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Chapter 4 - OPER8030

This document provides an overview of the key concepts in an ERP procurement process, including: 1) It describes the basic steps in a procurement process from creating a purchase requisition to paying vendors. 2) It explains the important master and transactional data involved at each step, such as material, vendor, pricing and accounting information. 3) It discusses how the procurement process integrates with other key ERP processes like production planning and financial accounting.

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57 views

Chapter 4 - OPER8030

This document provides an overview of the key concepts in an ERP procurement process, including: 1) It describes the basic steps in a procurement process from creating a purchase requisition to paying vendors. 2) It explains the important master and transactional data involved at each step, such as material, vendor, pricing and accounting information. 3) It discusses how the procurement process integrates with other key ERP processes like production planning and financial accounting.

Uploaded by

srinivas sai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BUSINESS PROCESS

INTEGRATION AND
ENTERPRISE RESOURCE
PLANNING SYSTEMS
OPER8030
CHAPTER 4 – THE PROCUREMENT PROCESS
A BASIC PROCUREMENT PROCESS

2
ORGANIZATIONAL DATA

• Client
• Company code (CC)
• Plant
• Storage location (S Loc)
• Purchasing organization (P Org)
• Purchasing group

3
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
Company code (CC)
Storage location (S Loc)
4 Purchasing organization (P Org)
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

5
GBI STORAGE LOCATIONS

6
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

7
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

Company code (CC)


Storage location (S Loc)
8 Purchasing organization (P Org)
ENTERPRISE-LEVEL PURCHASING ORGANIZATION

9
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

Company code (CC)


Storage location (S Loc)
10 Purchasing organization (P Org)
COMPANY-LEVEL PURCHASING ORGANIZATION

11
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

14
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

15
MASTER DATA

• Material Master
• Vendor Master
• Purchasing info record
• Conditions

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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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DATA IN THE 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)

21
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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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 MOVEMENTS
• A transaction that causes a change in stock (value or status)
• Categories of Goods Movement
• Specific Movement types

• 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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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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A DETAILED PROCUREMENT
PROCESS

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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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ELEMENTS OF THE PURCHASE
ORDER STEP

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DATA IN A PURCHASE ORDER

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THE STRUCTURE OF A PURCHASE ORDER

34
COMMUNICATING WITH VENDORS

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ELEMENTS OF THE GOODS RECEIPT
STEP

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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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ELEMENTS OF THE INVOICE
VERIFICATION STEP

40
DATA NEEDED FOR INVOICE VERIFICATION

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FINANCIAL IMPACT OF INVOICE
VERIFICATION

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ELEMENTS OF THE PAYMENT STEP

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DATA NEEDED FOR VENDOR PAYMENT

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FINANCIAL IMPACT OF VENDOR
PAYMENT

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INTEGRATION WITH OTHER
PROCESSES

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REPORTING - SOURCES
• Organizational data
• Master data
• Transaction data (documents)
• Purchasing documents
• Material documents
• Accounting documents
• Invoice documents

REPORTING – INSTANCE
•Status of a Requisition, Purchase Order

47
STANDARD ANALYSIS

48
FLEXIBLE ANALYSIS

49

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