Fall, 2012

Procurement Processes SAP Implementation EGN 5620 Enterprise Systems Configuration Fall, 2012

Business Process Integration FI MM SD Master Data Rules FI MM SD FI FI MM MM SD SD January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 3

Business Process Integration Purchase Process January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 4

Rules (review) Rules define the parameters for Master Data and Transactions Rules determine functionality for Master Data and Transactions Rules are relatively fixed Rules change, when corporate policy changes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 5

Rules (review) Material Management • Fiscal Periods • Account Groups • Material Types • Plant Parameters • Purc. /Rec. /Inv. Tolerances • Automatic Account Assignment • Reservations • Material Group • Loading Group January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 6

Transaction Data (review) Transaction data are application data; each transaction is dynamic and unique, unlike master data and organization data which do not change very often. Transaction data use (is comprised of) organization data, master data, and rules Transaction data includes internal and external exchanges that describe business activities January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 7

Purchasing in SAP R/3 (review) The purchasing process resides in the Materials Management (MM) module of SAP R/3 as well as the Finance (FI) module Master data for the purchasing process exists in the (MM) and (FI) modules The purchasing process may interface with the modules below: ◦ Production Planning (to plan for production), ◦ Quality Management (to check quality at receipt), and ◦ Warehouse Management (to put away) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 8

Procurement Process (Procure-to-Pay) Purchase Requisition Purchase Order Notify Vendor 3 -Way Match Payment to Vendor Invoice Receipt January 2008 Vendor Shipment Goods Receipt © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 9

Create & Save Purchase Order

Purchase Order in SAP Three sections in a purchase order: ◦ Header ◦ Item overview ◦ Line item

Purchase Order Structure Header Vendor Purch. Org. group Company Date PO Price Item Overview Purchase Order 45. . . 01 Materials Quantities Delivery Date Price/Uof. M Currency Plant Line Item PO History Line Price Delivery Schedule Tolerances Storage

Purchase Order Structure: Header - information specific to the entire purchase order ◦ Vendor ◦ Purchase organization data ◦ Condition (total purchase price) ◦ Partner ◦ Payment process ◦ Status January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 13

Purchase Order Structure: Line Items Line item – purchasing information required for the item ◦ Item category ◦ Material id and description ◦ Materials or services quantity ◦ Delivery date ◦ Net price ◦ Currency ◦ Plant ◦ Storage location ◦ Measurement unit January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 14

Purchase Order Structure: Item Details ◦ Material data for the item ◦ Quantities/weights ◦ Delivery schedule ◦ Invoice ◦ Conditions (Purchasing price for the item) ◦ Delivery address ◦ Confirmation ◦ Condition control ◦ Subcontracting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 15

Purchase Order: Output Format Printed and mailed E-mail Electronic Data Interchange (EDI) Faxed (hardcopy or electronic) e. Xtensible Markup Language (XML) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 16

Search Purchase Orders You can search for the purchase order number with ◦ Material number, ◦ Vendor number, etc. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 17

MM: Goods Receipt Notify Vendor Purchase Order 45. . . 01 Vendor Receipt Shipment

Goods Receipt – Movement Types Movement types ◦ Goods receipt ◦ Goods issue ◦ Stock transfer - stock transactions Movement type determines which ◦ Quantity fields are updated ◦ Stock types are updated ◦ General Ledger (G/L) stock or consumption accounts are updated ◦ Fields are displayed during document entry January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 19

Material Movements When a goods movement takes place it is represented by a Movement Type ◦ Movement types are three-digit keys used to represent a movement of goods 101 – goods receipt into warehouse 102 - reversal of goods receipt for purchase order into warehouse/stores 103 – goods receipt into GR blocked stock 122 – return delivery to vendor 501 - receipt w/o purchase order into unrestricted-use stock

Goods Receipt Goods receipt is a goods movement activity in which we accept goods into our system. If materials are delivered against a purchase order we will reference that order and SAP can ◦ retrieve data from the PO for us to verify: material, quantity, and so on ◦ Update inventory G/L account automatically ◦ Update purchase order history with the receipt ◦ Update physical inventory

Goods Receipt – Destinations Goods receipt into (destined for) the warehouse Goods receipt into consumption Goods receipt posted into blocked stock ◦ SAP increases total valuated stock by the delivered quantity. ◦ SAP updates the stock value at the same time. ◦ SAP only updates the consumption statistics in the material master record ◦ SAP does not update the consumption statistics if the goods movement posting uses the special stock types: sales order stock type and project stock. ◦ SAP maintains the same stock level. ◦ SAP only records it in good receipt block stock of the purchase order history. Note: ◦ If goods receipt is being posted into a storage location where data does not yet exist for the material, SAP automatically © SAP AG - University Alliances creates a storage location data in the material master and The Rushmorerecord. Group, LLC January 2008. All rights reserved. 22

Goods Receipt – Effects Purchase Order (PO) history and Purchase Order (PO) updated Material Master - stock and value updated Notification of goods receipt issued (optional) Transfer request to the Warehouse Management module (if active) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 23

Goods Receipt – Effects (continued) Material and financial documents created and/or updated Stock and consumption accounts updated Inspection notification in the Quality Management (QM) module - if active January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 24

Goods Receipt – Account Postings Inventory account is debited at standard price Goods Receipt/Inventory Receipt (GR/IR) clearing account is credited at purchase order price Price difference account is debited (credited) with difference between standard price and purchase order price January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 25

Goods Receipt – Account posting Purchase requisition Purchase order Goods receipt No impact on Financial Accounting (FI) Materials Management (MM) and Financial Accounting (FI) via automatic account assignment

Invoice Receipt Process Tasks: Engage in 3 -way match to validate the invoice. Enter PO number to retrieve the PO and view (verify) ◦ ◦ ◦ Open dollar amount. Quantity, Price, receiving date, Vendor name Enter the invoice number and the dollar amount to be paid Simulate invoice posting Post the invoice in SAP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 27

3 -Way Match for Payment Purchase Order Payment Program Invoice Receipt Debit Credit Verification Goods Receipt January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 28

Invoice Processing - 3 -Way Match Incoming Invoices are reference against a Purchase Order to verify their content, prices, and arithmetic. If discrepancies arise between the purchase order or goods receipt and the invoice the system with generate a warning or an error ◦ Depending on system configuration the difference could cause the system to Block the Invoice Purchase order - Target quantity - Target price - Invoice receipt - Actual price - Goods receipt - Actual quantity -

Invoice Verification - 3 -way match Matches the vendor’s invoice to the purchase order and the goods receipt (3 rd part of 3 -way match) Matches price and quantity Updates the purchase order and its history Updates accounting information January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 30

Financial effects of Invoice Posting When an invoice is posted, SAP shifts the liability ◦ From the Goods Receipt/Invoice Receipt account (for the purchase order) ◦ To the vendor account Upon posting, SAP: ◦ Updates the Purchase Order ◦ Updates the Material Master ◦ Creates an Accounting Document ◦ Initiates the payment process within Financial Accounting

Invoice Receipt Reconciliation Account Invoice receipt Amount owed is assigned and transferred to vendor account payable

Invoice Payment Selects invoices for payment based on the payment terms in the vendor master or purchase order Generates payment for released invoices Updates accounting information January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 33

Accounts Payable Settlement Process Determines: ◦ Which open items to be paid ◦ When they will be paid ◦ Which bank to make payment ◦ Payment medium ◦ Who will get paid Payment process creates a financial accounting document to record the transaction January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 34

Payment to Vendor Can be done automatically or manually ◦ Post Outgoing Payment vs. Payment Program Elements of the Payment Transaction: ◦ Payment Method ◦ Bank from which they get paid ◦ Items to be Paid ◦ Calculate Payment Amount ◦ Print Payment Medium Process will create a financial accounting document to record the transaction

Vendor Payment Bank Amount owed is paid to vendor and account payable is reduced

Procurement Processes PEN, Inc. EGN 5620 Enterprise Systems Configuration Fall, 2012

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Check PO History (ME 23) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39

Check PO History (continued) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 40

Check Inventory January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 41

Exercises: (Due date 10/15/2012) 100. 101. 102. 103. 104. 105. 106. 107. Create a Purchase order for Slick Pens Create a purchase order for premier pens Create a purchase order for Promotions Ltd. Create receipts for the purchase orders Create an invoice receipts from vendors Post payments to vendors Display vendor line items Create purchase outline agreement (contract) for Stock item