This document describes the procure to pay process in SAP. It involves determining material requirements, selecting suppliers, creating purchase orders, goods receipt, invoice verification, and payment processing. The key organizational levels in SAP related to procurement include materials master, vendor master, purchasing info records, source lists, and quota arrangements. The external procurement process follows a cycle of determining requirements, identifying suppliers, selecting vendors, handling purchase orders, monitoring orders, goods receipt, invoice verification, and payment.

1. Materials Management (MM)
Procure to Pay Process
Jaures Magloire N.A.
Senior SAP MM/SD Consultant

2. Procure to Pay process
Lesson Objectives
After completing this lesson, you will be able to:
• Describe the various external procurement
processes.
• List the organizational levels relevant to the
procurement process in the SAP system.
• Explain the relationships between these
organizational levels

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Business Example
Materials are procured in your company by means of
various channels – partly from external vendors and
partly from other branches of your company. The
departments involved in these procurement
processes are Purchasing, Warehousing and Invoice
Verification. These are organized on a regional and
functional basis. As a member of the project team
you are examining how these procurement processes
and the necessary company structure are replicated
in the SAP system.

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Master Data involved in procurement
• Material Master
• Vendor Master
• Purchasing Info Record
• Source Lists and;
• Quota Arrangement

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Organizational levels in procurement

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External procurement process
The external procurement of materials is based
on a cycle of general activities. In
detail, a typical procurement process includes
the following phases:

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Determination of requirements:
The responsible user department can manually
pass a requirement for materials to the
Purchasing department via a purchase
requisition. If you have set a MRP procedure for
a material in the material master,the SAP
system automatically generates a purchase
requisition.

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Determination of source of supply:
As a purchaser, you are supported during
determination of possible sources of supply. You
can use determination of the source of supply to
create requests for quotation (RFQs) and then
enter the quotations. In addition, you can refer
to purchase orders, contracts and conditions
that already exist in the system.

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Vendor selection:
The system simplifies the selection of vendors
by making price comparisons between the
various quotations. It automatically sends
rejection letters.

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Purchase order handling:
Similar to purchase requisitions, you can create
purchase orders manually or have them created
automatically by the system. When you create
purchase orders, you can copy data from other
documents, such as purchase requisitions or
quotations, to reduce the amount of entry work
required. You also have the option of working
with outline agreements.

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Purchase order monitoring:
You can monitor the processing status of the
purchase orders in the system. You can also
determine, for example, whether a delivery or
an invoice for a purchase order item has been
entered. You can remind the vendors of
outstanding deliveries.

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Goods receipt:
When you enter incoming deliveries in the
system, you refer to the relevant purchase
order. The amount of entry work is therefore
minimized, and you can check whether the
delivered goods and quantities match the
purchase order. The system also updates the
purchase order history of the purchase order.

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Invoice verification:
When entering invoices, you refer to the
previous purchase order or delivery so you can
check the calculations and the general accuracy
of the invoice. The availability of the purchase
order and goods receipt data enables you to
refer to the quantity and price variances.

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Payment processing:
The payment program authorizes payment to
the creditor liabilities. Financial Accounting
executes this program regularly.

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