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Doc2 Businessprocesses

The document describes different types of procurement processes including procurement of materials for stock, direct consumption, assets/capital goods, pipeline materials, and consignment. Materials procured for stock are kept in inventory and increase or decrease based on receipts and issues. Direct consumption materials like consumables are given directly to user departments. Pipeline procurement involves materials flowing directly from vendors to plants through pipes without purchase orders or goods receipts. Consignment procurement involves vendors placing materials in company premises with no immediate payment and settling only for quantities withdrawn.

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32 views

Doc2 Businessprocesses

The document describes different types of procurement processes including procurement of materials for stock, direct consumption, assets/capital goods, pipeline materials, and consignment. Materials procured for stock are kept in inventory and increase or decrease based on receipts and issues. Direct consumption materials like consumables are given directly to user departments. Pipeline procurement involves materials flowing directly from vendors to plants through pipes without purchase orders or goods receipts. Consignment procurement involves vendors placing materials in company premises with no immediate payment and settling only for quantities withdrawn.

Uploaded by

birojivenkat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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BASIC MM PROCESS:

PROCUREMENT OF MATERIAL FOR STOCK PURPOSE:

Material that are kept in stock. These materials are kept in stock once received from the vendor. The
stock of this material keeps on increasing or decreasing based on amount of the quantity received or
issued. To order a material for stock, the material must have a master record within the system.
Purchase order
created w.r.t
PR/Quotation.

Mat X vendX

Qty 10 pc Rs 100/pc

Invoice
At GR, received verification for
material is placed in the PO and GR.
store and booked in
inventory stock G/L
account.
PROCUREMENT OF MATERIAL FOR DIRECT CONSUMPTION PURPOSE:

Generally indirect materials, stationeries, and consumables are procured for direct consumption
purpose.

Process flow is same as stock procurement, but in PR user specifies that items are for particular user
department consumption purpose and at GR, the received material will be given directly to the concern
user department and material value also booked in relevant user department consumption GL account,
but not in inventory/stock GL account.
ASSET/CAPITAL GOODS PROCUREMENT:
Similar to direct consumption.

Account assignment category is A.

Asset master has to be created by finance department.

Functions related to capitalization and depreciation are carried out by finance department.
PIPELINE PROCUREMENT

In this process, materials flow directly from vendor to plant premises through a pipe/cable/or wire.

Eg: Oil, water, gas, power, etc.

In this process, no PR, no PO, no GR. Whenever material is required, withdraw it from vendor pipeline
and consume it to production or to any internal consumption purpose and settle the liabilities to vendor
for this withdrawn quantity only.
Process Flow Diagram
Procurement of Pipeline Materials

Pipeline info Demand of


Pipeline
Event

record exists Incoming


Material Vendor Invoice

Mat –X, Vend –Y, Plant – Z. Rs 100/kg


Business Analyst
Purchaser

Agreement period: 1 dec 2016 to 1 dec 2017.

Goods issue say


Warehouse Clerk

Goods Issue for Pipeline


Material

for 100 quantity.

Payables Pipeline
Mat.
PPV
Accounts

AP – Payables Pipeline.
Account
Payable

Vendor Automatic
Accounts Pipeline
Payable Tax
(158) Settlement

MRP = Material Requirements Planning, PPV = Purchase Price Variance

© 2011 SAP AG. All rights reserved. 5


CONSIGNMENT PROCUREMENT

In this process, vendor places his material stock in our plant premises, immediately no invoice from
vendor and no immediate payment to the vendor.

Whenever material is required, withdraw it from vendor consignment stock and settle the liabilities to
the vendor for this withdrawn quantity only.
Consignment agreement/inforecord

Mat –X, Vend – Y, Plant –Z. Vald: 1 st sept 2016 to 31 dec


2017, Rs 100/PC

Va

Mat –X, Vend – Y, Plant –Z.

Say GR for 100


qty

Say GI for 10 pc, manual IR


or automatic settlement.

1) We create consignment purchase order.


2) We do goods receipt for the consignment purchase order, say 100 pc….it will increase stock in
consignment stock, not in own stock, and there is no value updating.
3) Whenever there is requirement, issue the stock to the concern department, say 10 pc. Account
document will be posed. i.e., quantity and value update happens.
4) We need to invoice for the utilized stock, for the 10 stock.

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