sap purchasing management

SAP Purchasing Management

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SAP Purchasing Management

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Compu-Genius Inc. Document Number: GD-2002-MM 4.6 10575 Katy Freeway Created by: Gyanesh Dadhich Suit#250 Dated: Aug, 2002 Houston-Tx-77024 [email protected]

Copyright © 2002 by Gyanesh Dadhich - 1 -

CompuGenius, Inc.

SAP Purchasing Management (Part of Logistic Courses)

mySAP Logistic 4.6d Copyrighted by: CompuGenius Logistic Management & Consulting Group 10575, Katy Freeway Houston TX 77024 Ph: 713-787-6687



SAP R/3 Purchasing Management

Introduction

Purchasing is a component of Materials Management (MM). The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification.

The tasks of the Purchasing component are as follows:

• External procurement of materials and services

• Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department

• Monitoring of deliveries from and payments to vendors

Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly.

Integration:



Purchasing communicates with other modules in the SAP System to ensure a constant flow of information. For example, it works side by side with the following modules:

• Controlling (CO):

The interface to the cost accounting system (Controlling) can be seen above all in the case of purchase orders for materials intended for direct consumption and for services, since these can be directly assigned to a cost center or a production order.

• Financial Accounting (FI):

Purchasing maintains data on the vendors that are defined in the system jointly with Financial Accounting. Information on each vendor is stored in a vendor master record, which contains both accounting and procurement information. The vendor master record represents the creditor account in financial accounting.

Through PO account assignment, Purchasing can also specify which G/L accounts are to be charged in the financial accounting system.

• Sales and Distribution (SD):

Within the framework of materials planning and control, a requirement that has arisen in the Sales area can be passed on to Purchasing. In addition, when a requisition is created, it can be directly assigned to a sales order



Organizational Structure - Levels

The structure of an enterprise is represented in the SAP R/3 System by the following organizational levels: Client: Client is highest organizational level in Hierarchy. The Client is a Commercial, Organizational unit within the R/3 System, with its own data, Master Records and Set of tables. From a business perspective, the clients form a corporate group. Company code: Company code is the smallest unit in organization structure. This level represents an independent accounting unit within a client. Balance sheet and Profit & Loss statements, required by law, are created at company code level. You can set up several company codes in one clients level. Example: a subsidiary company, member of a corporate group.

Client

Company Code A Company Code B

Plant A1 Plant A 2 Plant B

Storage Location 0001

Storage Location0002

Storage Location 0003

Controlling Area A Controlling Area B

Purchasing Organization (Cross Company Code)



Plant: Plant can be a manufacturing plant in the true sense, or can represent a branch office or site within a company code. A plant is an organizational logistic unit that structures the enterprise from the perspective of production, procurement, plant maintenance and material planning. In SAP system, a plant must be assigned to one or more purchasing organizations. Furthermore, a plant must always be assigned to a company code. Storage Location: The storage location is an organizational unit that allows the differentiation of material stocks with in a plant. Physical inventory is carried out at storage location level. Purchasing organization: Purchasing organization is an organizational unit responsible for procuring materials and services for one or more plants and for negotiating prices and terms of delivery with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions. You can incorporate purchasing into the company structure by assigning purchasing organization to company code and plants. You can have a combination of centralized and decentralized organizations. Purchasing group: The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities A purchasing group can also act for several purchasing organizations

The purchasing organization is integrated within the organizational structure as follows:

• The purchasing organization is the highest level of aggregation (after the organizational unit "client") for purchasing statistics.

• A purchasing organization can be assigned to several company codes. (= Corporate-group-wide purchasing).

• A purchasing organization can be assigned to one company code. (= Company-specific purchasing).

• A purchasing organization must be assigned to one or more plants. (= Plant-specific purchasing).

• A purchasing organization can be divided into several purchasing groups that are responsible for different operational areas.

• Each purchasing organization has its own info records and conditions for pricing.

• Each purchasing organization has its own vendor master data.

• Each purchasing organization evaluates its own vendors using MM Vendor Evaluation.

Purchasing Master data:



MM Purchasing processes the following types of master data:

• Material master data The Material Master record is a company’s main source of material specific data. Details on materials an enterprise procures externally or produces in-house. The unit of measure and the description of a material are examples of the data stored in a material master record. Other SAP Logistics components also access the material data.

• Vendor master data Vendor master data contain Information about external suppliers (creditors). The vendor's name and address, the currency the vendor uses, and the vendor number (stored in the SAP system as an account number) is typical vendor data. Vendor master record is maintained by Accounting and Purchasing. Each user department can maintain both general data and purchasing and accounting specific data centrally or decentrally.

• Purchasing Info Record The info record establishes the link between material and vendor, thus facilitating the process of selecting quotations. For example, the info record gives the unit of measure used for ordering from the vendor, and indicates vendor price changes affecting the material over a period of time.

• Source list The source list specifies the possible sources of supply for a material. It shows the time period during which a material may be ordered from a given vendor.

• Quota arrangement The quota arrangement specifies which portion of the total requirement of a material over a certain period is to be assigned to particular vendors on the basis of quotas.



Procurement Cycle:

1 Determination of

requirements

2 Source

Determination

3 Vendor Selection

4 P O Processing

5 P O Monitoring

6 Goods Receipts

7 Invoice

Verification

8 Payment

Processing

Procurement



1:Determination of Requirements: The user department responsible can manually pass a requirement for material to the purchasing department via a purchase requisition. If you have set a MRP procedure for a material in the material master, the R/3 system automatically generates a purchase requisition. 2: Determination of Source of supply: The R/3 system helps the buyer determine possible sources of supply. You can use determination of the source of supply to create request for quotation (RFQ) and enter the quotations. You can also access existing purchase order and condition in the system. 3: Vender selection: the system simplifies the selection of the vendors by making price comparison between the various quotations. It automatically sends rejection letters. 4: Purchase order processing: The system facilitates data entry by providing entering aids when you are entering purchase orders. 5: Purchase order monitoring: The buyer can monitor the processing status of the purchase order on line at any time and can determine weather goods or an invoice have been received for the relevant purchase order item. The system also supports reminder procedures. 6: Goods Receipts: The system compares the Goods receipts quantities with the purchase order quantity. 7: Invoice Verification: Vendor invoices are checked for accuracy of prices and contents. 8: Payment Processing: Financial Accounting normally deals with vendor’s payments.

Table of contents



SAP R/3 Purchasing Management Step 1: Define a Company Step 2: Define Company code Step 3: Assign Company code to Company Step 4: Define a Plant Step 5: Maintain Purchasing Organization Step 6: Maintain Storage Location Step 7: Assign Plant to Company code Step 8: Assign Purchasing organization to Plant Step 9: Assign Purchasing organization to Company code Step 10: Material Master Step11: Create Vendor Accounts Group Step12: Create Number Ranges for Vendor Accounts Step 13: Assign Number Ranges to Vendors Accounts Group Step 14: Cerate Vendor Masters Step 15: Source of Supply: Purchasing Info Records Step 16: Changing an Info Record Step 17: Net Price Simulation Step 18: Out line Agreements: Contracts: Step 19: Schedule Agreement Step 20: Outline Agreement: Display, Change, Cancel and Block



Step 21: Optimized Purchasing: Source determination Step 22: Creating Purchase Requisition Step 23: Assign and Process of Purchase Requisition Step 24: Creating Purchase Requisition W/O Master Record Step 25: Change in Purchase Requisition Step 26: Simplified Procurement process (ERS) Step 27: Creating Purchase Orders Step 28: Displaying a Purchase order Step 29: Goods Receipts Step 30: Run the Settlement Program Step 31: Vendor Evaluation

Purchasing Management



Step 1: Define A Company Transaction Code: OX15 A Company is an organizational unit in Accounting, which represents a business organization according to the requirements of commercial law in a particular country. A company is generally used in legal consolidation module to roll up financial statement. A company can consist of one or more company codes. A Company should be defined for every country as a legal requirement. Company is represented by 6 digits alphanumeric key.

Menu path: IMG >Enterprise Structure> Definition >Finanzwesen (Financial Accounting)>Define Company

Click on New Entries Next screen will display: Company: enter 6-digit alphanumeric identifier for your company. Company Name: enter your company name Postal Code: Enter ZIP code City: enter name of city Country: enter country name Language: enter language Currency: enter currency that your company will operate with

Click on Save or (Ctrl+S)

Step 2:



Define Company Code Transaction Code: OX02 Company code: A Company code represents an independent accounting unit, for example, a company within a corporate group. You process all business transaction, activity and manage accounts at company code level. Balance sheet and Profit & Loss statements, required by the law are created at the company code level. Note: you can create New company code and Copy of existing one Menu path: IMG>Enterprise Structure> Definition>Finanzwesen>Define, Copy, delete, check company Code Put your cursor on “Edit Company Code Data”. Click on choose (You can double click it also)



If you want to create new company code click on New Entries or if you want to copy existing one click on copy button on menu bar and enter the company code you want to copy. After copying, you can edit data in your new company code. This example is for new company code Next screen will display: Company code: enter four Character company code identifier. Company name: enter your company name. Additional Data field: City: enter city name. Country: enter country name. Currency: enter currency Language: enter language. You can use possible entry button to select language. Click on Address icon.

Next screen display: Edit Address Title: company Name: enter your company name. Search terms: enter search term. Street and House number Country: enter country name. Language: enter language

Click on Enter / Copy to Save the document.

Step 3:



Assign a Company Code To The Company Transaction Code: OX16 After define company code you should assign it to your company. Menu path: IMG >Enterprise Structure> Assignment >Finanzewesen > Assign Company code to Company

Next screen: Click on position Enter your Company Code And hit Enter So that your Company Code shows at the top. Under the Column Company and against your Company Code enter Your Company name identifier. (You can select it from possible entry button.)

Click on Save. The system will give a notification that request was carried out and then the bottom of the screen that “Data was saved”.

Step 4:



Define A Plant: Plant can be a manufacturing plant in the true sense, or can represent a branch office or site within a company code. A Plant is an organizational logistics unit that structures the enterprise from the perspective of Production, Procurement, Plant maintenance and materials planning. In SAP system, a plant must be assigned to one or more purchasing organizations. Furthermore, a plant must always be assigned to a company code. A Plant can be one of the following types of locations:

• Central delivery warehouse • Regional Sales office • Manufacturing Facility • Corporate headquarter • Maintenance Plant

Define A Plant: Menu path: IMG> Enterprise Structure> Definition> Logistik Allgermein (Logistic Alignment) > Define, copy, delete, check plant Note: you can create new plant or you can copy of existing plant. When you use this function, the system process the entry in the plant table and in all dependent customizing and system tables in which the plant included as a key.



Next screen will display: Double click on define plant (If you want copy of existing plant click on copy button on next screen. After coping plant you can change the editing. If you want to create new plant click on New entries.)

Next screen will display: Plant: enter a unique four-character name for plant.

Click on Save.



Edit Address screen will be display: Enter Name, Address Communication field

Click on Enter.



Step 5: Maintain Purchasing Organization: Purchasing organization is an organizational unit that negotiates conditions of purchase, prices and terms of delivery with vendors for one or more plants. It is responsible for procuring materials and services and purchasing organization assumes legal responsibility for all external purchase transactions. A purchasing organization can be divided into several purchasing groups that are responsible for different operational areas.

• Each purchasing organization has its own info records and conditions for pricing. • Each purchasing organization has its own vendor master data. • All items of an external purchasing document, that is, request for quotation,

purchase order, contract, or scheduling agreement, belong to a purchasing organization.

• The purchasing organization is the highest level of aggregation (after the organizational unit "client") for purchasing statistics.

• The purchasing organization serves as the selection criterion for lists of all purchasing documents.

Possible Purchasing Organizational forms: You can incorporate purchasing into company structure by assigning the purchasing organization to company codes and plants this means you can determine weather purchasing is organized centrally or decentrally in your company. You can have a combination of centralized and decentralized purchasing organization.

• Plant -Specific Purchasing organization: In Plant specific procurement, a plant is responsible for procuring materials for one plant only.

• Cross Plant Purchasing organization: This Purchasing organization procures material and services for all plant assigned to the company code.

Purchasing Organization A

Purchasing Organization

Plant A Plant B

Company Code


Plant A Plant B

CompanyCode



• Cross- Company code Purchasing Organization: if you want to organize purchasing on a cross-company code basis, you cannot assign a company code to the purchasing organization in customizing. For ex: When you create a purchase order, the system asks you to enter the company code for which you want to procure the material.

You can organize your purchasing function in the following ways:

• Corporate-group-wide purchasing • Company-specific purchasing • Plant-specific purchasing • All of these forms can co-exist within a single client

Note: Purchasing organization 0001 is already preset in all dependent tables. SAP recommends that you retain this number if you require only one purchasing organization. You will have then customized only few tables.


Plant A Plant B

Company Code A

Company Code B



Maintain purchasing organization: You can incorporate purchasing into company structure by assigning the purchasing organization to company codes and plants Menu path: IMG> Enterprise Structure> Materialwirstschaft (Material management) > Maintain Purchasing Organization

Next screen will display: Click on new entries: Next screen will display: Purch. Organization: enter the purchasing organization name purch. Org. descr: Enter the description for purchasing organization

Click on Save

Step 6:



Maintain Storage Location : Storage location is an organizational unit that allows the differentiation of material stock within a plant. If a material is located in a storage location, the storage data for that storage location must exist in the material master record, so that the system can manage the stock quantities at storage-location level Physical inventory is carried out at storage location level. Maintain Storage Location: Transaction code: OX09 Menu path: IMG> Enterprise Structure> Materialwirstschaft (Material management) > Maintain storage Location Popup window will display: Enter your Plant code:

Click on Enter



Storage Location Screen will display: Click on new entries: Next screen will display: Select storage location under dialog structure: Slocation : enter location identifier number Description: enter description for Location

Click on Save.

Double click on Address of storage No: enter number for location.

Click on Save.

Step 7:



Assign Plant to Company code: Transaction code: OX18 A plant must be assign to a company code. Menu path: IMG> Enterprise structure > Assignment> Logistik Alligemein (Logistic)> Assign Plant to company code

Allocation of Plants> Company code screen will display: Select your company code Click on assign



Next screen will display: Check your plant

Click on Enter

In next screen you can see your plant under your company code node.

Click on Save.



Step 8: Assign Purchasing Organization to plant: Transaction Code: OX17 In the SAP system, a plant must be assigned to one or more purchasing organizations. Menu Path: IMG> Enterprise Structure> Assignment> Materialwirstschaft (Material management) > Assign Purchasing organization to plant

Plants> Purchasing Organization screen will display Select your purchasing organization Click on Assign



Check your plant

Click on Enter.

In next screen you can see your plant under your purchasing organization.

Click on Save.



Step 9: Assign Purchasing organization to company code Transaction code: OX01 Menu path: IMG> Enterprise Structure> Assignment> Materialwirstschaft (Material management) > Assign Purchasing organization to company code.

Select your company code Click on Assign



Next screen: Check your purchasing organization

Click on Enter

In next screen you can see your purchasing organization under your company code node.

Click on Save.

Step 7:



Assign Plant to Company code: Transaction code: OX18 A plant must be assign to a company code. Menu path: IMG> Enterprise structure > Assignment> Logistik Alligemein (Logistic)> Assign Plant to company code

Allocation of Plants> Company code screen will display: Select your company code Click on assign



Next screen will display: Check your plant

Click on Enter

In next screen you can see your plant under your company code node.

Click on Save.



Step 8: Assign Purchasing Organization to plant: Transaction Code: OX17 In the SAP system, a plant must be assigned to one or more purchasing organizations. Menu Path: IMG> Enterprise Structure> Assignment> Materialwirstschaft (Material management) > Assign Purchasing organization to plant

Plants> Purchasing Organization screen will display Select your purchasing organization Click on Assign



Check your plant

Click on Enter.

In next screen you can see your plant under your purchasing organization.

Click on Save.



Step 9: Assign Purchasing organization to company code Transaction code: OX01 Menu path: IMG> Enterprise Structure> Assignment> Materialwirstschaft (Material management) > Assign Purchasing organization to company code.

Select your company code Click on Assign



Next screen: Check your purchasing organization

Click on Enter

In next screen you can see your purchasing organization under your company code node.

Click on Save.

Master Data for Purchasing



Purchasing is supported in its everyday work by the following types of master data:

• Material Master • Vendor Master • Purchasing info record • Source list • Quota arrangement • Conditions • Vendor evaluation

Step 10: Material Master: The Material Master record is a company’s main source of material- specific data. It is used by all components in the R/3 system. The material master database (often referred to simply as the "material master", comprising all the individual material master records stored in the system) contains descriptions of all materials that an enterprise procures, produces, and keeps in stock. It is the central repository of information on materials (such as inventory levels) for the enterprise. The integration of all material data in a single database objects prevents the problem of data redundancy. Every area, such as Purchasing, Inventory Management, Material Planning and Invoice verification can use the data stored. Material master Transaction code: MM01 Since materials are processed by various user departments within a company and each department stores different information for the materials. The Material Master is sub divided into information grouped by user departments. Each user department has a different view of the material master record and id responsible for maintaining the data to support its function. Menu path: SAP main menu> Logistics> Material Management> Material Master > Material> Create (General) >Immediately



When editing Material Master data, you go through a number of series. Create Material initial screen will display Material: leave blank this field system will assign Material Number after save. Industry sector: Industries sector has a control function in the R/3 system. Choose any industry ex mechanical. The Industry sector you assign to a material cannot be change later. Material type: select material type, ex Finished product. Various material types are provided in SAP R/3 system. You can also copy material Master from this screen. Click on “Select View” Pop up window will be display Choose Basic Data 1, Basic Data 2, Purchasing, General Plant Data/Storage 1, General Plant Data/Storage 2, Accounting 1,and Accounting 2. Click on Enter to Continue.



A popup window will be display. Plant: enter your plant ID.

Click on Enter.

Basic data 1 Enter Description of material Enter Base unit of measure Enter Material Group ex 103 for electronics Click on Enter Click on Basic data 2

Click on Enter



Click on purchasing Click on Enter Click on plant data/ stor 1

Click on Enter

Click on Accounting 1 In the field Valuation Class, enter valuation class number or use F4 to choose one value. In the field Price Control, enter S like standard price. In the field Standard Price, enter 10.

Click on Save/ Post (Create more than one material master)



Vendor Master: Accounting (FI) and Purchasing (MM) both maintain the Vendor Master record. In Accounting, the Vendor is regarded as the company’s crediting business partner. The vendor master database contains information about the vendors that supply an enterprise. This information is stored in individual vendor master records. A vendor master record contains the vendor’s name and address, as well as data such as:

• The currency used for ordering from the vendor • Terms of payment • Names of important contact persons (sales staff)

Since, to the accounts department, the vendor is generally a creditor (accounts payable), the vendor master record also contains accounting information, such as the relevant control account (reconciliation account) in the general ledger. Each user department can maintain both general data and Purchasing and Accounting – specific data centrally or decentrally. In addition Purchasing often maintains data at corporate group level. Step 11: Create Vendor Accounts Group Transaction code: OBD3 To create Vendor master record, you have to specify an account group. The account group cannot be changed after you create the master record. Your system administrator, however, can change the above-mentioned account group specification. Menu Path: IMG>Financial accounting> Accounts receivable and Accounts payable >Vendors accounts> Master records>preparation for creating Vendors Master records> Define Accounts group with screen layout (Vendors). Click on New Entries



Next screen will display: Accounts group: Enter four Character identifier for your vendor accounts group Name: enter description for vendors group.

Click on Save.

Step 12: Create Number Range for Vendors Accounts: Transaction code: XKN1 Menu path: IMG >Financial Accounting> Accounts Receivable and Accounts Payable Vendors Accounts>Master records> Preparation for creating vendors master records> Create number ranges for vendor accounts



Under vendor number ranges screen Click on Change Interval push button (the one with pencil mark). Click on Insert Interval push button (Shift+ F1)

Maintain Number Ranges Intervals Screen: No.: Next available number. From number: starting number of next available number range To number: ending number of the number range. Make sure that the number range is not too large and the number you are assigning does not overlap with an existing number range. Click on insert enter.

Click on Save. SAP will display a notice, click on enter to continue. SAP will display a message in the status bar that the changes were saved.



Step 13: Assign Number Range to Vendor Accounts Group Transaction code: OBAS After create number ranges next step is allocate number ranges to vendors account groups: Menu path: IMG >Financial Accounting> Accounts Receivable and Accounts Payable>Vendors Accounts>Master records> Preparation for creating vendors master records> Assign number ranges to Vendor Accounts Groups.

Click on Position. Type your Vendor account group in the pop up screen. Click on enter to continue. Under the number range column enter the two-digit identifier for the number range you want to use, which you created in before step.

Click on Save.



Step14: Create Vendor Master Transaction code: MK01 Vendor Master records contain information on the vendors (external suppliers) of an enterprise. You can create vendor master either Purchasing or Financial side. Menu Path: SAP main menu> Material Management>Purchasing> Master Data>vendor> Create

Create Vendor: Initial Screen will display: Vendor: leave blank (system internally generate number for vendor) Purch. Organization: enter your purchasing organization. Accounts group: enter your vendor Accounts group. You can select from possible entry button.

Click on enter to move next screen.



Create vendor: Address screen will display: Title: enter company: Name: enter Vendor name Enter street address Click on next page button. (Twice)

Create Vendor: Purchasing data screen will display. Order currency: enter the currency Terms of payment: click on possible entry button and select terms of payment.

Click on Save. SAP will display a message Vendor xxxxx has been created for purchasing organization , at bottom on screen.



Source of supply: Step 15: Purchasing Info Record: Purchasing Info records serves as a source of information for Purchasing. The purchasing info record contains information on a specific material and a vendor supplying the material. For example, the vendor's current pricing is stored in the info record. Purchasing Info record is an important source of information for the buyer, enabling him or her to determine via list display which vendor offer a particular material or which material can be procured from a particular vendor. You can store and maintain the followings data in Info records.

• Current and future prices and conditions (for exp. Fright and discounts) • Delivery data (for exp, Planned delivery time). • Vendor data (for exp, contracts) • Texts

The info record allows buyers to quickly determine: -Which materials have been previously offered or supplied by a specific vendor -Which vendors have offered or supplied a specific material Purchasing Info Record Transaction code ME11. You can maintain info records manually or automatically from quotations, purchase orders, or online agreements. Purchasing Info record contains general data that is valid for every purchasing organization or every plant. Menu path: SAP main menu > Logistics> Material Management> Purchasing > Master Data> Info record >Create



Create Info record: initial screen Vendor: enter vendor account number Material: enter material number Purchasing org: enter your purchasing organization Plant: enter your plant identifier

Click on Enter (If the system shows warning by pass it, click on enter again)

Create info record: General data screen will display: This screen will show you vendor data and origin data. You can enter reminder for vendor data. Click on purchase org. data 1



Next screen will display: Plnd dely. Time: enter vendors planned delivery time. (Used for scheduling) Purchase group: select purchase group from possible entry button. Standard Quantity: enter the standard quantity for price determination. Net price: enter net price for purchasing. You have two options. 1.You enter the net price per unit in the Net price field. This price includes the vendor's normal discounts or surcharges only - cash discounts for prompt payment, for example, are calculated separately. 2.You enter the gross price in the Net price field and then maintain the pricing conditions. (To do this, choose Conditions.) The system automatically replaces the entered gross price with the calculated net price. Click on conditions



You can specify both time-dependent and time-independent.

Conditions in info records, contracts are time dependent conditions and conditions in purchase orders are time independents.

Time depended conditions can be restricted to a certain period of validity.

Valid on: enter validity starting date. Valid to: enter validity up to date Rate: enter rate for material. Unit: enter quantity Click on back Arrow to move back

Click on Text Text overview screen will be display: Enter logical text for Info record notes and purchase order text

Click on Save.



Step 16: Changing an Info record Transaction code: ME 12 If you wish make changes in Info records, you can change in some specific data. If you want to change in several info records simultaneously, you can use Mass maintenance function. Menu path: SAP main menu > Logistics> Material Management> Purchasing > Master Data> Info Record >Change

Change Info Record: Initial screen will display Vendor: enter vendor account number Material: enter material number Purchasing org: enter your purchasing organization Plant: enter your plant identifier Info Record: enter info record number you want to change. You can search by possible entry button.

Click on Enter



Click on purchasing Organization data You can change in only specific fields, like the field, which are open for change. Mostly white field are changeable and gray fields un changeable. In this field you can change in Control Data. Ex: Planned delivery time Purchasing group, standard quantity etc. Click on condition

Gross price condition change screen will display: You can change validity date Change in Rate (Gross price)

Click on Save after changes.



Step 17: Net Price Simulation :

The net price simulation enables you to compare prices and conditions as follows:

-Prices of different vendors for a material and/or a material group

-Prices of all materials supplied by a specific vendor

You can calculate the net prices of a material supplied by a number of different vendors based on any simulation quantity you care to specify. Net Price Simulation : Transation Code : ME1L You can choose Net price simulation by selecting: -Compare the prices of a material supplied by different vendors, By Material - Compare the prices of all materials supplied by one vendor, By Vendor Menu Path: SAP main menu > Logistics> Material Management> Purchasing > Master Data> Info Record > List Displays> By Vendor



Info Records per Vendors screen will display: Vendor: Enter vendor Number Material: enter material number From –To. Purchasing organization: enter your purchasing organization Plant: enter plant Id. Click on Execute Icon

Purchasing Info records screen will display The list contains the net prices for all purchasing organizations and plants that are defined for the info record. In addition, the net price of the last purchase order and/or the last quotation are/is listed Select the material and check the box. Click on Price Simulation Box or F8



New window will be popup: Enter pricing simulation date. Enter simulation quantity. Enter unit of measure

Click on Enter.

Next screen will display simulation price for material. The info record with the best price marked in the resulting list with an arrow. If no price exists for an info record, a note will print on the list. Click on Simulation List



Next screen will display Price Simulation for Info records, You can see detail result of price simulation with comparison.



Out line Agreement :

An outline purchase agreement is a longer-term agreement between a purchasing organization and a vendor regarding the supply of materials or the performance of services within a certain period according to predefined terms and conditions. (Outside SAP, such agreements may be referred to by a number of terms, including "blanket", "master", “framework" or "umbrella" agreements)

In the SAP System, such agreements are subdivided into:

Contracts:

-Centrally agreed contracts

-Distributed contracts

Scheduling agreements:

-Scheduling agreement referencing a centrally agreed contract

Step 18 :

Contracts: Out line Agreement

Transaction code: ME31

In the MM Purchasing component, a contract is a type of outline purchase agreement against which release orders (releases) can be issued for agreed materials or services as and when required during a certain overall time-frame.

Menu path: SAP main menu> Logistics> Material Management> Purchasing>Outline Agreement > Contract> create



Create contract screen will be display Vendor: enter vendor number. Agreement type: click F4 and chose WK (value contract) or MK (quantity contract). Purch. Organization,: enter purchasing organization. Purchasing group: click F4 and chose one value for group. Plant: enter the your plant

Click on Enter.

Next screen will be display; Validity end: enter date that contract is finished. Targ. val. :Enter amount target for the contract for example 100000

Click on Enter.



Item Overview Screen will display. Item: enter item no. Material: enter material no. Targ.qty: enter target quantity. Net price: enter price of material.

Click on Save SAP will display Quantity Contract created under Number Xxxxxx at bottom of screen.

Step 19: Schedule Agreement Transaction Code: ME31L

A scheduling agreement is a form of outline purchase agreement under which materials are procured on predetermined dates within a certain time period.

A scheduling agreement consists of a number of items, for each of which a procurement type is defined.

Menu path: SAP main menu> Logistics> Material Management> Purchasing> Outline Agreement Scheduling Agreement> Create > Vendor Known



Create Scheduling Agreement screen display: Vendor: enter vendor number Agreement type: In the field you specify whether you are creating a scheduling agreement with or without release documentation, for example. The agreement types LPA (with release documentation) and LP (without release documentation) are defined in the standard system, select agreement type LP Agreement date: enter the date of agreement. Purch. Organization: enter your purchase organization. Purchasing group: select purchasing group Ex 001 Plant: enter the plant id

Click on Enter. Next screen will display: Validity date start: enter start date Validity end: enter Agreement end date Targ.value : enter target value ex: 100000

Click on Enter.



Item: enter item number In the field material enter material number. Targ. Qty: enter total contract quantity for example 10000 In the field Net price, enter price of contract for example 10

Click on Enter.

Next screen will display

Click on Save SAP will display a message at Bottom of screen.



Step 20: Out line Agreement : Display, Change,Cancel and block

You can display, change, cancel, and block outline purchase agreements. You can find and display outline agreements. You can display a single outline agreement and can create analyses of outline agreements.

Displaying an Outline Agreement:

Menu Path: SAP main menu> Logistics> Material Management> Purchasing> Outline Agreement >Contract/Scheduling Agreement> Display

Enter the number of the desired outline agreement.

Click Enter, The overview of the chosen agreement will display.

Changing or Canceling an Outline Agreement:



Changing or canceling an outline agreement, you must consider the following:

• When you change an outline agreement after it has been sent to the vendor, a change document (change notice) is automatically generated and queued for printing or transmission. The change document tells the vendor what you have changed in the outline agreement.

• If goods have already been delivered, then the changes you can make to the outline agreement are limited. For example, you cannot change the quantity to deliver in a quantity contract to an amount that is less than the amount already delivered. If the invoice has been received or the goods have been paid for and you change the price, the change has no effect. (The vendor must send an invoice for the new amount or credit your account.)

• You can view the ordering activity for a contract item by displaying the release (order) documentation for the item you can "block" an outline agreement to freeze all activity on it. After the implementation and checking of desired changes, you can unblock the agreement again.

Step : 21 Optimized Purchasing : Source Determination

The source determination facility helps you to find the most suitable source for a certain requirement from the large volume of data that is available, i.e. it suggests a suitable outline agreement or vendor for ordering purposes.

The system determines the source of supply of a requested material on the basis of the following factors (in the order shown):

• Quota arrangement The system first determines whether a quota arrangement within whose validity period the delivery date in the requisition falls exists for the material.

If a quota arrangement exists, the system determines the vendor from whom the material is to be procured according to the quotas assigned to the vendors and then suggests the source.

If no source can be determined this way, the system checks the source list.

• Source list The system determines whether an entry in the source list within whose validity period the delivery date of the requisition falls exists for the material. The source



in question may be a fixed vendor or an outline agreement (contract or scheduling agreement).

If the source list contains a unique source, the requisition is assigned to that source.

If several sources are found, a box appears for selection purposes.

If no source could be determined, the existing outline agreements and info records are examined.

• Outline agreement and info record The system searches for contracts, scheduling agreements, and info records for the material and suggests these.

(If info records with more than one purchasing organization exist, all info records of the purchasing organization(s) that is/are responsible for procurement for the requesting plant are also suggested.) If several outline agreements and perhaps info records exist, all possible sources are offered for selection in a box.

Source Determination Transaction code : ME01

The source list is used in the administration of sources of supply.

It specifies the allowed (and disallowed) sources of a material for a certain plant within a predefined period. Each source is defined by means of a source list record.

Menu path: SAP main menu> Logistics> Material Management> Purchasing> Outline Agreement > Master Data > Source list> Maintain



Next screen will display: Material: enter your material number Plant: enter plant Id.

Click on Enter

Overview screen will display: In the field Valid from, enter the date valid from. Valid to: enter the date valid up to Porg: enter purchasing organization Agreement: Enter the contract number or you can select from possible entry button. Item: enter the first item line See in the contract that you created either 10 or 1.

Click on Fix radio button means this is fixed source. Within a validity period, there may be no more than one fixed source of supply of the same type (that is, one vendor or outline agreement).



System always proposes this contract when you convert the purchase requisition to purchase order.

Click on Save. The Source list is created.

Step 22: Purchase Requisition:

A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material or a service so that it is available at a certain point in time.

A purchase requisition can be fulfilled through purchase orders or longer-term purchase agreements.

Requisitions can be created either directly or indirectly. Directly means that someone from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date.

Indirectly means that the purchase requisition is initiated via another SAP component.

A purchase requisition consists of a number of items, for each of which a procurement type is defined. The following procurement types exist: Standard, Subcontracting, Consignment, Stock transfer, and External service



Ordering: Create Purchase Requisition Transaction Code :ME51N

It is an internal document: it is not used outside the enterprise.

You can create Purchase requisition with or without Master record.

If a master record exists for the material that is to be ordered, proceed as follows:

Menu path:

SAP main menu> Logistics> Material Management> Purchasing > Purchase Requisition >Create

Create Purchase requisition screen will display Select Purchase Requisition Click on item overview



Create Purchase Requisition screen will display: Check in the box SOURCE DETERMINATION, so system can propose the source of supply. If not then no source is proposed. Material: Enter material number that you create in contract and source list. Enter quantity: enter quantity for purchase requisition Delivery date: enter material delivery date Plant: Enter plant that you create in source list Enter purchasing group

Click on Enter

You can see that system propose the contract in the box “agreement” along with vendor.

Click on Save SAP will display a message "Purchase Requisition number xxxx created"



Step 23: Assign and Process of Purchase requisition Transaction: ME57 Menu Path: SAP main menu> Logistics> Material Management> Purchasing>Purchase Requisition Follow-on Functions> Assign And Process

- Do not forget to select box “Assigned purchase requisition - Enter Purchase requisition that you just created in the field purchase requisition - Click F8 or icon execute



Select this item and click icon Assignment

Highlight on contract number i.e. 4600000030 and click icon Process assignment



New window will be pop up: You can create Purchase order from this screen. Click Continuer or Enter

Save the Purchase Order. SAP will display a message Purchase Order is created.

Step: 24



Create Purchase Requisition W/O Master Record Transaction code: ME51-N

If the requested material has no master record and is to be ordered for direct usage or consumption, you can specify which consumption account is to be charged. This process is termed account assignment.

If a master record not exists for the material that is to be ordered, proceed as follows:

Menu path:

SAP main menu> Logistics> Material Management> Purchasing > Purchase Requisition >Create



Create purchase requisition screen will display: Item: enter item number A (Account Assignments): enter Account Assignment Category. Ex: Third party Short text: enter short text for Requisition Quantity req.: enter required quantity Unit of measure: Delivery date: enter date of delivery Material group: enter material group Id Plant: enter plant Id Purchasing group: enter purchasing group Single Accounts Assignment under Item Header G/L Account: enter G/L account number or you can search from possible search button. Cost center: enter cost object link with your G/L account. Select Valuation under Item header

Valuation price: Enter valuation price Click on Enter

Click on Save SAP will display a message "Purchase Requisition number xxxx created"

Step: 25



Change In Purchase Requisition Transaction Code: ME52N You can change in some fields of Purchasing Requisition. Menu Path: SAP main menu> Logistics> Material Management> Purchasing>Purchase Requisition Change

Enter the number of the purchase requisition you wish to change. Click on Enter Change Purch. Requisition screen will display: You can make change; you wish to change in some fields.

Click on Save after changes.



Simplified Procurement Process Step:26 ERS (Evaluated Receipt Settlement) Step 1: Turn on the flag ERS on vendor file. Transaction Code : MK02 Menu path: SAP main menu> Logistics> Material Management> Purchasing> Master Data> Vendor > Purchasing> Change (current)

Vendor: Enter Vendor number Purch. Organization: Enter Purchasing organization Flag Purchasing Data

Click on Enter



Check on the box AutoEvalGRSetml Del.

Click on Save (Note: Some time screen shows warning, by pass it and click on enter.)



Step: 27 Creating a Purchase Order A purchase order is a 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

You can use purchase orders to cover your requirements using external sources (i.e. a vendor supplies a material or performs a service).

You can also use a purchase order to procure a material that is needed in one of your plants from an internal source, i.e. from another plant. Such transactions involve longer-distance stock transfers. The activities following on from purchase orders (such as the receipt of goods and invoices) are logged, enabling you to monitor the procurement process.

You can use purchase orders for once-only procurement transactions. If, for example, you wish to procure a material from a vendor only once, you create a purchase order. If you are thinking of entering into a longer-term supply relationship with this vendor, it is advisable to set up a so-called outline agreement, since this usually results in more favorable conditions of purchase.

You have the following options in creating purchase order:

• Vendor known

You can use this procedure if you know which vendor is to receive the order.

• Vendor unknown

if you want the system to select and suggest possible vendors you can use this procedure. These suggestions are then made on the basis of sources of supply that have been predefined in the system. (Note: the term "source" covers outline purchase agreements, info records, and source lists).

• Creation of POs from assigned requisitions

Use this procedure to list the requisitions for your purchasing group that have already been assigned to a vendor (that is, those requisitions containing a vendor, outline agreement, or info record as a procurement option). Pos can be generated from these requisitions automatically. Like Optimize Purchasing

• Stock transfer

Choose this procedure if you wish to order not from a vendor but from one of your plants.



• Vendor-Managed Inventory (VMI)

You use this procedure if you wish to create a purchase order from an acknowledgment sent to you by your vendor via EDI.

Creating a Purchase Order Transaction Code: ME21N Menu path: SAP main menu> Logistics> Material Management> Purchasing> Purchase Order > Create> Vendor Supplying Plant known

Vendor: Enter Vendor Number Click on Header detail Screen will open: Purchasing org.: Enter Purchasing Organization Purch. Group: Enter Purchase Group Material: Enter Material Number Quantity: Enter PO quantity Delv. Date: Enter delivery date Net price: Enter Net price Plant: Enter Plant ID Click on item detail



Select folder INVOICE. You can see ERS field is flag i.e. when you receive the goods system will pay exactly the quantity receipt. Tax code: enter your tax code for selection you can use possible entry button. Jurisdiction code: enter your jurisdiction code, you can use possible entry button for selection.

Click on Save

Step: 28 Displaying a Purchase Order: Transaction code: ME2L You can display Purchase Requisition: By Vendor By Material Menu path: SAP main menu> Logistics> Material Management> Purchasing> Purchase Order > List Displays> By Vendor



Purchasing document per vendor will display: Vendor: enter vendor range Purchasing organization: enter purchasing org. from: to Click on execute icon

Next screen will display: You can see all purchase order: Select one purchase order and click on Environment > Display document at top menu bar



Next screen will display Purchase order document with detail You can analyze the document. Click on Back Arrow or F3 to move back

Select the Plant name Click on PO history



Next screen will show you History For Purchase Order Once you double click on line item System will display Material Document overview. You can see all details of Material document Use Back Arrow or F3 to move back from screen.

Step :29 Goods Receipts: A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in warehouse stock. You use this component to post the receipt of goods from an external vendor or from production. A goods receipt leads to an increase in warehouse stock. The R/3 System distinguishes between the following types of goods receipts:

• Goods receipts for Purchase Order • Goods receipts with reference to a reservation • Other goods receipts

Goods receipts For Purchase Order: If your company uses the MM Purchasing component, deliveries from vendors are most likely the result of purchase orders initiated by the purchasing department.



The purchase order is not only the document with which the purchasing department orders goods from the vendor; it is also an important planning and tracking tool for the following departments: Purchasing, Material Requirements Planning (MRP), Inventory Management, and Invoice Verification.

Reference to a Purchase Order If a material is delivered for a purchase order, it is important for all of the departments involved that the goods receipt entry in the system references this purchase order, for the following reasons:

• Goods receiving can check whether the delivery actually corresponds to the order.

• The system can propose data from the purchase order during entry of the goods receipt (for example, the material ordered, its quantity, and so on). This simplifies both data entry and checking (over deliveries and under deliveries).

• The delivery is marked in the purchase order history. This allows the Purchasing department to monitor the purchase order history and initiate reminder procedures in the event of a late delivery.

• The vendor invoice is checked against the ordered quantity and the delivered quantity.

• The goods receipt is valuated on the basis of the purchase order price or the invoice price

Goods Receipts Transaction code: MIGO We are creating Goods receipts for purchase order. Menu path: SAP main menu> Logistics> Materials Management> Purchasing> Purchase Order> Follow on Functions> Goods Receipts



Enter PO number that you’ve Created. Document date: enter document date Posting Date: enter posting date

Click on Enter to move next screen.

Next screen will display: Make sure the box Item OK is flag. Enter storage location under Storage location field

Then click icon Post / Save SAP will display a message "Material Document Posted"



When you post a goods receipt, the system automatically creates a material document, which serves as proof of the goods movement Note: (If you receive a delivery for which no purchase order exists, you can still post the goods receipt. In this case, the system generates an automatic purchase order at the vendor, if this has been set for each movement type in Customizing.) Step 30: Run the Settlement Program (Execute ERS) Transaction code: MRRL

In the Logistics Invoice Verification incoming invoices are verified in terms of their content, prices, and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.

Menu path: SAP main menu> Logistics > Materials Management> Logistics invoice Verification> Automatische Abrechnung> MRRL- Execute ERS



Enter vendor number Enter Purchase order for this test Check the box test run for test purpose. Click icon Execute or F8.

In this screen, you can click on PO number, system displays PO. Click arrow back or F3. This time, check off the test run.



Click on Save (Some time screen shows warning, by pass it and click on enter.)

Step: 31 Vendor Evaluation:

The Vendor Evaluation component helps you select sources of supply and facilitate the continual monitoring of existing supply relationships. It provides you with accurate information on prices, and terms of payment and delivery. By evaluating vendors, you can improve your enterprise's competitiveness.

On the basis of detailed information, and in collaboration with the relevant vendors, you can quickly identify and resolve any procurement problems that may crop up from time to time.The Vendor Evaluation component supports you in optimizing your procurement processes in the case of both materials and services.

You can check the reliability of the vendors from whom you procure services on a plant-by-plant basis. You can determine whether the vendors perform the services within the specified timeframes and appraise the quality of the work carried out.

Scores and Criteria

The standard SAP System offers you a scoring range from 1 to 100 points, which is used to measure the performance of your vendors on the basis of five main criteria.

The main criteria available in the standard system are:



• Price • Quality

• Delivery

• General service/support

These four main criteria serve as a basis for evaluating vendors from whom you procure materials.

• External service provision

This main criterion serves as a basis for evaluating those vendors you employ as external service providers.

You can also define other or further main criteria, as required. You can assign different weights to the individual criteria. The vendor’s overall score is computed taking into account the weighted scores awarded for each of the main criteria. The Vendor Evaluation System ensures that evaluation of vendors is objective, since all vendors are assessed according to uniform criteria and the scores are computed automatically. In this way, subjective impressions and judgments can be largely eliminated. To create a detailed evaluation, each main criterion can be divided into several sub criteria. The standard system provides you with certain sub criteria, which suffice as a basis for evaluation. You can also define your own additional sub criteria. The scores for the sub criteria are calculated in different ways. Vendor evaluation Step 1: Configuration Transaction code: OMGL

Before you can work with the Vendor Evaluation component, the system settings must be maintained.

Menu Path: IMG> Materials Management > Purchasing>Vendor Evaluation >Define Purchasing Organization Data for Vendor Evaluation Note: you can create new



entries or You can copy all data from Purchasing Org 001 to your new one.



If you are coping from existing one you click on copy button and enter purchasing organization name and click on enter. If you are creating new one click on New entries Purchasing org.: enter your Purchasing organization ID. Enter the fields shown under the screen. Click on save Select Main criteria under dialog structure

Next screen will display: Cr: enter the number for criteria Criterion: enter criteria Price: Quality: Delivery: Services:



Double-Click on weighting Next screen will display: Wtg key: enter the key for weighting. Short text: Enter the short text Cr: enter criterion no. Criterion: enter main criterion. Weighting: enter weighting point

Select weighting field and click on Point score for the automatic criteria under dialog structure.



Enter the points score for automatic criteria S: click on possible entry button and select criteria field Percentage: enter the criteria % Sco: enter point score. After completion all of score

point Click on Save

Vendor Evaluation Step: 2 Vendor Evaluation Step: 2 Transaction code: ME61 Menu Path: SAP main menu>Logistics> Material Management> Purchasing> Master Data> Vendor Evaluation> Maintain



Maintain vendor Evaluation screen will display: Purch. Organization: enter your purchasing organization Vendor: enter vendor identification number.

Click on Enter

Next screen, Overview of main criteria will be display: Enter 01 in weighted field

Click on Enter.

Check delivery Click on main criterion



Sub criteria for main criterion screen will display. Now you can click on button Auto.new eval/Mcrit, system display the new evaluation Sap will display an information at bottom of the screen "Automatic sub criteria recomputed for main criterion 01" You can repeat this process for several vendor by creating PO, receive PO late, earlier than delivery date in the PO and then go back to do vendor evaluation. The result will be different.

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