Procurement Master Data

Master Data

Vendor Master Data Material Master Data Purchasing info Record Condition Master Data Output Master Data

When you enter a goods movement, you start the following chain of events in the system:

A material document is generated, which is used as proof of the movement and as a source of information for any other applications involved. If the movement is relevant for Financial Accounting, one or more accounting documents are generated. The stock quantities of the material are updated. The stock values in the material master record are updated, as are the stock and consumption accounts. Depending on the movement type, additional updates are carried out in participating applications. All updates are based on the information contained in the material document and the financial accounting document. For example, in the case of a goods issue for a cost center, the consumption values of the items are also updated.

An invoice can be processed in Logistics Invoice Verification in various ways:

Invoice Verification Online Invoice Verification in the Background Automatic Settlements Invoices Received via EDI

Step 6 Goods Receipt

PO Notify Vendor Vendor Shipment Goods receipt

Procure-to-Pay Process

Purchase req, purchase order, notify vendor, vendor shipment, goods receipt, invoice receipt, payment

Price Level

This subcriterion compares relationship of a vendor's price to the market price. If the vendor's price is lower than the market price, he/she receives a good score; if it is higher than the market price he/she is assigned a poor score. On the basis of the subcriterion Price Level you can compare a vendor's price to the current market price at a certain point in time.

Price History

This subcriterion compares the development of the vendor's price with the market price. On the basis of the subcriterion Price History, you can determine whether the vendor's price has increased or decreased over a certain period in comparison with changes in the market price over the same period.

Compliance With Shipping Instructions

This subcriterion is used to determine how precisely a vendor complies with your instructions for the shipping or packing of a material.

On-Time Delivery Performance

This subcriterion is used to determine how precisely a vendor has adhered to the specified delivery dates.

Confirmation Date

This subcriterion is used to determine whether a vendor adheres to a previously confirmed delivery date (that is, whether the goods are actually received on the date previously confirmed by the vendor).

Quantity Reliability

This subcriterion is used to determine whether a vendor has delivered the quantity specified in the purchase order. "On-time delivery performance" and "Quantity reliability" always have to be seen in conjunction. You can specify for each material (in the material master record) or for all materials (in the system settings) the minimum quantity of the ordered materials that must be delivered in order for a goods receipt to be included in the evaluation. This enables you to avoid a situation in which a punctual goods receipt involving only a small quantity of ordered materials is included in the evaluation with a good score for "on-time delivery performance". If this minimum quantity is not delivered, the vendor is not awarded a score. However, in this case the vendor receives a bad score for quantity reliability.

Quality Audit

This subcriterion is used to evaluate the quality assurance system used by a company in manufacturing products.

Goods Receipt

This subcriterion is used to evaluate the quality of the material that the vendor delivers. Quality inspection takes place at the time of goods receipt.

Complaints/Rejection Level

This subcriterion is used to evaluate whether the materials delivered by the vendor are regularly found to be faulty subsequent to incoming inspection (for example, on the shop-floor) leading to additional expense and loss of time (due to loss of production, reworking etc.). The score (QM key quality figure) is calculated in QM Quality Management and the data passed on to MM Vendor Evaluation. This key quality figure is converted for use in the Vendor Evaluation scoring system.

Requisitions can be created indirectly in the following ways:

Via materials planning and control The component Consumption-Based Planning suggests materials that need to be ordered on the basis of past consumption or usage figures and existing stock levels. The order quantity and the delivery date are determined automatically. Via networks (from the component PS Project System) Requisitions are generated automatically from networks if: A material component with non-stock material or an external service component has been assigned to an operation and the indicator allowing automatic generation of requisitions immediately the network is saved has been set in the network. Via maintenance orders Requisitions are generated automatically from maintenance orders if: A material component with non-stock material has been assigned to an operation, or An operation with the control key for external services has been created. For further information, refer to the section Planning of an Order in the PM Maintenance Orders documentation. Via production orders (from the component PP Production Planning and Control). Requisitions are generated automatically from production orders if: They contain an external processing operation (e.g. subcontracting work). A precondition is that the control key for the operation allows or prescribes external processing. They contain non-stock components.

It is in Logistics Invoice Verification that incoming invoices are verified in terms of their content, prices and arithmetic.

When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.

•Movement types are three-digit keys used to represent a movement of goods

•101 - goods receipt into warehouse •103 - goods receipt into GR blocked stock •122 - return delivery to vendor •231 - consumption for a sales order •561 - initial entry of stock The movement type plays an important role in - updating of quantity fields - updating of stock and consumption accounts - determining which fields are displayed during entry of a document in the system

Step 5 Purchase Order

•A purchase order is a formal request to a vendor for a specific material or service under the stated conditions

Purchasing Information Record Overview

•Allows buyers to quickly determine: •Which Vendors have offered or supplied specific materials •Info Records contain: •Data on pricing and conditions •Last purchase order •Tolerance limits for deliveries •Specific lead times •Availability periods •Vendor Evaluation data •Serves as default information for Purchase Orders Tolerance limits are set by the company to indicate how much variance from the purchase order to the receipt will be accepted

•Client

•An independent environment in the system

•Storage location

•An organizational unit allowing differentiation between the various stocks of a material in a plant

Step 8 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 Master Data Views

•Client Level General Data •Address •Vendor Number •Preferred Communication •Company Code Data FI •Reconciliation Account •Terms of Payment •Bank Account •Purchase Org Data MM •Purchasing Currency •Salesman's Name •Vendor Partners

Material Master Data

•Contains all the information a company needs to manage a material •It is used by most components within the SAP system •Sales and Distribution •Materials Management •Production •Plant Maintenance •Accounting/Controlling •Quality Management •Material master data is stored in functional segments called Views

Vendor Master Data

•Contains all the necessary information needed to business with an external supplier •Used and maintained primarily by the Purchasing and Accounting Departments •Every vendor MUST have a master record

•If materials are delivered against a Purchase Order we will reference that Order

•Determine if we got what we ordered •System can propose data for us from the PO •Material, quantity •Purchase Order History is update with the receipt •Updates Order Inventory •Updates Inventory G/L Account

There are a variety of ways that a purchasing department can process a requisition to determine the appropriate Source of Supply

•Direct sourcing based on buyers knowledge •Internal Sourcing (intercompany transfer) •Source List - Based on company identified preferred sources •Outlined Agreement - longer term agreements •Contracts •Scheduling Agreements - Total quantity of material is spread over a certain period in a delivery schedule, consisting of line items indicating quantities and their planned delivery date •RFQ - request for quotation

•Requisitions can be created two ways:

•Directly - Manually •person creating determines: what, how much, and when •Indirectly - Automatically •MRP •Production Orders •Maintenance Orders •Sales Orders

Purchasing Information Record

•Framework for Purchase Order •Contains the relationship between a vendor and a material •Can be created: •Manually •Automatically - Quotations •Automatically - Purch. Orders •Reporting •Vendor Evaluation

Goods Receipt

•Goods movement in which we accept goods into our system

Step 3 Request for Quotation

•If nothing exists in the system we may need to submit a request for quotation to our vendors. An RFQ is an invitation to a vendor by a Purchasing Organization to submit a bid for the supply of materials or services •The accepted quotations will generate Purchasing Information Records •Perform Quotation Price Comparisons •Finally Select a Quotation

Step 7 Invoice Processing

•Incoming Invoices are referenced 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 (3-way match)

Step 1 Purchase Requisition

•Internal Document instructing the purchasing department to request a specific good or service for a specified time

•Purchasing Group

•Key that represents the buyer or group of buyers who are responsible for certain purchasing activities •Channel of communication for vendors

PO Output

•Once a Purchase Order has been created the vendor needs to be notified •Printed •E-mail •EDI •Fax •XML •There are a variety of forms that aid in the purchasing process and are generated from the Purchase Order •Purchase Order Output •Order Acknowledgement Forms •Reminders •Schedule Agreements

Step 2 Requisition Sourcing

•Once the requisition has been assigned a source of supply it can be released for processing

•Plant

•Operating area or branch within a company •Manufacturing, distribution, purchasing or maintenance facility

•Purchase Orders can be created manually

•Reference a Purchase Order •Reference a Purchase Requisition •Reference a RFQ/Quotation •Without Reference •Purchase Orders can be created automatically

•Company Code

•Smallest org unit for which you can maintain a legal set of books

•Purchasing Organization

•The buying activity for a plant takes place at the purchasing organization •Organization unit responsible for procuring services and materials •Negotiates conditions of the purchase with the vendors

Step 4 Vendor Evaluation, once Identified

•Vendor evaluation helps purchasing evaluate vendors for sourcing while also enabling the company to monitor vendor relationships through performance scores and criteria you put in place.

•Destinations for Receipt of Goods

•Warehouse - Unrestricted, Quality, Blocked •Quality •Goods Receipt Blocked Stock

Step 6 Effects of a GR

•When a Goods Movement for the receipt of goods takes place a series of events occur: •Material Document is Created •Accounting Document is Created •Stock Quantities are Updated •Stock Values are Updated •Purchase Order is Updated •Output can be generated (GR slip / pallet label)

Step 6 Material Movement

•When a goods movement takes place it is represented by a Movement Type

Invoice Processing

•When an invoice is saved it applies the liability from the Goods Receipt of our Purchase Order to a Vendor •Upon verification the: •Purchase Order is updated •Material Master is Updated (MAP) •Accounting Document is created •Once the Invoice has been posted the verification process is completed and the payment process is initiated within Financial Accounting