CH04
CH04
CH04
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Learning Objectives
1. Describe the major organizational levels associated with the
procurement process.
2. Discuss the four basic categories of master data that are
utilized during the procurement process.
3. Explain the key concepts associated with the procurement
process
4. Identify the key steps in the procurement process and the
data, documents, and information.
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Learning Objectives (Continued)
5. Effectively use SAP ERP to execute the key steps in the
procurement process
6. Utilize SAP ERP to extract meaningful information about
the procurement process
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A Basic Procurement Process
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Outline
Organizational data
Master data
Key concepts
Process
Reporting
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Organizational Data
Client
Company code (CC)
Plant
Storage location (S Loc)
Purchasing organization (P Org)
Purchasing group
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Plant
Many definitions or uses. A location
That holds valuated stock (for distribution)
Where production planning is carried out
Where products and services are created
That contains service or maintenance facilities
Factory, warehouse, distribution center
Can be assigned to one CC only
A CC can have many plants
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Storage Location
A place, within a plant, where materials are stored
Areas designated for different types of material (raw material,
work-in-process, finished goods)
More sophisticated divisions including storage bins, cabinets,
trays
A plant must have at least one storage location
A storage location can belong to only one plant
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GBI Storage Locations
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Purchasing Organization
Identify and select vendors
Negotiate general conditions of purchase and contracts for
one or more plants or companies.
Determine pricing conditions
Typically three models for Purchasing Organization
Enterprise-Level
Company-Level
Plant-Level
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Enterprise-Level Purchasing Organization
Also known as cross-company code model
One Purchasing Organization assigned to all CC in a client
Purchasing for all plants across all CC
Highly centralized – corporate Purchasing Org
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Enterprise-Level Purchasing Organization
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Company-Level Purchasing Organization
Also known as cross-plant model
Different Purchasing Organizations are assigned to each CC
Purchasing for all plants in one or more CC
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Company-Level Purchasing Organization
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Plant-Level Purchasing Organization
Also known as plant-specific model
Each plant has its own Purchasing Organization
Highly decentralized
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Plant-Level Purchasing Organization
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Reference Purchasing Organization
One centralized Purchase Org for high-level decisions across
the enterprise
Multiple CC-specific and plant-specific Purchase Org
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Purchasing Group
A buyer or group of buyers responsible for certain materials
or groups of materials
Can be internal to the company or external
Decide to purchase land, but use a realtor (external purchasing
group) to execute the purchase
Not assigned to or related to purchasing org
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Master Data
Material Master
Vendor Master
Purchasing info record
Conditions
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Material Master
Data needed to execute transactions related to materials
(along with org data)
Data are grouped by different user areas (views)
Data are specific to (defined for) for different organizational
levels
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Material Master – Views
Basic data Plant / Storage
Purchasing Work Scheduling
Accounting MRP
Forecasting Classification
Sales Warehouse Management
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Material Master – Views
Basic data
Description, unit of measure, weight, material group
Purchasing
Purchasing group, GR processing time, delivery (under / over)
tolerances
Accounting
Currency, valuation class (link to G/L), price control (moving
price, standard price, future price)
Plant / Storage
Storage requirements (hazard, temperature, etc.)
Shelf life
Weight, volume
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Material Master - Views
Views for other processes
Forecasting (Material Planning process)
Sales (Fulfillment process)
Work Scheduling (Production process)
MRP (Production process)
Classification (PLM process)
Warehouse Management (WM process)
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Material Master - Views
Different material types have different required views
Examples:
Raw material: no sales view
Finished Goods: no purchasing view
Trading goods: no production related views
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Material Master – Org Levels
Defines the level at which the master data is maintained
Can have different data for different combinations of Org
data
Purchasing: Plant, storage location
Sales: Sales Area (Sales Org, Distribution Channel)
Warehouse: Warehouse #, storage type
Example:
SHRT1000 + MI00+ TG00
SHRT1000 + SD00+ TG00
SHRT1000 + US00 + Wholesale channel
SHRT1000 + US00 + Internet channel
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Demo 4-1: Review Material Master
Review some of the data included in a material master.
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Vendor Master
Data needed to do business with vendors
Data needed to execute transactions related to vendors
(along with org data)
Data are specific to (defined for) different organizational
levels. The three segments are:
Client level data (General)
Company code level data (Accounting)
Purchasing organization level data (Purchasing)
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Vendor Master Segments
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Data in the Vendor Master
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Vendor – General Data
Client-level data
Valid across all CC in a client
Examples
Name,
Address
Communication (phone, fax)
Search term
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Vendor – Accounting Data
Company code specific data
Valid for the entire company code across purchasing areas
Examples
Account information
Bank information
Reconciliation account
Payment terms and methods
Communication (dunning)
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Vendor – Purchasing Data
Separate for each Purchasing Organization
Applies to the specified Purchase Org
Examples
Partner functions (vendor, invoicing party, payment recipient)
InCoTerms: defines responsibilities and costs of shipment
Freight, insurance, customs clearance, locations
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Demo 4-2: Review Vendor Master
Review some of the data included in a vendor master.
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Purchasing Info Record
Relates vendors and materials.
One info record per combination of vendor and material (or
material group)
General data
Conditions: pricing, discounts, free goods (current and future)
Vendor data
Texts (notes)
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Purchasing Info Record
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Purchasing Info Record
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Conditions
Pricing Conditions
Gross price
Discounts and surcharges
Freight / shipping
Obtained from
Purchasing info records
Contracts and agreements
Other sources
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Demo 4-3: Review Purchasing Info
Records
Review data in a purchasing info record.
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Key Concepts
Item categories
Account determination
Stock type/status
Goods movement
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Item Categories
Defines the process used to procure the item
Categories
Standard
Subcontracting
Components provided; finished product received
Consignment
Liability only when withdrawn from stock
Service
Stock transfer
Third party order
Ship to third party; bill to us (drop shipment)
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Demo 4-4: Review Item Categories
Review various item categories used in the purchasing
process.
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Account Determination
Which GL account to assign to PO?
Defined in material master (valuation class)
Account assignment categories
Used when purchasing material without material master
Assets, Production Order, Cost Center, Sales, Order, Project
Automatic GL account determination based on category
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Purchase for Stock vs. Consumption
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Stock Types / Status
Based on usability of material
Unrestricted use
In quality inspection
Blocked stock (damaged, unusable; wrong delivery)
Stock in transit
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Goods Movement
A transaction that causes a change in stock (value or status)
Categories of Goods Movement
Specific Movement types
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Structure of a Material Document
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Demo 4-5: Review a Material Document
Review data included in a material document.
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Goods Movements
Goods Receipt
From vendor or production process
Increase in quantity and value of stock
Goods Issue
To sales order or internal consumption
Decrease in warehouse stock
Stock Transfer
Physical movement of material between storage locations
Sloc to Sloc
Plant to Plant
CC to CC
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Goods Movements
Transfer Posting
Results in a change in material status
In-quality inspection/ blocked/ unrestricted use
One material type to another
May or may not include a change in location (Sloc, plant)
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Demo 4-6: Review Goods Movements
and Movement Types
Review various goods movements and movement types
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A Detailed Procurement Process
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Process Steps
Trigger
Data
Task details
Outcomes
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GBI Story
Inventory of t-shirts (SHRT1000) is low (<=50) in the
Miami plant
Therefore it is necessary to procure more t-shirts
Spy Gear is the only supplier of t-shirts
Quantity purchased is 500
Purchase price is $15 per t-shirt
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Elements of the Purchase
Requisition Step
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Purchase Requisition
Trigger
Other processes
Manually
Data
User input: Dates, materials, quantities
Master data: Material master, Vendor, Info record
Organizational data: Client, CC, P Group
Task details: none
Output
Document: Purchase requisition
Subsequent steps
Purchase Order
RFQ
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Data in a Purchase Requisition
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Converting a Purchase Requisition
to a Purchase Order
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GBI Scenario
Material planning process has determined
Re-order point = 50
Order quantity = 500
Miami plant employee reviews inventory report and
determines that it is necessary to reorder
Requisition:
500 SHRT1000 to be delivered at the Miami plant by a specified
date
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Demo 4-7: Create a Purchase Requisition
Create a purchase requisition for stock material.
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Elements of the Purchase Order Step
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Purchase Order
Creation
Manually or automatically
With or without reference to other documents
Data
Documents: Purchase requisition, Purchase order, RFQ,
Quotation
Master data:
Material (characteristics)
Vendor (terms)
Info record (pricing)
Conditions (pricing)
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Data in a Purchase Order
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Purchase Order
Tasks
Data automatically included from input sources
Source determination using info records, agreements and
contracts, and source lists
Outcomes
Purchase order
Purchase requisition history – PO added
Communicate
with vendor (external procurement) using messages: fax, EDI,
print
Plant (internal procurement) using transfer orders
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Purchase Order Structure
Header
Document number, dates
Vendor, currency, terms
PO total
Line items
Material number, description
Quantity, price, item total
Delivery date
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The Structure of a Purchase Order
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Purchase Requisition to Purchase Order
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Communicating with vendors
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Purchase Order Processing Options
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GBI Scenario
Create purchase order
Material: SHRT1000
Quantity: 500
Vendor: Spy Gear (from source list or manual entry)
Receiving plant: Miami
Reference document: purchase requisition
Price: $15 each (from info record)
Total PO value: $7500
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Demo 4-8: Convert Purchase
Requisition to Purchase Order
Convert a previously created purchase requisition into a
purchase order
Review data in the purchase requisition
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Elements of the Goods Receipt Step
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Goods Receipt
Data
Documents: PO, Delivery document (packing list)
Master data
Task
Verify materials receipt
Create GR document
Outcomes
Material documents
Header: Document number, date, reference
Details (items): Material, quantity, location, movement type
Financial Accounting documents
Header: Document number, date, reference, currency
Details (Items): GL accounts, description, amount
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Goods Receipt
Outcomes
Notifications
Material master: stock and value
GL accounts (Stock/Consumption, GR/IR)
PO history – Material document added
Quality management
Quality inspection lot
Warehouse management
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Data In The Goods Receipt Step
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Financial Impact of Goods Receipt
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Material and Accounting
Documents from a Goods Receipt
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Demo 4-9: Receive goods against a
Purchase Order
Record the receipt of materials for the purchase order
previously created.
Review data in the associated purchase requisition.
Review data in the associated purchase order.
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Elements of the Invoice Verification Step
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Invoice Verification
Data
Vendor invoice
Purchase order
Material document
Tasks
Three-way match
Outcomes
Financial Accounting documents
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Data needed for Invoice Verification
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Invoice Verification
Outcomes
GL: vendor account, A/P, GR/IR
PO history - invoice document added
Material master :
Stock value,
Moving average price (if using moving price vs. standard price)
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Financial Impact of Invoice Verification
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Demo 4-10: Receive and Verify an Invoice
Verify and record an invoice received from a vendor.
Review data in the associated purchase order
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Elements of the Payment Step
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Payment Processing
Creation: manually or via automatic payment program
Data
Three-way match (or other process)
Payment method, account, items to pay,
Tasks
Calculate payment amount (discounts)
Post payment document (accounting document)
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Payment Processing
Outcomes
Financial Accounting Documents
Payments (checks, EFT, notifications)
Updates
GL accounts
Material master :Moving average price (if using moving price vs.
standard price)
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Data needed for Vendor Payment
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Financial Impact of Vendor Payment
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Demo 4-11 Make payment to Vendor
Record payment made to a vendor for previously recorded
invoices.
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Integration With Other Processes
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Reporting
Source of data
Instance level reporting (status)
Process level reporting
Lists and reports
Purchasing Information System
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Reporting - Sources
Organizational data
Master data
Transaction data (documents)
Purchasing documents
Material documents
Accounting documents
Invoice documents
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Reporting - Instance
Status of a Requisition, Purchase Order
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List of Invoices
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Work List – List of Requisitions
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Demo 4-12: Display a List Report
Retrieve and display a list of invoices (online list)
Retrieve and display a list of open purchase requisitions
(work list)
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Reporting - Standard
Process level reporting
Standard reports / List displays
Logistics Information System
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Reporting – Logistics Information System
Components
Purchasing Information System
Sales Information System
Quality Management Information System
Inventory Control
Transportation Information System
Shop Floor Information System
Plant Maintenance Information System
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Reporting – Logistics Information System
Information Structures
Special tables of statistics from various modules that is
constantly updated
Selection criteria (types of information)
Key figures: variables of interest
Quantitative values on measurable facts
Numbers (of orders, deliveries)
Quantities (of material)
Cost, delivery time
Characteristics: used to organize key figures
Vendors, material, organizational levels
Timeframe: day, week, month, etc.
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Standard Analysis
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Demo 4-13: Display a report using
the Purchasing Information System
Generate a standard report using the purchasing information
system for the US00 Purchasing Organization.
Drill down to several levels of information in the report.
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Flexible Analysis
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The Following Slides
The following slides will be hidden and are for Instructors
that may want to use the SAP R/3 to demo functionality
covered in the chapter.
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Review Material Master
Logistics -> Materials Management -> Material Master ->
Material -> Display -> Display Current
Select
Material: T-Shirt (SHRT 1000)
Org levels: Basic data, purchasing, accounting1
Plant: MI00
Review data for several views
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Review Vendor Master
Logistics -> Materials Management -> Purchasing -> Master
Data -> Vendor -> Central -> Display
Select Olympic Protective Gear.
Select company code US00
Select Purchasing Organization US00
Note the three areas of data
General data, CC data, Purchasing Organization data
Select all check boxes except withholding tax
Enter and review data in the various screens
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Review Purchasing Info Records
and Conditions
Logistics -> Materials management -> Purchasing -> Master
data -> Info Record -> Display
Select a GBI vendor – Olympic Protective Gear
Select a material – SHRT 1000
Select org levels
Note the four areas of data
General data, P Org data, Conditions, and Texts
Review data in the various screens
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Review Item Categories
Logistics -> Materials Management -> Purchasing ->
Purchase Order -> Create -> Vendor/Supplying plant
known
Close “header” and “item detail” sections
Open “item overview” section
Review choices for Account Assignment Category column (2nd
column)
Review choices for Item Category (3rd column)
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Review Goods Movements and
Movement Types
Logistics -> Materials Management -> Inventory
Management -> Material Document -> Display
Search for material document. In search screen include only
plant DL00
Review resulting list
Select one document (enter year if needed after selection)
Review document
Header items
Line items
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Create a Purchase Requisition
Need to purchase
500 t-shirts
Navigation:
Logistics -> materials management -> purchase requisition ->
Create
Input: material number and quantity
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Create a Purchase Requisition
Automatic data entry
description, unit of measure, delivery date, material group
Review tabs, in particular:
Valuation: valuation price
Source of supply: none
Status: Proc. Status = not created; review options
Save
Document (requisition number):
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Create a Purchase Order
Navigation:
Logistics -> Materials Management -> Purchasing -> Purchase
Order -> Create -> Vendor/supplying plant known
Automatic data entry (copy from requisition)
Document overview on
Selection variant – my requisitions
Select requisition and adopt
Note data transferred from requisition to order
Close item detail
Input
Select vendor
Enter price? (why or why not?)
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Create a Purchase Order
Navigation:
Logistics -> Materials Management -> Purchasing -> Purchase
Order -> Create -> Vendor/supplying plant known
Automatic data entry (copy from requisition)
Document overview on
Selection variant – my requisitions
Select requisition and adopt
Note data transferred from requisition to order
Close item detail
Input
Select vendor
Enter price (why?)
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Example / Demo
Open item detail and review tabs
Material data (source?)
Conditions
NOTE: no tab for PO status
What do these data apply to?
Open item header and review tabs
Conditions
Org data
Status
What do these data apply to?
Save
Document (PO) number:
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Example / Demo
Review Purchase Requisition
Navigation:
Logistics -> materials management -> purchase requisition -> Display
Review status tab
Note purchase order data
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Receive goods against a Purchase
Order
Navigation:
Logistics -> Materials Management -> Inventory Management
-> Goods Movement -> Goods Receipt -> For Purchase
Order -> GR for Purchase order
Input
Close detail area tab
Enter (search for) PO number
Check “ok” box
Enter storage location: finished goods + Enter
Automatic data entry (tabs in detail data area)
Where: Movement type, stock type, plant
Save
Document (material document) number:
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Example / Demo
Review Purchase Requisition
Navigation:
Logistics -> materials management -> purchase requisition -> Display
Review status tab; note GR data
Double click on PO number
Review PO history tab
Click material document number
Review material document and go back
In PO, close item detail, open header, review status
Exit
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Example / Demo
Review GL accounts
Navigation: Accounting -> Financial Accounting -> General
Ledger -> Account -> Display Balances
Review A/P account – nothing there! Why?
Review GR/IR account
View Inventory account
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Receive and Verify an Invoice
Navigation:
Logistics -> Materials Management -> Invoice Verification
Input
Enter date, amount and PO number
Check “booking ok” box
Verify green light and zero balance
Automatic data entry
Vendor data, material, quantity, price, total
Save
Document (accounting ) number:
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Example / Demo
Review Purchase Requisition
Navigation:
Logistics -> materials management -> purchase
requisition -> Display
Review status tab; note invoice data
Double click on PO number
Review PO history tab
Click account document number
Review account document and go back
In PO, close item detail, open header, review status
Exit
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Example / Demo
Review GL accounts
Navigation: Accounting -> Financial Accounting -> General
Ledger -> Account -> Display Balances
Review A/P account – updated
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Make payment to Vendor
Navigation:
Accounting -> Financial Accounting -> Accounts Payable ->
Document Entry -> Outgoing Payment -> Post
Input
Enter date, bank account, amount and vendor account
Enter to next screen
Select invoices (double click invoice amount) to be paid until
“amount entered” and “assigned” are equal
Save
Document (accounting ) number:
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