Procurement Processes EGS 5620 Enterprise Systems Configuration Spring

Procurement Processes EGS 5620 Enterprise Systems Configuration Spring, 2016

Procurement Processes SAP Implementation

Business Process Integration MM Master Data Rules MM MM MM January 208 3

Transaction Data Transaction data • application data • dynamic, and • unique document number. Transaction data use organization data, master data, and rules. Transaction data describing business activities includes ◦ Internal exchange, and ◦ External exchanges 4

Purchasing in SAP ERP Purchasing process resides in ◦ Materials Management (MM) module, and ◦ Finance (FI) module Master data for the purchasing process exists in (MM) and (FI) modules Purchasing below: process may interface with the modules ◦ 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. 5

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. 6

Purchase Order Structure 1. Header Vendor Purch. Org. group Company Date PO Price 2. Item Overview Purchase Order 45. . . 01 Materials Quantities Delivery Date Price/Uof. M Currency Plant 3. Item details PO History Line Price Delivery Schedule Tolerances Storage

Purchase Order Structure

Purchase Order Structure: 1. Header information specific to the entire purchase order, such as ◦ 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. 9

Purchase Order Structure: 2. Items Overview Line item – purchasing information required for the item ◦ Item category (standard, consignment, service, …) ◦ 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. 10

Purchase Order Structure: 3. 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. 11

Purchase Order: Output Format Printed and mailed E-mail Electronic Data Interchange (EDI) Faxed (hardcopy or electronic) Extensible Markup Language (XML) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 12

Search Purchase Orders You can search for the purchase order number with ◦ Material number (T-code: ME 2 M), ◦ Vendor number (T-code: METL), etc. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 13

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 are updated ◦ Stock types are updated (e. x. QA, Block, unrestricted) ◦ 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. 15

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 inventory. Data from the purchase order used to verify: 1) 2) 3) 4) 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 ◦ increases total valuated stock by the delivered quantity. ◦ updates the stock value at the same time. Goods receipt into consumption Goods receipt posted into blocked stock ◦ only updates the consumption statistics in the material master record ◦ does not update the consumption statistics if the goods movement posting uses the special stock types: sales order stock type and project stock. ◦ maintains the same stock level. ◦ only records it in good receipt block stock of the purchase order history. 18

Goods Receipt – Effects 1) 2) 3) 4) 5) 6) 7) Purchase Order (PO) history and Purchase Order (PO) updated Material Master - stock and value updated Material and financial documents created and/or updated Stock and consumption accounts updated Inspection notification in the Quality Management (QM) module - if active Notification of goods receipt issued (optional) Transfer request to the Warehouse Management module (if active) 19

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 20

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 22

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. 23

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 will 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 25

Financial effects of Invoice Posting When an invoice is posted, the liability is shifted. From the Goods Receipt/Invoice Receipt account (for the purchase order) to the vendor account Upon posting invoice, SAP: 1) Updates the Purchase Order 2) Updates the Material Master 3) Creates an Accounting Document 4) Initiates the payment process within Financial Accounting

Invoice Receipt vendor and Reconciliation Account Invoice receipt Amount owed is assigned and transferred to vendor account payable and automatically move to Account payable (A/P)

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

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

Procurement Processes Global Bike, Inc.

250 US## Nxx US## DL##/MI##/SD ## 3

Purchase Requisition (ME 51 N) 32

Purchase Order (ME 21 N) 33

Setting for Goods Receipt (MIGO) 34

Goods Receipt for PO (MIGO) 35

Invoicing for PO (MIRO) 36

Receipt for PO (F-53) 37

Check PO History (ME 23 N) 38

Check Inventory January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39

Lab 5 Exercises: (Due date 3/21/2016) 1. Create raw materials 2. Create purchase requisitions for trading goods 3. Create Purchase orders for trading goods from PR 4. Create goods receipt for trading goods 5. Post invoice for purchasing trading goods 6. Pay vendors for trading goods 7. Create purchase order for raw materials 8. Create goods receipt for raw materials 9. Post invoice for purchasing raw materials 10. Pay vendor for raw materials 11. Review purchase order history 12. Review stock status after purchase orders processed