Professional Documents
Culture Documents
MM - Overview MM - Purchasing MM - Purchase Order MM - Inventory Management MM - Invoice Verification
MM - Overview MM - Purchasing MM - Purchase Order MM - Inventory Management MM - Invoice Verification
MM - Overview
MM - Purchasing
MM - Purchase Order
MM - Inventory Management
MM - Invoice Verification
Purchase department
Stores department
Contents
MM overview
Organizational Structure
Material master
Vendor master
Exercises
Other master records
Solutions
Procurement
Logistics Planning
Sales Logistics
Production
FI
G/L
G/L G/L
G/LGRIR/
GRIR/ Vendor
Vendor
Inventory
Inventory// Expense
Expense
GRIR AP Payment
GRIR APInvoice
Invoice Payment
SD
Requirement
Requirement Purchase Goods Invoice
Purchase Goods Invoice
for
forGoods
Goods//
Services Order
Order Receipt
Receipt Verification
Verification
Services
Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis
Client Characteristics
Purchasing Organization
Plant
Usually a Manufacturing Facility, Warehouse, or a
Location that Stocks , Manages, and Valuates
Inventory
May be a Physical Site with Multiple
Manufacturing/Production Lines
May be Multiple Manufacturing/Production Lines at
One Physical Site
Can be a Physical Location(cost centers may or
may not be associated to a plant i.e. administrative
Vs. manufacturing cost centers)
SD Availability Checking is Normally Done at the
Plant Level
TATA CONSULTANCY SERVIES
Organizational Elements - MM
Plant (Cont.)
Storage Location
Material Master
Vendor Master
•
Service Master
Purchasing info record
Source List
Vendor Excise Details
Material and Chapter ID combination
Excise Tax rate
Definition
Number uniquely identifying a material master record,
and thus a material.
Use
For every material that your company uses, you must
create a material master record in the material master.
This record is uniquely identified by a material number.
Internal and External number assignment.
Basic data1
Purchasing
Purchase order text
Storage 1
Storage 2
Organizational levels.
Plant
Storage location
General Data
Menu Path
Logistics -> Material management -> purchasing ->master
data vendor ->purchasing ->create
Chapter ID
Excise Law
Chapters, Headings and subheadings
Example 7216.10
72 - Iron and Steel
16 - Angles, shapes and sections
Material and Chapter ID combination
Material assessable value
Net dealer price
Material assessable value
MODVAT Determination
Input material MODVAT
output material MODVAT
Vendor Excise details
SSI Rates
Excise Tax rates
Purchase department
Create contracts
Contents
Purchasing overview
Purchase requisitions
Request for quotations
Outline agreements
Exercises
Solutions
Integration
Controlling (CO)
Purchase orders for materials intended for direct consumption
They can be directly assigned to a cost center or a production
order.
Financial Accounting (FI)
Vendor master is maintained by both accounting and purchasing
departments.
Through PO account assignment, Purchasing can also specify
which G/L accounts are to be charged in the financial accounting
system.
Determination of Requirements
Materials requirements are identified either in the user departments
or via materials planning and control.
It includes both MRP proper 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 the demand management.
You can enter purchase requisitions yourself, or they can be
generated automatically by the materials planning and control
system.
Source Determination
The Purchasing component helps in identifying potential sources of
supply based on past orders and existing longer-term purchase
agreements.
This speeds the process of creating requests for quotation (RFQs)
Vendor Selection and Comparison of Quotations
The system is capable of simulating pricing scenarios, allowing you to
compare a number of different quotations.
Rejection letters can be sent automatically.
Create
Use this option to create a purchasing document .
Enter the required information and save the document .
The document is then stored under a unique number.
Change
Use this option to change a purchasing document .
You need the document number in order to access the document.
Display
Use this option to display a purchasing document .
You cannot change or add any information to the document that is
displayed .
You need the document number in order to access the document.
List displays/reporting
You can use these options to generate reports analyzing purchasing
documents
Example
List of all purchase orders for Vendor ABC
Follow-on functions
This option allows you to perform tasks related to (following on from)
but not included in the purchasing functionality.
Example
Entering a goods receipt or an invoice in the system.
Messages
This option enables you to print or transmit documents in message
form
Example
Transmission via fax, Printouts etc
Definition
A purchasing document is an instrument used by Purchasing to
procure materials or services.
Types of purchasing documents
Request for quotation (RFQ)
Transmits a requirement defined in a requisition for a material or
service to potential vendors .
Quotation
Contains a vendor's prices and conditions
It is the basis for vendor selection.
Structure
Each purchasing document is subdivided into two main areas:
The header
The header contains information relevant to the whole document .
Example, information about the vendor and the document number is
contained in the document header
The individual items .
The items specify the materials or services to be procured .
Example, The material description and the order quantity are
specified in each item.
Definition
A purchase requisition is a request or instruction to Purchasing to
procure a certain quantity of a material so that it is available at a
certain point in time.
It is an internal document.
Requisitions can be created in the following ways:
Directly: Someone from the requesting department enters a purchase
requisition manually.
Indirectly: The purchase requisition is created via another SAP
component.
Purchase requisitions can be subject to a release
procedure.
Procurement types
Standard
Subcontracting
Components to be provided can be entered.
Consignment
Stock transfer
External service
Service specifications can be entered
Things to remember
Item category
Account assignment category
Purchasing organization
Purchasing group
Requirement tracking number
Delivery date
Item with or with out material master record
Order quantity
Automatically from PR
Manually
With reference to PR
With out reference to PR
Delivery address
Address of the company asking for quotation, by default it is the
address of E+L. But it can be changed.
vendor address
Just enter the codes of the vendor, System will take other details
from vendor master.
Quotation dead line
Delivery date
Printing RFQ
Send the Printed RFQ to the vendors
Receive the quotation from the vendor
Maintain the RFQ
Enter the net price quoted by the vendor
Enter the pricing conditions
Terms of payment
Update the info record if reqd
Agreement types
Quantity contract
Value contract
Structure
Document header: containing information relating to the entire
agreement. For example, the vendor information and header
conditions are in the document header
Items: containing the information specific to the relevant material or
service.
statistics on ordering activities for the item
quantity or price of the item
conditions, such as quantity discounts and surcharges
Target quantity
Target Value
Pricing conditions
Validity starting and ending date
Vendor address
Delivery address
Remainders
Purchase department
Print PO
Contents
Creating POs
Printing of POs
Printing Remainders
Changing or canceling POs
Purchasing information
Exercises
Solutions
Definition
Formal request or instruction from a purchasing organization to a
vendor or a plant to supply or provide a certain quantity of goods or
services at or by a certain point in time.
Structure
Header
items
Additional data
Automatically from PR
Set automatic PO indicator for material and vendor
Maintain Purchasing info record
Maintain source list
Fixed vendor
PR from MRP or Manually created PR
Assign manually or automatically
Process the assigned PR to create PO
Manually creating a PO
With reference to PR
Select the PRs
Select the items from PR
Copy the items in to PO
Enter the vendor
Enter the prices and pricing conditions
Requirement tracking number
Update the info record if reqd
Important terms in PO
Vendor
For creating a PO you need to enter vendor code
Vendor master should exist for this purpose
if you don’t want to maintain all the details for a vendor you can
create a one time vendor
Item category
Standard
Subcontracting
service
Delivery date
Date format
Day format
Week format
Month format
Delivery date entered here is only expected delivery date
You can also specify a statistical delivery date
Units of measure in PO
The order unit
This is the unit you specify in connection with the order quantity.
The order price unit
This is the unit that applies in connection with the net price and which is
taken as the basis for invoice verification.
If the order price unit does not correspond to the order unit, and if no
conversion factor is specified in the system, you must enter a conversion
factor on the item detail screen.
Conditions
This component enables you to store pricing stipulations agreed
with the vendor
Examples are applicable discounts or surcharges, or stipulations
regarding the payment of freight costs in the system.
There are three kinds of price in Purchasing:
Gross price
Price without taking any possible discounts and surcharges into account
Net price
Price taking any applicable discounts and surcharges into account
Effective price
Net price after deduction of cash discount, with allowance for any
miscellaneous provisions, delivery costs, and non-deductible taxes.
Terms of Payment
Example
Within 14 days 2% discount
Within 30 days due net
Inco terms
Incoterms are internationally-recognized terms of delivery
reflecting the standards set by the International Chamber of
Commerce (ICC).
Example
FOB - Free On Board. This means that the buyer has to bear all
costs and risks of loss of or damage to the goods from that point.
You can specify Incoterms for an order item that differ from those in
the PO header.
Header texts
Header note
Pricing types
Dead lines
Terms of delivery
Shipping instructions
Terms of payments
warranties
Penalties for breach of contract
Purpose
This component can be used, if you wish to have your vendor provide
you with various kinds of confirmation regarding delivery dates and
quantities
It enables you to base your materials planning and control activities
on more up-to-date data than that contained in purchase orders.
Confirmation control key
Shipping notification
Order acknowledgement
Shipping Notification
Definition
A vendor’s confirmation to a purchasing organization of the delivery
date for a certain quantity of ordered materials
It can be for the date of performance of ordered services also.
Structure
A shipping notification consists of several items in which the notified
(confirmed) quantity of the material or service is specified.
Release Strategy
The release strategy defines the approval process for purchasing
documents.
The strategy specifies the release codes necessary and the
sequence in which releases have to be effected.
A maximum of eight release codes can be defined.
The assignment of the release strategy to a purchasing document is
based on the release conditions.
Release Code
Definition
The release code is a two-character ID allowing a person to
release (clear, or approve) an external purchasing document.
Who may work with which release codes is basically controlled
via a system of authorizations.
Release Prerequisites
The release prerequisites indicate the sequence in which PO must be
approved via the release codes.
Menu path
Purchase order -> Header -> Messages
Data required
Output type
Medium
Communication method
Select the printer
Further Data
Repeat output
Change output
List displays
List of POs for a vendor or for a range of vendors
This gives the details of the purchase order like still to be
delivered, still to be invoiced etc.
List of POs for a material or for a range of materials
List of POs for a account assignment
List of POs for a requirement tracking number
Reporting
General analyses
Order value analyses
Subcontracting stocks per vendor
Material
Purchasing values
Purchasing quantities
On time delivery
Qty reliability
Frequencies
Vendor
Material group
Purchasing group
Purchase department
Stores department
Do Issue of Goods
Contents
Overview
Type of stocks
Goods movements
Controlling (CO)
The interface to the cost accounting system is activated in the
case of material consumption
For example, when materials are issued for various account
assignment objects such as orders or cost centers.
Cost accounting is also involved when goods receipts are
assigned directly to cost centers or orders.
Relevant views
Accounting
Price and accounting information.
Examples:
type of price control
valuation class.
Materials Planning
Information for materials planning.
Examples:
safety stock, reorder level, availability check.
Purchasing
Procurement information for a material.
Examples:
overdelivery and underdelivery tolerances
purchasing order unit of measure (order unit).
Storage
Information for warehousing and storing the material.
Example:
unit of issue
storage conditions, fixed bin location
Quality Management
Information for sampling and inspecting a material.
Examples:
indicator for goods receipt via quality inspection
Work Scheduling
Information for producing the material.
Examples:
production unit
overdelivery and underdelivery tolerances allowed.
Restricted-use stock
Valuated stock of a material managed in batches held by a company
(and belonging to that company)
Usage of this stock is subject to certain restrictions. This category of
stock is only used when batch status management is active.
Blocked stock returns
Stock that was returned by the customer and conditionally accepted.
It is neither valuated nor does it count as unrestricted-use stock.
stock in transfer
Quantity that was already withdrawn from stock at the issuing
location but that has not yet arrived at the receiving location
Stock in transfer is managed in the valuated stock of the receiving
location, but it does not yet count as unrestricted-use stock.
Stock in transit
Stock in transfer that is created in the case of a stock transfer via a
stock transport order.
Available stock
Dynamic stock that is calculated by MRP taking any receipts, issues,
the current available stocks into account.
Which requirements, receipts, and issues are included in the
availability check is defined in the Customizing system.
Reserved stock
Sum of all quantities of a material that are reserved for withdrawal.
Reserved stock is usually not available from the point of view of MRP
For Inventory Management it still counts as unrestricted-use stock.
Planned receipts
Sum of all quantities whose receipt has been planned with
reservations.
Planned receipts are usually already available from the point of view
of MRP
For Inventory Management they do not yet count as unrestricted-use
stock.
Open PO quantity (total)
Sum of all outstanding PO quantities for a material.
The open PO quantity usually increases available stock in MRP
It does not increase unrestricted-use stock in Inventory Management.
Stock Transfer
Transfer of material from one plant to other plant or from one storage
location to other storage location
Transfer Posting
changes in stock type or stock category of a material.
Examples of transfer postings are:
Transfer Postings From Material to Material
Release from quality inspection stock
Transfer of consignment material into company's own stock
Movement Type
When you enter a goods movement in the system, you must enter a
movement type to differentiate between the various goods
movements.
A movement type is a three-digit identification key for a goods
movement.
Examples
Goods receipt for a purchase order 101
Goods issue for a cost center 201
Release from quality inspection stock 321
Purchase department
Stores department
Finance department
Devalue materials
Contents
Invoice entry and verification
Credit memo
Excise invoice
Material devaluation
Physical inventory
Inventory management information
Exercises
Solutions
Accounting data
Accounting data is used to define G/L accounts
Transaction data
Transaction data records transactions or events in the SAP system.
Purchasing document
Material document
Accounting document
Preliminary Posting
You can enter an invoice (or a credit memo) without posting it and
simply "park" it.
If you park an invoice or a credit memo the system does not make
any postings.
A parked document can be changed as often as you like.
When data is added or changed, the changes are noted by the
system.
When no further changes are required, you can then post the parked
document.
Transaction J1IA
Required entries
Purchase order number
Excise group
Vendor’s Excise invoice number
Excise invoice date
In the details screen you can change
Description
Quantity
Excise duty
Methods
In the SAP System there are various methods of determining tax or
commercial prices:
lowest value determination based on current market prices
system searches for the lowest price from among the various prices
stored for each material.
lowest value determination based on rate of movement
lowest value determination based on range of coverage
Range of coverage = average stock : average consumption
Balances display
The Balances display function offers analysis of the stock
accounts and of the GR/IR clearing account.
Consignment
The Consignment option permits analysis of the consignment
stocks from vendors as well as the consignment stocks and the
returnable packaging stocks at the customer’s site.
Batch where-used list
Batch search strategy
Material analysis
Stock values
Receipts and issues
Inventory turnover
Inventory turnover of the value of valuated stock is calculated as
follows:
Value of total consumption / Value of average valuated stock
Range of coverage
The range of coverage of the value of valuated stock is
calculated as follows:
Value of valuated stock / value of average total usage / day