Procure To Pay

Business Process
 HELLO!
I am Yassir Fahchouch
Master’s degree in logistics network management from the
national school of commerce and management {ENCGK}.

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About this Training

▰ Procure to Pay Cycle.

▰ Procurement of Stock Material.
▰ Procurement of Consumable Material.
▰ Stock Material Vs Consumption Material.
▰ Procurement of External Services

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 Procurement Cycle

2. Determination 4. Purchase
1. Determination 3. Vendor 5. PO 6. Goods 7. Invoice 8. Payment
of Source of Order
of Requirements Selection monitoring Receipt Verification Processing
Supply Processing

Purchase
RFQ Flow PO
Requisition (MIGO) (MIRO)
Chart (ME21N)
(ME51N)

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 Procurement Cycle

1. Determination of Requirements
If I m working as a purchasing officer, I’ll get some sort of requirement from Business. Those requirements can be
created manually, or by SAP as well.
2. Determination of Source of Supply
Where should I but my goods ?
✓ We ask a couple of vendors for a quotation (This is a product we want, we want this much quantity, etc...) which
we can decide is it the right source of Supply. We call this RFQ [Request For Quotation]. The vendors will come
back with the price and conditions of shipment and all that and then we will select a vendor at stage number 3.
3. Vendor Selection
4. Purchase Order Processing
We will create a purchase order and send it to the vendor we selected before. Purchase order can be created manually or
automatically by SAP as well.
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 Procurement Cycle

5. Po Monitoring
We should keep an eye on when the order supposed to deliver and when the actual delivery is happening.
6. Good Receipt
Once the vendor has sent us the goods, we will do the goods receipt in the system. We will make an entry in the
system which is called goods receipt that we have received the goods, so the system can add the goods to the
inventory as the stock.
7. Invoice Verification
Once we received the goods at number 6, we will create an invoice for the customer, that means that we’ve
received the goods and now we need to pay to the vendor. We will create an Invoice on the system.
8. Payment Processing
We will send payment to the vendor.

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Purchase Requisition (ME51N)

✓ Purchase Requisition is a request that is made to

purchasing organization to procure certain list of material.
✓ Purchasing requisition is an internal document ; it remains
within the organization.

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Request For Quotation Flow Chart

Purchasing

Vendor A

Source
Vendor B
of
Supply

Vendor C

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Request For Quotation Flow Chart

Create RFQ (ME41)

➢ Assign Collective number (Collective number is a way to tag different RFQs
together so that they can be managed easily).
➢ Display & Print RFQ (ME9A).
➢ Price received from Vendors.
➢ Maintain Quotation (ME47).
➢ Price Comparison (ME49).
➢ Reject Unwanted Quotations.
➢ Print Reject Letters (ME9A).
➢ Create PO (ME21N). 9
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Procurement of Stock
Material

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Procurement of Stock Material

✓ Stock Material is a type of material for which we maintain

the stock in our Business or in our Company. For example,
it can be your raw materials, your finished goods, etc …

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Procurement of Stock Material

1. Create PO 2. Goods Receipt 3. Invoice

(ME21N) (MIGO) (MIRO)

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2
Procurement of
Consumable Material

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Procurement of Consumable Material

✓ Examples of Consumable materials: Computer systems, stationeries

like pen, pencil.
✓ If you want to procure a material as a consumable, you must specify
Account Assignment Category.
✓ Consumable materials are not subject to inventory management at the
storage location.
✓ They are not managed on a value basis in Inventory Management.
✓ They can be procured without a material master record.
✓ Material type UNBW (non-valuated materials) and NLAG (Non-stock
material) is used for creating the material master record.

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 Procurement of Consumable Material

1. Create PO 2. Goods Receipt 3. Invoice

(ME21N) (MIGO) (MIRO)

Account Assignment Category is a must

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Stock Material Vs
Consumption Material

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 Stock Material Vs Consumption Material
Stock Material
✓ Entry of material number required.
✓ No account assignment category.
✓ Posting to stock accounts.
✓ Quantity, value, and consumption
updated in material master record.
✓ Moving average price is adjusted.
Vs Consumption Material
✓ Entry of material number not required, but is possible.
✓ Account assignment category mandatory (most of
the time the account assignment category used is K -
Cost center).
✓ Posting to consumption accounts.
✓ Value is not updated, quantity and consumption can
be updated.
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Stock Material Vs Consumption Material

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Stock Material Vs Consumption Material

Stock Material (Finished goods, raw materials, etc … )

➔ Valuation class
➔ GL posting account

Consumable Material
➔ NO Valuation class

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3
Procurement of External
Services

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Procurement of External Services

✓ Prerequisites
1. Service Master Data (AC03)
2. Service Conditions (ML33/ML39/ML45)
✓ Process
Step 1) Create Service Purchase Order (ME21N)
Account Assignment Category –K (cost center).
Item Category –D (Service)
Step 2) Service Entry sheet (ML81N) & Acceptance
Step 3) Invoice (MIRO) 21
 Procurement of External Services

1. Create Service PO 2. Service Entry Sheet 3. Invoice

and Acceptance
(ME21N) (ML81N) (MIRO)

Account Assignment Category –K (cost center).

Item Category –D (Service)

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 What is Service Entry sheets ?

✓ Service Entry (ML81N) is a process where a Purchasing officer or

someone will confirm that a service is done.

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THANKS!
Any questions?
You can find me at
yassir.fahchouch@uit.ac.ma

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