The document discusses key aspects of procurement and order processing including: 1) Procurement refers to receiving, recording, filling, and assembling orders for shipment. It involves identifying suppliers, soliciting proposals, selecting suppliers, and reviewing supplier performance. 2) Order processing includes activities like creating sales orders, checking inventory availability, scheduling deliveries, generating billing documents, and tracking payments. 3) Master data like customer, material, and pricing information is critical for minimizing errors during order processing.

1. Group slide part
• Mae slide 1 – 17
• Mark G. Slide 18 – 26
• Coleen slide 27 - 34
• Irene 35 - 41
• Gretchen 42 - 44
Irene and gretchen kau na po bahala if dadagdagan nyo po ung slides. Iksi
lang ng naisama q sa slides nyo refer na lang po kau sa softcopy na pinasa
q dn para maintindhan nyo at para maexplain nyo futher and if gusto nyo
pa pong dagdagan ung slides. Tanxs.

2. ORDER PROCESSING AND
PROCUREMENT

3. ORDER PROCESSING
• Refers to
receiving,
recording,
filling, and
assembling
orders for
shipment

4. Order Cycle
Sales Order Processing
Pre-Sales Activities Inventory Sourcing
Payment
Billing Delivery

5. Pre-Sales Activities
• It contains the following functionality:
– Creating and tracking customer contacts and communications (sales
activity)
• Phone call records
• On-site meeting
• Letters
• Campaign communication
– Implementing and tracking direct mailing, internet, and trade fair
campaigns based on customer attributes
• Pre-sales documents need to be managed within the presales activities:
Inquiries and Quotations. These documents help identify possible sales
related activity and determine sales probability.

6. Inquiry
• An inquiry is a customer’s request to a
company for information or quotation in
respect to their products or services without
obligation to purchase.
– How much will it cost
– Material/Service availability
– May contain specific quantities and dates
• The inquiry is maintained in the system and a
quotation is created to address questions for
the potential customer.
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7. Quotation
• The quotation presents the
customer with a legally
binding offer to deliver
specific products or a
selection of a certain
amount of products in a
specified timeframe at a pre-
defined price.
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8. Sales Order Processing
• Customers place orders with a customer service
representative who create a document* with information
on:
– Customer
– Material Ordered - material and quantity
– Pricing conditions for each item
– Schedule lines - delivery dates and quantities
– Delivery Information
– Billing information
• Information is pulled from master data on customers
and materials to minimize data entry errors.

9. Creating an Order
Customer Master Sold-to party 2540-00
Item Material Quantity
Material Master 1 1400-500-00 30
2 1400-100-00 20
• When a sales order is created in R/3, data is copied from:
– Customer Master
– Material Master
– Condition Records for Pricing
– Tables in Configuration for shipping point and route.
• Data can also be copied from an inquiry or quote.

10. Master Data
Customer Pricing
Master Master
Material
Master
• Master Data is centrally stored (shared across application modules)
and is processed to eliminate data redundancy.
• Three kinds of master data are critical to sales order processing:
– Customer - Shared with FI/CO
– Material - Shared with MM and PP
– Pricing

11. Customer Master Data
• Customer Master
– Contains all of the information
necessary for processing orders,
deliveries, invoices and customer
payment
– Every customer MUST have a
master record
• Customer Master Data is
created by Sales Area
– Sales Organization
– Distribution Channel
– Division
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12. Customer Master Data
• The customer master
information is divided into
3 areas:
– General Data
– Company Code Data
– Sales Area Data
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13. Master Data
• Material Master
– Contains all the information a
company needs to manage
about 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
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14. Material Master Views
Sales Data
Basic Data Purchasing Data
Mat. Plan. Data
Material Master Forecasting Data
Storage Data
Controlling Data Quality Data
Accounting Data
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15. Material Master
General Information relevant for the entire organization:
Name
Weight
U/M
Client 410
Sales specific information: Delivery Plant Storage Location specific information:
Loading Grp Stock Qty
Plant 102 Storage Location 20
Plant 101 Storage Location 10
Plant 100
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16. Customer-Material Information Record
• Data on a material defined for a
specific customer is stored in a
Customer material info record.
• Info Records contain:
– customer-specific material number
– customer-specific material
description
– customer-specific data on deliveries
and delivery tolerances
• You can also maintain default text
to appear on sales orders for that
customer
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17. Condition Master (Pricing)
• Condition master data includes:
– Prices
– Surcharges
– Discounts
– Freights
– Taxes
• You can define the condition master
to be dependent on various data:
– Material specific
– Customer specific
• Conditions can be dependent on any
document field
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18. Inventory Sourcing
• Inventory Sourcing determines:
– If a product is available (availability check).
– How the product will be supplied:
• From stock on hand.
• From production or purchase orders that should
be available.
• From make-to-order production.
• Shipped from an external supplier.
• Shipped from another plant or warehouse.

19. Inventory Sourcing
• Inventory sourcing occurs when:
– An order is created.
– An order is changed.
– When the delivery document is created.

20. Stock Available: Backward Scheduling
Requested
Material Transportation Loading Goods Delivery
Order Date Availability Date Planning Date Date issue date Date
Transit Time
Loading Time
Pick Pack and Stage The R/3 System uses the
longer of these two times in
calculating delivery scheduling.
Transportation
Lead Time

21. Stock Unavailable: Forward Scheduling
Confirmed
New Material Transportation Loading Goods Delivery
Order Date Availability Date Planning Date Date issue date Date
Transit Time
Loading Time
Pick Pack and Stage The confirmed delivery date
is derived by the R/3 System
using forward scheduling based
Transportation on the new material availability date
Lead Time

22. Delivery
• Delivery activities include:
– Creating delivery documents
– Creating transfer orders for material picking
– Provide packing information (if required)
– Goods issue (updating accounting and
inventory data)

23. Shipping Point and Route
SP 1
SP 2
SP 3
Plant Shipping Point Route Customer
• The Shipping Point is the logical or physical location where
deliveries are created and managed (see Organizational Elements).
• The Route is the path that the delivery follows from the plant to the
customer site.
• Delivery dates are determined based on lead times associated with
the shipping point (picking and packing time) and route
(transportation lead times and transit times)

24. Delivery
Complete
Sales Order Delivery
Delivery
Partial
Delivery
Delivery
Sales Order Delivery
Delivery
Order Sales Order
Combination Delivery
Sales Order
• A delivery can be created for each sales order.
• Sales orders may split into multiple deliveries (availability).
• A delivery may combine a number of sales orders for efficiency.
• Combined sales orders must have something in common like
shipping point, delivery processing date, ship-to party or route.

25. Billing
• A Billing Document is created by copying information
for the sales order and delivery document into the
billing document which is used to create the invoice.
• Creating a Billing Document will automatically debit
the customer’s accounts receivable account and credits
the revenue account. Postings may also be made to
other accounts.

26. Billing
Invoice Sales Order Delivery Invoice
Split
Invoice
Separate Sales Order Invoice
Delivery
Invoice
per delivery Delivery Invoice
Collective Sales Order Delivery
Invoice
Delivery Invoice
Sales Order Delivery
• Invoice splits can be used to bill for different items like
materials and services.
• Collective invoices can be used to consolidate deliveries
onto one invoice to minimize paperwork.

27. Payment
• Payment is the final step in the customer order
management cycle.
• Final payment includes:
– Posting payments against invoices.
– Reconciling differences, if necessary.
• The Cycle may not always go as planned (material not
in stock, defective material returned for credit, etc.).
SAP has procedures to deal with these possibilities.

28. Posting Payments
Invoice 1
Acme Corp. 4325
Invoice 2
Pay to $
Invoice 3 Dollars
First National Bank
Invoice 4
2132 123123 54545 345 34
• Customers may send one check to cover multiple invoices. They
may also send checks for less than the full amount due. SAP allows
for partial payments to be applied to invoices.
• Payment posting is performed by the accounts receivable
department.

29. Order Management Process
Pre-Sales Contact
Inquiry
Scheduling
Contract Quotation agreement
Materials Management
Materials Management
Sales Information System
Sales Information System
Production Planning
Production Planning
Sales Order Order
Processing
Inventory Sourcing
Delivery/ Delivery Goods issue
Transportation Transfer Order Shipment
Billing Invoice
Payment/ Material Stock
Accounts Receivable
Accounting Account

30. Fitter Snacker Exercise
West Hills
Athletic Club
Sales
Inquiry Order
Sales and
Distribution
1 2
Pricing Availability

31. Fitter Snacker Exercise
Pick Goods Issue
4 5
Materials
Management
Sales
Order Delivery Delivery Delivery
3

32. Fitter Snacker Exercise
Invoice
West Hills
Athletic Club
Sales and Delivery
Distribution
6
Accounts 7
Receivable Post
Receivable Receivable

33. PROCUREMENT
• Procurement/Purchasing Procurement is
the process of buying goods and services for
the user department based on order
specifications given by that department.
Procurement begins with sending the
purchase order to the supplier. Procurement
function involves-

34. three company purchasing
orientations
• Buying orientation. The purchaser’s focus is
short – term and tactical.
• Procurement Orientation: buyers
simultaneously seek quality improvements
and cost reductions.
• Supply Chain Management Orientation: The
purchasing role is further broadened to
become a more strategic, value – adding
operation.

35. Types of Purchasing Processes
• Routine products - These products have low
value and cost to the customer and involve
little risk.
• Leverage products: These products have
high value and cost to the customer but
involve little risk of supply because many
companies make them.

36. Types of Purchasing Processes
• Strategic products: These products have
high value and cost to the customer and also
involve high risk
• Bottleneck products: These products have
low value and cost to the customer but they
involve some risk

37. Stages in the Purchasing Process
• Palagay na lng nong table na nasa hard copy..
Tanxs.

38. Problem Recognition
• The purchase process begins when someone
in the company recognize a problem or need
that can be met by acquiring a good or
service. The recognition can be triggered by
internal or external stimuli.

39. General Need Description and
Product Specification
• the buyer determines the needed item’s
general characteristics and required
quantity.
• The buying organization now develops the
item’s technical specifications. Often, the
company will assign a product – value –
analysis (PVA) engineering team to the
project.

40. Supplier Search
• The buyer now tries to identify the most
appropriate suppliers. The buyer can
examine trade directories, contact other
companies for recommendation, watch trade
advertisements, and attend trade shows

41. e – procurement in three other ways:
• Direct extranet links to major suppliers.
• Buying alliances.
• Company buying sites.

42. Proposal Solicitation
• The buyer invites qualified suppliers to
submit proposals, If the item is complex or
expensive, the buyer will require a detail
written proposal from each qualified
supplier, after evaluating the proposals, the
buyer will invite a few suppliers to make
formal presentations.

43. Supplier Selection
• Before selecting a supplier , the buying
center will specify desired supplier attributes
and indicate their relative importance, it will
then rate suppliers on these attributes and
identify the most attractive suppliers.

44. Order routine specification
• After selecting suppliers, the buyer
negotiates the final order, listing the
technical specification, the quantity needed,
the expected time of delivery, return
policies, warranties, and so on.

45. Performance review
• The buyer periodically review the performance
of the chosen supplier(s). There methods are
commonly used. The buyer may contact the
end users and ask for their evaluations: or rate
the supplier on several criteria using a weighted
score method; or aggregate the cost of poor
supplier performance to come up with adjusted
costs of purchase, including price, the
performance review may lead the buyer to
continue, modify, or end the relationship with
the supplier.