L17 Procure
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L17 Procure

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L17 Procure L17 Procure Presentation Transcript

  • The Procurement Process
  • Objectives
      • Describe the basic business process of procuring stock materials in an ERP System.
      • Discuss the integration points in procurement to Financial Accounting and Inventory Management.
      • Discuss the reporting and analysis tools used by R/3 in the procurement cycle.
  • Hierarchical Enterprise Structure
    • Client
    • highest hierarchy level, e. g. group with its daughter companies
    • Settings made will affect all company codes
    • Company Code (FI)
    • Org. Unit can present a balance sheet according to the legal provisions  legally independent enterprise
    • Settings made will only affect the respective company code
    • Purchasing organization
    • procures material or services for the assigned plants
    • negotiates on terms & conditions with vendors  make contracts
    • is responsible for all the purchase processes
    • operative purchasing is done by purchasing groups
    • Plant
    • Operational facility within a company code (e.g. factory, store, ...)
    • has its own requirements planning and inventory management
    • Storage location
    • a space for logical inventory management
  • Purchasing organization purchasing group MG 0, 3 purchasing organization purchasing group MG 1, 4 plant material group purchasing group MG 2, 5 purchasing group MG 7, 8, 9 purchasing group MG 6
  • Inventory Management with a Warehouse Management System client 0001 plant storage location 001 warehouse number 001 storage type 05-04-03 002 05-04-04 storage bin MM WM company code 0001 – ABC inc. 0001 – Jones inc. 0002 – Model Ltd. purchasing organization 0001 0001 0002 0003 0002 0003 0004 0001 0002 0003 0004 distrib.- center factory (physical stock)
  • The Module MM – Main Functions
    • Maintenance of the material master record (different views)
    • Material requirements planning
    • Material procurement : handling of the documents for
      • purchase requisition
      • request, quotation
      • vendor selection
      • purchase order, outline agreement
      • vendor master record
    • Inventory management
      • goods movement, material valuation
    • Invoice verification referring purchase orders, goods received documents, delivery notes etc.
  • MM – interdependencies to other modules MM material master purchasing requirements plan. inventory mgmt. invoice verification SD sales and distrib. PM plant maintenance QM quality management PP production planning Logistics FI financial acc. CO controlling AM fixed assets mgmt.
  • Basic Data
    • Master records - include information about
      • vendors
      • material and services to be procured
      • the relation between 1. and 2. ( purchasing info record ) e.g. prices / terms and conditions
    • bills of material for
      • production planning
      • purchasing
      • sales and distribution
      • withdrawal of Material
  • Structure of the Vendor Master Record
    • invoice entry
    • invoice verification
    • payment handling
    • request for quotation
    • quotation processing
    • purch. order handling
    • General data
      • name
      • address
      • control data
    • accounting data
      • bank account
      • acc. maintenance
      • payment
    • purchasing
      • terms and cond.
      • partner functions
      • currency
    utilization for each purchasing organization client wide or for each company code client wide area of validity sections
  • Views on the Material Master Record
    • each view is maintained by a certain user department of the firm
    • accounting : valuation - and calculation-specific information
    • requirements planning : information about material requirements planning (e. g. reorder point)
    • purchasing : e. g. responsible purchasing group, order unit
    • engineering : technical information
    • storage : information about warehousing, material movements, ...
    • forecast: i nformation about the forecasting of the material requirements
    • S & D : informationen about sales orders and price determination
  • purchasing info record material data vendor data info record prices terms & cond. PO statistics tolerance levels date quotation order outline agreement
  • Procurement
    • The primary SAP R/3 application modules that support the Procurement process are:
      • Materials Management
        • Purchasing
        • Goods Receipts
        • Invoice Verification
      • Production Planning
        • Purchase Requirements
      • Financial Accounting
        • Payment Processing
        • Materials Valuation
  • Purchasing Process outline agreem. requirem. planning determination: source of supply purchase order processing ? PO MM X X X X X determination: requirements X X X X X vendor 1 vendor 2 vendor selection vendor PO PO PO monitoring goods received & inventory mgmt. PO invoice ? = invoice verification
  • Procurement Cycle
    • The procurement cycle may consist of eight processes:
  • Business Process Flow for Procurement
    • The main documents and transactions in the Procurement process are:
      • Note: Payments to vendors are usually made at specified times (e.g. at the end of the month).
      • Payment amounts are determined according to the ‘open’ invoices posted on the system.
  • Purchase Requisition Processing
  • Purchase Orders
    • A purchase order is a formal request to a vendor to provide certain materials or services under specific conditions (quantity, price, delivery date, etc.)
  • Create Purchase Order (PO) vendor known vendor not known terms & cond. source list vendor info record 3 assigned purchase requisition exists (from user department) 1 purch. order vendor 2 2 outline agrement purch. req. vendor 2 purch. order purch. order
  • Purchase Order Processing
  • Goods Receipt
    • When goods are received from a purchase order, the item data is copied from the purchase order into the goods receipt document.
  • Goods Receipt for Stock Material
    • Entering the goods receipt increases the inventory level of a material that is procured for stock.
    • Inventory Management (MM module) controls and records all goods movement, form purchase order receipt through the plant, to consumption
  • Results of a Goods Receipt Posting
    • Transaction documents are created both for materials management and finance.
    Goods Receipt Posting Accounting document Stock quantity Consumption statistics Point of consumption Cost center Order Transfer Order Purchasing data: Order item, Order history Goods receipt slip Material document G/L accounts: Consumption account GR/IR account
  • Posting an Order Entry (Goods Receipt) MM Logistics purchasing req. planning inventory controlling invoice verification goods receipt inventory mgmt. goods issue. transfer posting SD sales and distrib. PM plant maintenance QM quality management PP production planning FI financial acc. CO controlling AM fixed assets mgmt.
  • Invoice Processing
    • This last step in the procurement process includes invoice verification and updating accounts payable in the FI module.
      • Payment will then be made later based upon the ‘open’ invoices posted on the system
  • Invoice Verification input information invoice verification output information orders
    • actions:
    • enter invoice
    • verify invoice
    • post invoice
    • update relevant data
    • (re-edit invoice)
    goods receipt master data: material vendors accounts terms & cond. financial accounting asset management cost accounting
  • Invoice Verification Environment
    • Invoice verification accesses data from purchasing, inventory management, material master, and vendor master files.
  • Vendor Payment
    • Accounts payable reads the invoice file and pays all posted invoices due. (Payment runs can be automated to occur at specific times.)
  • Procurement Integration Purchase Order Goods Receipt Invoice Verification PP FI FI MM Purchase Order Invoice
  • Reporting and Analysis
    • Standard Reporting provides List Displays (pre-defined programs) by:
      • Vendor
      • Material
      • Account assignment
      • Material group
      • Purchase order number
      • Tracking number
    • General Analysis
    • Order Value Analysis
    • Inventory Transaction Analyses
  • Logistics Information System (LIS)
    • The Logistics Information System (LIS) contains several information systems such as:
      • Purchasing Information System
      • Inventory Controlling
      • Sales Information System
      • Shop Floor Information System
    • LIS extracts its data from the operative applications; it offers many different views on this information.
  • Logistics Information System (LIS)
    • The LIS exists for the entire logistics system in R/3
    • The LIS contains several information systems such as:
      • Sales Information System
      • Purchasing Information System
    • The LIS extracts data from the operative applications; offering it in many different views, the depth of which is determined by the user.
      • Inventory Controlling
      • Shop Floor Info System
    Sales Information System Purchasing Information System Inventory Controlling Shop Floor Information System Maintenance Information System Quality Mgmt Information System Sales and Distribution (SD) Materials Management (MM) Production Planning (PP) Plant Maintenance (PM) Quality Management (QM) Logistics Information Library R/3 Logistics Information Systems Logistics Processing Systems
  • In Summary (important)
    • The basic procurement process includes:
      • Purchase requisition
      • Purchase order
    • Procurement master data includes the vendor and material master files.
    • At various times during the Procurement process, integration occurs between the PP, MM and FI modules.
    • The two reporting tools used in the procurement environment are:
      • Standard Reporting
        • List Displays  General Analysis  Inventory Analysis
      • Logistics Information System
        • Purchasing Information System  Inventory Controlling System
      • Goods receipt
      • Invoice processing