SAP NOTES

1 ENTERPRISE STRUCTURE

CLIENT

Is a commercial Organizational Unit within R/3 system with its own data, Master records and set of tables.

It is the highest level element of all Organizational unit

Represented by 3 digit alphanumeric key

COMPANY CODE

It is the smallest Organizational unit within R/3 system for which can have an independent accounting department within external accounting. Legal entity

It is having balance sheets, Profit & Loss accounting required by the law

Represented by 4 digit alphanumeric key.

PLANT

Is an organizational logistic unit that structures the enterprise from the perspective of production, procurement, Plant maintenance, Material Planning

It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant.

Represented by 4 digit alphanumeric key

STORAGE LOCATION

Is an Organizational unit that allows the differentiation of material stocks within the Plant

Inventory management on quantity basis is carried out at storage location level.

Physical Inventory is also carried out at storage location level.

VALUATION AREA

Is an organizational level at which material is valuated.

R/3 system recommends Plant level

Valuation at Plant level is mandatory if you are using Production planning/ CO/ Retail system

Valuation area selection is a fundamental setting in customization and very difficult to REVERSE

PURCHASE ORGANIZATION

Is an organizational level that negotiates conditions of purchase with Vendors for 1 or more Plant.

It is legally responsible for completing purchasing contracts

CENTRALISED PURCHASE ORGANIZATION

Should be attached to Company Code or otherwise Plant specific (attached to Plants). We can have cross-company code OR Cross-plant Purchase Organizations

PURCHASING GROUPS

Is the key for buyer or group of buyers responsible for certain specific purchasing activities (eg. Mech/ Elect, etc.)

Organizational Unit Organizational grouping of an enterprise.

Transaction Application programs which executes business processes in R/3 system

Document Data record generated through a transaction

Material Master Central data object in SAP R/3 system.

Configuring is the method of doing customizing

CONFIGURE to CUSTOMIZE

2 BASIC PROCUREMENT PROCESS (GENERAL)

Flow

1. Determination of requirements

2. Source determination

3. Vendor selection

4. Purchase Order processing

5. Purchase Order monitoring

6. Goods Receipt

7. Invoice Verification

8. Payment processing (FI)

Purchase Order : A formal request to Vendor to supply certain goods / services under the stated conditions

When we enter an invoice against a PO/ GR, the system checks the price, rate, payment terms with respect to Purchase Order and Quantity w.r.to GR

While entering the GR, system checks whether the material is as per PO or not w.r.to Quantity, Shelf life, etc.

Several GRs can be entered for a PO item in one operation

The type of Invoice verification (PO Based / GR Based) is to be fixed in PO , Invoice Tab

If MRP Procedure is set, PR will be generated automatically during MRP run.

Purchasing value Key

for auto-reminders and supply tolerances. It is fixed in the purchasing view of the material master. It is managed at CLIENT LEVEL.

Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline Agreement (Item Tab)

Item Category

Defines whether an item requires or can have

A material number

An account assignment

Goods Receipt

Invoice Receipt

Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing)

Standard Blank materials that are procured externally

Subcontracting L Finished product ordered from a Vendor (maintained at STORAGE LOCATION level)

Consignment K Vendor makes the material available and manage a consignment stock (maintained at PLANT Level)

Stock Transfer U

Third Party S

Text

MANDATORY REQUIREMENTS (GENERAL)

MaterialAccountStockGoodsInvoice

ITEM CATEGORYNumberAssignmentReceiptReceipt

StandardBLANKYESYES

ConsignmentKYESYESYES

SubcontractingLYESYESYES

Stock TransferUYESYESYES

Third PartySYESYES

Limit/ BlanketB YES YES

ZERO VALUE POs

Generally used for samples. But generally used monitoring the delivery. FOC indicator is set in item level. Invoice receipt is cancelled because of this tick

Variable Order unit can be specified in material master record and purchasing info record.

In PO,

Inco-terms are specified at Header level

Shipping Instructions can be at Item and header level (As a Text in header level and Delivery tab at item level)

Delivery instructions can be at Item and header level. (In texts tab)

Changeability of PO

1. If PO is already sent to Vendor CAN change the PO and send a copy to the Vendor

2. If Vendor is delivered material against PO Only LIMITED changes like texts are possible (We can not change qty)

3. If Goods received and payment made NO changes possible.

Invoicing Plan

System creates invoice automatically as per Plan and release them for payment

For automatic settlement for periodic invoicing plan, ERS must be selected in Vendor Master

In partial invoicing plan, provision of down payment in the Billing or Invoicing plan rule date

3 MASTER DATA

VENDOR MASTER

Vendor Master Data is maintained at

General - CLIENT LEVEL INFORMATIONS

Addresses

Company code level COMPANY CODE LEVEL INFORMATIONS

Accounting related - Payment terms, payees,

Purchasing Organization level -

Related to purchasing Currency, Inco-terms, VSR, etc

We can BLOCK a Vendor Master Record (XK05) - Complete

If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST ME01

Automatic PO generation is in purchasing data.

ACCOUNT GROUP of a Vendor

Control functions of Vendor account group are

1. Status of the Vendor ( One time Vendor or routine vendor)

2. Field selection in the Vendor Master Record

3. Partner schemas

4. Vendor Sub range

5. Type of number assignment (external or internal)

Single Master Record is maintained for one time Vendor Account group is CPD

Other routine vendors are generally in LIEF

Vendor Reconciliation account

Its a G/L account which maps Companys liability towards several vendors.

Depending on account grouping selected, system assigns a number (can enter manually also). This Vendor number is used in sub-ledger number in Financial Accounting.

When posting an invoice, system uses the reconciliation account automatically from Vendor master record.

A vendor account code is created against Company code and Purchase Organization, so its account is unique in all Plants under the Company code.

Pre-requisite for Vendor Partner roles

1. Vendor master record for each partner separately

2. Specified in customizing Partner roles selected

Controls of Document type

Screen sequence and screen layout (Screen variant)

Number ranges of document

MATERIAL MASTER

Material Master is structured for various organizational levels.

Data at CLIENT / COMPANY CODE LEVEL (table MARA)

Data Valid for the total Company. Basic data

Material No., Material group, Unit of measure, Conversion factors, Purchasing value key, etc

Data at COMPANY CODE LEVEL

Accounting Data, Costing data if valuation is at Company code

Data at PLANT LEVEL (Table MARC)

Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc.

Data at STORAGE LOCATION LEVEL

Storage bin, picking area, etc.

MATERIAL NUMBER

18 character alpha numeric key

Basic data is CLIENT SPECIFIC

Some Purchasing data are PLANT Specific Pur group, GR processing time, etc.

Purchasing Value key is maintained at CLIENT LEVEL

If we are not specifying a Plant at Organizational level, only data at higher level (Client) will be displayed

Language selection is additional data of Material Master.

The standard system uses a BUFFER when assigning numbers to the material master records

The amount of numbers for the buffer is 10. Using this buffer and having the material number assigned before saving a new number, the master can be lead to a gaps in the number assignment. However if you reset the number level of an interval back to the initial value, R/3 system fills these gaps when you create the new materials

MATERIAL TYPE

Materials with same characteristics are grouped together in Material types- Raw Material, Finished Goods, etc.

Represented by 4 digit alphanumeric codes

Material type is having following CONTROL functions

1. The type of number assignment (Internal or external)

2. The permitted number ranges

3. Screen layout and screen sequence

4. User specific views

5. Procurement type (Internal / external)

6. Up-dating of Quantity and Value in master records / FI

7. Account determination on goods movements

8. Price control

Material type CANNOT be changed for materials whose Purchase Order is made.

Special Material types available in std SAP

Additionals (VKHM) - requirements like effective presentation to CustomsEg. Care labels

Advertising media (WERB) presentation for advertising. Eg. leaflets/ catalogues Apparels (MODE)

Empties (LEER) Type of RTP generally subject to deposit of money. Can have several components together in BOM. Eg. empty bottle/ empty crate, etc. (SD) Full Products (VOLL) counter part of empties. Operating supplies (HIBE) Procured externally and required for the manufacture of other products. Packing Materials (VERP) Transport with goods/ come with goods of FOC. It is managed at quantity and value in Material master even though it is free of cost. Used in HU managementMaterial filed selection reference

A reference control key defines which control string applies to the relevant influencing factor

We can maintain reference key for

1. Material type

2. Plant

3. Industry sector in customizing

Filed selection group

Grouping of master records according to the filed option (Hide/ Display/ Optional/ reqrd. entry)

Field selection against TRANSACTION is also to be defined for filed option

Link rules of each transaction against the material type

SAP defined link rules CAN NOT be changed

Screen/ views can be customized as per Company codeINDUSTRY SECTOR

Represented by 1 digit alphanumeric key

The control functions of Industry sector are

Screen selection and its sequence

Industry specific fields

If we assigned a material to an Industry sector, we CANNOT change it later.

Unit of measure

Base unit of measure

Purchasing Unit, Sales Unit, Issue unit

Order Price Unit (OPU)

Main fields in Purchasing View are

Purchasing Value key

Automatic PO Selection

Source list requirement

Quota Management

Accounting View

Valuation Class determines to which stock accounts are to be updated on goods movements

Price Control Standard or Moving Average Price

Valuation of material depends on the price control set in Material Master.

Standard Price All stock postings will be at standard price and in case of any deviation posting the difference to Price difference account

Moving Average Price (MAP or v)

GR valuation will be at PO price and Goods Issue at Moving average price

MAP updates on goods movements.

In case of any difference with respect PO price, the difference amount will be posted to the stock account (on total stock at that moment). If sufficient stock is not available to distribute, system will post the difference to Price difference account.

Extending/ adding a View to an existing material master MM50

Then select the required view, Select

B Accounting

D MRP

E Purchasing

K Basic Data

C Classification

G Costing

A Work Scheduling

4 PROCUREMENT OF STOCK MATERIAL

PURCHASING GENERAL

Centralized Purchasing

With one Purchasing Orgn

1 Purchase Orgn responsible for a number of Company codes

Distributed Purchasing

Number of Purchase Orgn for different Plants

1 Purchase Orgn responsible for 1 Plant

Company specific

1 Purchase Orgn responsible for 1 company code

Reference Purchase Organization

Pre-requisites for reference purchase organization:

1. Both the purchase organizations (reference and normal) are to be maintained in Organization structure

2. The reference purchase Orgn can be maintained WITH or WITHOUT Company code and Plant

3. Assign reference purchase Orgn as Reference purchase orgn in customizing

Data in MM Purchasing

Material Master 1. Client related data 2. Plant related data 3. Storage location related data

Vendor Master 1. General data 2. Company code related data(accounting) 3. Purchasing related data

Master records in Purchasing

1. Purchasing Info Record

2. Source List

3. Quota Management

4. Conditions

5. Vendor Evaluation

The linking of document type made in customizing (in purchasing) are:

Document type to allowed item categories

Allowed item categories to Link PR document type

The conditions dependencies on time (TD & TID) are fixed at document type level at customizing.

PURCHASE REQUISITION

PR can be created Manual, or Auto from PP/ PS/ PM/ PPC

Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in purchasing

Purchase requisitions are processed by item-by-item

PR can be created for material with master record and without master record also. But if it is without master record, it will be with Account assignment and Text & material group

PR changeability

Before changing PR, check

1. Already PO is issued or not If issued, NOT changeable

2. Already released or not (release procedure) If released limited changes possible. Depend on changeability indicator

3. Created by MRP NO Changes possible (Quantity can be changed while processing. But the left out will shown as open against the same PR)

Flagging of PR items are CLOSED

The item of a PR is regarded as closed, if the requested quantity is ordered in a PO

If we are creating PR manually, the items will not be considered in MRP.

RFQ / QUOTATIONS

Single document for RFQ and Quotation

Can be created with respect to:

Manual

Via reference document

Reference to PR

Reference to Outline Agreement

RFQ/ Quotations are Created and maintained at purchasing Organization level.

For RFQ NO COMPANY CODE / PLANTCollective Number: For linking a number of RFQs. It is in the header of RFQ.

It is a 10 digit alphanumeric number.

Creation of RFQ

Initial screen Quotation deadline, Purchase Orgn & Purchase group are fixed

Header details Collective number is assigned, Vendor addresses are maintained.

Item overview Material, Qty & deadline for each item

We cannot enter an account assignment in RFQ

Quotation processing

Vendors price and price conditions

We can enter the prices and conditions of each vendor in RFQ.

Comparison list

We can save the quotation data in purchasing info record by giving the tick in check box Info update

We can set the rejection indicator for unsuccessful vendors.

The mean value of all quotations can be saved as Market Price in the quotation comparison list. This market price will be used as the basis for valuating the price level of a vendor and is called up during Vendor Evaluation.

Conditions in Purchasing

Conditions can be maintained for Contract/ Sch. Agreements/ PO level. Conditions can be maintained in Info record. There are extended conditions also.

PURCHASING INFO RECORD

Info records are created for

1. Standard

2. Subcontracting

3. Pipeline

4. Consignment,

Where the system copies the data in purchasing

Certain concise information of a Vendor and material.

If we are not maintaining Material in Info record, system will store this information against a material group.

Info record contains :

1. Current and future price with pricing conditions for Plant/ Purchase organization

2. Delivery date and tolerance limits. Availability period During which, vendor can supply the material

3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a regular Vendor here.

4. Texts that can be maintained for Info record, which can be called up in PO

5. Number of last Purchasing document/ PO (In Purchasing data 2)

We can fix the PO text in Info record

1. If only info record text is to be fixed in PO, set NO M text option

2. If you are not selecting the above option, system will display both the texts in PO

Info update indicator WILL NOT update the info record. It will update the information.

The updated details can be seen at Info list (ME1L/M/P)

These data will be displayed as default data while creating the purchasing documents. It can be edited at purchasing document level.

Info record can be created

manually

automatically from Quotation / Outline agreements / Purchase orders, if info update indicator is selected while creation

If you want to maintain conditions in Info record, you have to maintain it MANUALLY.

Auto-updated info records will NOT BE HAVING the pricing conditions (ONLY final price will be retained)

Info update indicator

If we are fixing this info update indicator, system will copy the data and conditions maintained.

If we fix

A System will update the data WITH or WITHOUT PLANT

B System will update WITH PLANT

C System will update WITHOUT PLANT

For Quotations/ Contracts/ Scheduling Agreements and Conventional POs

If BLANK selected, Info record will not be updated

A If an info record exists at Plant level, it is updated. Otherwise, info record at Purchase Organization will be updated

B If Plant conditions are allowed for the Plant, an info record at Plant got updated

C - IF Plant conditions are not necessary, for the Plant, info record at Purchase Organization level will be updated.

The info update Indicator can be set at PO

If we fix

BLANK No update

TICK System will update the info record as per the settings in Customizing ( node Conditions > Define condition at Plant level)

BLANK Conditions allowed WITH or WITHOUT PLANT

+ - Only PLANT BASED Conditions will be updated

- - NO-PLANT BASED CONDITIONS are allowed.

For Enjoy transactions (PO- ME21N)

If just one (With or without Plant) exists, record will updated.

If NO info record exists, PLANT Level info record will be CREATED

If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info record will be updated

Structure of Info Record

1. General Data Vendor data, Order unit, etc.

2. Purchasing Organization Data 1

Control data Delivery time, Minimum quantity, etc

Price & Conditions Gross price, discount, etc.

Statistics PO History, PO statistics, etc.

Text Texts are maintained here, can be called up in PO

3. Purchase Organization / Plant Data

Control, Price, statistics, texts

4. Purchase Organization data 2

Here you will get the reference document number on which the info record is created/ updated. This option is available only if the record is created with reference to a purchasing document.

In other words, if an info record is created manually, the last PO data will be updated in Info record at purchasing data 2

Purchasing Info Record is valid for PLANT / PURCHASE ORGANIZATION While creating a PO, system first search for info record with PLAN&PURCHASE ORGANIZATION combination for price, if it is not available in the system, it will search for data with PURCHASE ORGANIZATION only.

Purchasing Info record is suggesting prices in 2 ways :

a. Conditions conditions are included, if info record is prepared manually.

b. If info record does not contain conditions, then the system will select the price of last Purchase Order.

We can define the conditions of last PO by customizing

a. Are always copied

b. Not to be copied when prices are entered manually

c. Never copied

Info Record CANNOT be deleted by normal archiving program run. It can be deleted by the system administrator

Data can be displayed from Info record screen through ENVIRONMENT are

Material

Vendor

RFQ/ Quotation

QM Info record

Last Document

Quotation price history

Order price history

We can have 4 different info record for a material & vendor for standard/ Consignment/ Subcontracting/ Pipeline

TEXTS

Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts

Item Texts - Item Text (CAN copy from Info Record/ Material Master)

Delivery Text

Inserting texts from material master record

\

CONDITIONS

Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc..

We can create conditions in

Quotations

Info Records

Outline agreements

Purchase Orders

Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT

System will ask for VALIDITY for TIME DEPENDENT conditions.

Time dependent

Time Independent

Conditions

Conditions

1. Info Record

YES

NO

2. Quotation

Depends on Doc Type

Depends on Doc Type

3. Sch. Agreement

Depends on Doc Type

Depends on Doc Type

4. Contract

YES

NO

5. Purchase Order

NO

YES

We can specify both time dependent and Time Independent conditions at Header level and Item level EXCEPT Info Record. The setting is at Document level

In Info record, conditions are stored at Info record level.

For Time Dependent conditions, we can create

1. Supplementary conditions

2. Validity Periods

3. Scales

4. Upper and Lower Limits

If we are creating a new condition type, should be assigned to an access sequence to link with Pricing Procedure

If the conditions are on header level of the document, then it is applicable for items in that document, but if it is at item level, it is applicable for that particular item only.

Conditions in Purchase Order DEPEND on DOCUMENT TYPE.

Conditions are prepared in a PO are at the level of document type

Conditions can be created for a Vendor/ for a Plant/ for Purchasing.

Header conditions Applicable for all items as per % or Value

Item conditions applicable for specific items - % or Value

Group conditions Applicable to all items but distributed proportionately as per the quantity/ value

CONDITION TECHNIQUE

Up to 3.1H version, Time independent conditions are referred as Document conditions and Time dependent conditions are referred as Master conditions.

Condition Type and condition category - Example

Condition category

Assigned to condition type (Std system)

H- Base ValuePB00 (this must exist in all pricing procedure except stock transfer)

B- Delivery CostFRA1

N Non de-ductable input tax

NAVS

E Cash Discount

SKTO

G Moving average Price

P101

Condition types used in standard system (examples)

PB00-Price

- Gross Price (With access sequence-0002)

RB00- Discount/ Surcharge- Absolute discount

ZB00- Discount/ Surcharge Absolute Surcharge

FRB1- Discount/ Surcharge Absolute Freight

ZOA1- Discount/ Surcharge - % Duty amount Customs

SKTO - Discount/ Surcharge Cash discount

NAVS-Taxes

- Non de-ductable input taxes

Standard pricing procedure in SAP is RM000 used for Purchasing

Purchase Requisition Prices

If the material is WITH material master record, the price will be displayed for Purchase requisition from the material master, even if we are maintaining a separate price in Info record. But the vendor will be populated from the Info record.

If the material is WITHOUT material master record, we have to maintain the price manually during the creation of PR, if required.

While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can be referred for other plants also.

VENDOR CONFIRMATIONS

Vendor confirmations can be of

Order acknowledgements

Loading or Transport confirmations

Shipping Notifications

ASN Advanced Shipping Note

5 PROCUREMENT OF CONSUMABLE MATERIALS

Account assignment category determines which category of accounts is to be debited in G/L accounting.

Categories are:

A Asset

K Cost centre

P Project

F Production Order

C Sales Order

U Unknown

Consumable materials that are procured directly for consumption against an account assignment object

It is NOT managed in value based in Inventory management

System updates the consumption in material master, if master data is available.

Examples are NLAG/ UNBW/ DIEN

NALG Non Stock Material

UNBW Non-valuated stock material

DIEN Services procured externally

If we select consumable material as material type in Material Master, it controls

Procurement type (Internal / External)

Account postings

Requirement in Inventory Management

Consumption is directly posted to consumption account

Inventory Management is NOT based on Value basis

Stock Vs Consumable

Stock

Consumable

1. Entry of Material Number

Required

Possible but not required

2. Account assignment

not required

Mandatory

3. Account postings to

Stock account

Consumption account

4. Mat. Master up-dation

Qty, Value&

Qty & Consumption

Consumption

are updated

5. MAP

Adjusted

Not applicable

Purchase Requisition for Consumable Material

Can be by manual or though automatic- through MRP run/ PM order/ Sales order

Can use account assignment U (Unknown) in PR. But to be confirmed in PO

If material master is available, system will take the price from it otherwise we have to enter manually.

Multiple account assignment is possible in PR

BLANK No multiple account assignment

1 Distribution on Quantity basis

2 Distribution on Value basis.

Goods Receipts are NON-VALUATED for consumable goods.

6 EXTERNAL SERVICES PROCUREMENT

Procurement cycle Flow

1. Determination of requirements

2. Creation of service specification

3. Source Determination

4. Vendor selection

5. RFQ (Bid evaluation)

6. Comparison of Quotations

7. Creation of service Order

8. Purchase Order monitoring

9. Service Entry

10. Service acceptance

11. Invoice verification

12. Release of Payments

Service Master

Master record creation- description of service, UoM, etc.

Can attach price through conditions

Conditions can be maintained at

At Service level (Market price/ Estimate)

At Service and Vendor level

At service, Vendor and Plant level

Service is procured for direct consumption.

Account assignment U (Unknown) is accepted at PR level, not in PO

Materials are procured at Item Level, but Service is procured BELOW item level.

Item category D is used for Service POs

Provision of unplanned expenses and total limit at item level

Release procedure is possible for Service Entry Sheet

Service Entry Sheet is made with respect to PO

Invoice verification also done with respect to PO

PO History is updated after Invoice verification

Service Entry sheet updates FI/ CO.

Complex service specification can format through outline levels

Can assign any number of service lines to each item level

AC03 Creation of Services, ML 81N Service Entry Sheet

Account assignment in services

Specifying the account assignment for the services at the time of their initial procurement is optional. Account assignment category is at document item level.

-U (Unknown is accepted

Multiple account assignment is accepted

Distribution is also possible

Invoice verification of services (SES)

In Vendor master we have to specify, GR based IV/ ERS/ Service based IV

Global Percentage Bidding (GPB)

It is a procedure of bidding used in procurement of external services ONLY.

Pre-requisites are

1. Document type AB in RFQ

2. Calculation schema MS0002 (with condition types KR01 header discount & KZ01 Header Surcharges

Process

1. Create RFQ with document type AB.

Maintain price per service and send to Vendors

2.Vendors will not quote any price for each service, But they will indicate a % addition or Deletion with respect to the price shown in RFQ.

This % can be at Per Outline level or for the uppermost outline level (total)

INVOICING PLAN and BLANKET POs are possible with Services

OUTLINE AGREEMENTS

Its a long term purchasing agreement with a Vendor concerning the supply of materials or the performance of services according to the pre-determined conditions.

These are valid for a certain period of time and cover a pre-defined total purchase QUANTITY and VALUEOutline Agreements- 1. Contracts

a. Value (WK)

b. Quantity (MK)

c. Centrally agreed Contracts

d. Distributed Contracts

2. Scheduling Agreements

a. LA

b. LPA

c. LU

Contracts are with Release Orders and Scheduling agreements are with Delivery schedule

Release Order is a Purchase Order reference to a Contract

CONTRACTS

NO DATES

PR > RFQ > Contracts (manual)

VALIDITY PERIOD is to be indicated in the Header

In Quantity contract, the target quantity and purchasing conditions are to be maintained for EACH item

Item category M & W are permitted in Contracts (M- Material Unknown & W- Material group)

Item category M Similar materials with SAME PRICE, but different material numbers. Material numbers are to be specified in release order.

Item Category W Material belonging to the same material group, but with DIFFERENT PRICE.

W can be used in VALUE CONTRACTS ONLY

M & W are NOT ALLOWED in Release Orders

Account assignment U (unknown) is permitted in contracts but NOT in release orders Release order documentation contains the statistics for an item. It is updated automatically and used for monitoring the contract Single and multiple account assignments are allowed in contractsCentrally agreed contracts For many Plants in a purchase organization. In this case DO NOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise against the contract. Partner functions are also possible.

Using Plant conditions, we can specify separates prices and conditions for each receiving Plants.

Distributed Contracts (DK) Contracts at different Plants operating on different (ERP) systems which are accessible through ALE

SCHEDULING AGREEMENTS

Long term agreement with a vendor to supply material as per pre-defined condition.

Pre-defined PERIOD and QUANTIRY (NO VALUE)

PR > RFQ > Scheduling Agreement.

Centrally agreed S.As can be prepared.

M, W and U are not allowed in Scheduling Agreements

Details of delivery date and quantity are maintained through Delivery schedules

Schedule line can be created automatically through MRP run, but for this

1. Define Scheduling agreement as a Source of supply for the material.

2. Auto schedule line selection source list Select option 2 in MRP Column (in Me01)

3. Auto schedule line must be allowed in MRP system

Types of Scheduling Agreements:

1. Type LA Document type - LP

Agreement + Delivery Schedule

2. Type LPA Document type LPAa) Agreement + Delivery Schedule + Forecast Schedule + Release documentation

b) Agreement + Delivery schedule + Forecast schedule + Release documentation + JIT Schedule + Release documentation

3. Type LU Stock transfer scheduling agreement

FRC (forecasting) Schedule gives a medium term overview of requirements

JIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/ Hourly basis.

Release documentation requirement is SET by fixing release documentation indicator in Customizing

For JIT scheduling, JIT is Indicator to be set in Material Master record

We can post a Goods receipt against a scheduling agreement directly in MIGO

Creation Profile

1. Optional data from Vendor master record

2. Release creation profile is for each scheduling item3. It is customized on a Plant specific basis4. It determines the periodicity of SA release and aggregation of schedule line quantities

5. Tolerance limits are in release creation profile (RCP) and set it during customizing

Aggregation schedule Total scenario in a specific time period

Firm, Trade off & Planning Zones

1. FIRM ZONE Immediate Vendor can go ahead with manufacturing. The Purchaser is liable for total quantity

2. TRADE OFF ZONE Near future requirements. Vendor can go ahead with mobilization of requirements. But the liability is limited to the purchased raw materials/ semi finished goods

3. PLANNING ZONE No liability by the Purchaser

Firm and trade off zones details are forwarded to the Vendor along with FRC and JIT Schedules for getting more clarity of Scheduling Agreement.

The procedure is

A. At IMG level Maintain release creation profile against your Plant. Here you are going to maintain

1. General Parameters like Creation strategy for JIT & FRC Schedules

2. Aggregation Horizon Daily or monthly aggregation in Days for both JIT & FRC

3. Creation periodicity Daily/ Weekly/ Monthly for JIT & FRC

4. Tolerance profile, etc

B. Transaction level

1) Create Scheduling Agreement ME31L. Attach the creation profile in the Scheduling Agreement at Item > More functions > Additional data

Please see that the Material Master is having tick for JIT Schedule &

2) Maintain Delivery schedule ME 38

3) Create the release documentation ME84. Select FRC & JIT Schedule and process and see that FRC and JIT Schedules are created

4) If you want to see the schedules, go to ME9E

SOURCE DETERMINATION

Source can be a Vendor or an Outline agreement.

By Source list, we are defining preferred or allowed sources for a material.

By Quota, we are specifying the share of total requirement over a specified PERIOD from each SOURCE.

Source determination at PR level

If the material is with master record, during creation of PR, Prices will be taken from the material Master, EVEN IF, we maintain a different price in Info record. But the vendor will be selected from Info record

Case. Source list is maintained for Vendor A & Info record is for Vendor B

While creation of PR, system will select A as the source, if the source list selection is opted in the material Master, otherwise, B will be selected.

For fixing a Vendor in a source list, the info record for that Vendor is TO BE maintained.

If we have maintained a source list for a material we have to select that Vendor for placement of PO. So check the requirement display before maintaining a Source list for a material.

INFO RECORD is a MUST for automatic source determination at PR level.

Source determination function is available ONLY for PR

SOURCE LIST

Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for a PERIOD (Validity)

MRP Indicator in Source list considered while material Planning

If source list requirement is defined at Plant level, then system will not allow creating a purchasing document without Source list.

Source list can be for a Material (at Material Master) or Plant (at customizing)

Source List analysis List out materials which are NOT having source list in the Plant

ONLY ONE FIXED Source is allowed fro a material within a Validity period

Source list can be maintained Manually/ From Outline Agreement / From Purchasing Info Record/ Automatic generation.

Source list can be made referral (of another material)

If the selection of source list is auto, we can have single or collective procedure. Can be from Out line agreement/ Info record

We can create a Source list for a MATERIAL GROUP (for contract W)

EXCLUSION INDICATOR Set for excluding a source in the source list

7 INVENTORY MANAGEMENT

MOVEMENT TYPE

A 3 digit key used to differentiate between goods movements in R/3 system.

It is having several control functions in Inventory Management

1. Plays a central role in automatic account determination

2. Determine which stock or consumption accounts are to be updated in FI.

3. Determines the format of the screen where we enter documents and how the quantity fields are updated.

Valuated Good Receipts

Auto creation of storage location- If it is set in customizing for Plant & Movement type, the storage data is created automatically during the first goods movement.

Auto creation of storage location happens if the given quantity is to be posted in to normal storage location.

Auto storage location will NOT be created for goods movements in SPECIAL STOCKS

Stock types

1.Unrestricted Available for MRP & Available for withdrawal

2.Quality Inspection Available for MRP but NOT available for withdrawals

3.Blocked NOT available for MRP & Withdrawal

4. Restricted stock. -As per the batch requirement in Batch Master

Stock Indicators are the indicators for differentiate between stock types on goods receipt

1 Unrestricted stock

2 Quality Inspection stock

4 Blocked stock

STOCKS

During goods receipt, a material and accounting documents are generated and it updates the Purchase order history

After GR is posted against a particular movement type, the Quantity, Material, Movement type and Organizational level CAN NOT BE CHNAGED. If any errors, reverse or cancel the document

We can post withdrawals & Consumption ONLY from UNRESTRICTED Stock.

If we want to withdraw material from QI/ blocked, we have to first transfer post it to Unrestricted and then withdraw it.

Plant stock & Storage location stocks views will appear automatically in material master after booking material movements.

Stock Transfer Vs Transfer Posting

Stock Transfer involves physical movement of goods but transfer posting need not be

In transfer posting ONLY Material document is generated (NO Accounting document)

Movement type is the key control factor in both the cases.

Quality

Inspection 322

350

349

321

Blocked 343

UN Restricted

344

Document principle applies to Inventory management.

A document is the proof of that transaction involving stock changes has taken place. Documents are stored in the system

Material Document Vs Accounting Document

A material document consists of Header (Posting date, created by, etc..) and item level details like quantity, material, storage location, etc

Accounting document consists of Header (General data like posting date, posting period, currency, etc.) and item level details like G/L account number, amount, etc.

Material document and accounting documents are INDEPENDENT documents

We can identify the material document by the material document number and document year. The Accounting documents are identified by the accounting document number, company code and a Fiscal year.

In Accounting document, the number ranges are assigned to a Document type. But for material document, the number ranges are assigned to a TRANSACTION / EVENT TYPE

Goods Movement

Transaction/Even typeDocument typeGR for PO

WE

WE or WN

GR for others

WF

WE

GI/ TP/ Others

WA

WA

GI for deliveries

WL

WL

We cannot change a document once it is posted. Some additional information like texts can be added. So we use reversal for correction

EFFECTS OF A GOODS RECEIPT

1.Stock Value updated in the Material Master

2.Material and Accounting documents are generated

3.Creation of an Inspection lot, if the material is Quality activated

4.Stock and consumption accounts are updated

5. Transfer request is created, if Warehouse Management is activated

6. Purchase Order and PO History is updated. RFQ, PR also updatedStock Overview

For each organizational level, Client/ Co code/ Plant/ Storage location / Batch/ Special stocks

Its a STATIC display of stocks. Planned data are not availableVALUATION CLASS

It is the grouping of materials to determine which stock accounts are to be updated upon goods movements

For automatic account determination, R/3 system works with Valuation Class.

It is fixed at Accounting view of material master

Material Valuation is depends on Price Control (Standard or MAP) and goods movements (GR/GI/TP)

GR/ IR clearing account depends on the PO price

Changing of the price control from standard to MAP is always possible.

Delivery costs Planned and unplanned

Unplanned delivery costs are directly booked through MIRO, so the valuation done at GR is NOT Correct if the transaction is having an unplanned delivery cost

Goods receipt can be for with reference to

1. Purchase Order

2. Order

3. Others

The stock display will be as follows

GR from

Stock detail as per system

Purchase Order Open PO quantity

Order

Open order quantity

Reservation

Planned receipts

ENJOY Transaction MIGO

MIGO transaction is combining following 7 transactions in single code

1. MB01- GR for known PO

2. MB0A GR for Unknown PO

3. MBRL Return Delivery

4. MBSF Release of blocked stock

5. MBNL Subsequent delivery

6. MBST Cancel Material document for GR

7. MB02/ 03 Change & Display Material document

GR of Blocked Stock (Movement type 103)

It is the conditional acceptance of goods. While we post the material into GR blocked stock-

1. Quantity is posted to Stock

2. Material is NOT VALUATED

3. The transaction will be available in PO History

4. The material is NOT available for MRP

GR STOCK

Unrestricted use (101)

Quality Inspection (101+X)

Valuated Blocked (101+S)

GR Blocked stock (103)

When GR blocked stock is released (MBSF), then it is valuated automatically. It will have the same effects of an ordinary GR.

While accepting the GR blocked stock to Plant unrestricted stock(105), you can refer the material document of earlier GR or Purchase Order

Goods Receipt in to QI stock (101 +X)

Pre-requisites

1. Quality inspection indicator in material master

2. QI indicator in Additional data in PO (Header). It will automatically copied from material master

3. Set QI indicator in GR at item level

Possible movements for QI stocks

1. Transfer to Unrestricted stock and its reversal

2. Transfer to GR blocked stock & its reversal

3. Transfer to Blocked stock and its reversal

4. Transfer to Sampling and its reversal

5. Return delivery to Vendor and its re-receipt

OTHER GOODS RECEIPTS

1. Initial entry of stock balances Movement type 561/ 563/ 565

2. External Good receipts without PO (Movement type 501)

3. Internal Goods receipts without production order (Movement type 521)

4. Good receipts for By-products (Movement type 544/542)

5. Good receipt for Free of Charge (FOC)- Movement type -511

6. Returns from customers (Movement type 451)

DELIVERY COMPLETED INDICATOR

The delivery completed indicators are fixed in PO & GR.

After setting the delivery completed indicator at GR, the open order quantity becomes ZERO. But still we can post new GRs against it. But the open order quantity WILL NOT CHANGE.

If we change the quantity of a delivery after posting the GR, the system DOES NOT CANCEL the delivery completed indicator automatically. But it issues a warning message.

If an order quantity/ return delivery quantity reduces the delivered quantity below the tolerance limit, the system cancels the delivery completed indicator. But issues a message Delivery completed indicator has been reset. Thereafter we have to manage it manually.

Standard R/3 system does not accept Over deliveries

For accept over deliveries, you have to select unlimited delivery in PO or properly set the over delivery tolerance

GRs valuated on the basis of the incoming quantities in the Order price unit

Invoice verification is also based on the GR qty in the order price unit.

If you want to restrict a GR upto a certain date, enter that date in Latest GR date in Delivery tab of item

RETURN DELIVERY

Return delivery can be created with reference to a material document or Purchase Order

Receipt by

Return

Substitute

Delivery by

Delivery

101

122

123

103

124

125

105

122

123

If you receive a substitute delivery, after you have returned the goods to a Vendor, it is ADVISABLE to reference the associated return delivery by using a reverse posting when you post a new receipt

122- Return delivery from Warehouse

It results into 1. Material document created

2. Stock accounts updated

3. Purchase Order update

124 Return delivery from GR Blocked stock

It results ONLY in creation of a material document as a proof of return

Return delivery in GR based Invoice verification

Uses the material document to reverse

If invoices are settled and then you are returning, please ensure that

Invoices should be cancelled

In customizing, for each MOVEMENT TYPE, you can specify Reversal and return delivery movement type and transactions in case of GR based IV

Difference between Reversal & Return delivery

Reason for movement is optional in the case of reversal, but mandatory in return delivery.

Return delivery slip is not required for reversal but mandatory for return delivery.

Both operate on different movement types.

Movement type 161

It is used to assign in a PO so that while posting the GR, the qty in the GR will be automatically removed from the stock. It is generally used for exchange of materials.

Quantity Distribution facility at GR

We can distribute the incoming quantity in GR to

1. To several storage locations

2. To several Movement types

3. To several stock types

4. To several Batches

Note Batch selection list DOES NOT work with SPECIAL STOCKS

Goods Receipt of Non-valuated goods

The receipt of goods to unrestricted stock. We can directly issue it for consumption

Automatic PO generation at GR

We can configure the system in such a way that system creates PO in background during the receipt of Goods which is not having any PO. We can do the invoice verification afterwards.

In Customizing for organizational structure, the plant must be assigned a purchasing organization in the step Standard purchasing organization - assign plant so that the system can determine the purchasing info records. Automatic POs are allowed only for movement type 101 & 161 in standard system. The customization for these movement types are to be there for automatic PO creation

System valuates the GR with the price defined in purchasing info record.

MIGO transaction is supporting automatic PO. It is available in MB01

In Vendor Master the purchase group default data for material to be maintained

Automatic PO is only possible for valuated goods Pre-requisites for automatic PO are;

1. Selection in Material Master

2. Selection in Vendor master

3. Info record should be available

4. Valuated good receipt

5. Automatic PO selection for Plant & Movement types (101& 161)

If a PO is generated in the background for the return item (movement type 161). This PO is required if you want to carry out invoice verification for the credit memos, issued by the Vendor for this return

GOODS ISSUE

TO

FROM

Ware House

To Cost Center

Consignment

GOODS ISSUE

To Asset

Pipe Line

To Sales

To Order

To Sampling

To scrapping

Sampling Materials are treated as scrapped. But the value of sampling material posted from the material stock account to the Quality Inspection stock account.

But while scrapping material, the material will be posted to Scrap account and it debits to the cost center.

Issue to sampling and scrapping are different.

We can change the movement type while goods issue.

Goods can be issued to reservation and BOM

While goods issue, we can have collective entry with different account assignment also.

System WILL NOT update the consumption statistics in Material Master, if you post goods movements using special stock types Sales Order Stock and Project Stock

We can set final issue indicator while issuing against a reservation

Stock determination is a function that can be used on a cross-application basis.

We CAN issue goods from Quality inspection and Blocked stock ONLY for SCRAPPING or SAMPLING

Reversing a planned goods issue

Can be reversed with reference to a Material Document OR to a reservation

A Material document (Reversal) will be created

An accounting document will be created

Stock will be updated (increased)

Consumption will be reduced

While issuing a material for scrapping,

Relevant stock reduced

Value posted from stock account to scrap account

Price is taken from material master

Movement type Consumption for201 Cost center

221 Project

231

Sales Order

241

Assets

251

Sales

261

Production order

281

Network

291

All account assignments

GR/ GI SLIP numbering

We can have GR/GI slip number in addition to the Material and accounting document numbers

It is a statutory requirement for some countries like Italy

It can be assigned Internally/ externally by each Plant or Storage Location or Movement type

Options 1) Include the filed for the GR/GI slip number in the SAP script form

2) Call up form MB-XAB using transaction MBXA

Then customize it Print report SAPLMBXA in print control

Serial numbers should be active for the Plant

In stock transfer (Plant to Plant) of material with serial number is only possible if the same profile is assigned to the material in both the Plants

Returns to Vendor

Movement type

Functionality

102

Reversal of GR due to any clerical mistake

122

Returns to Vendor due to any reason like damage

124

Returns to Vendor from GR blocked stock

161

Returns to vendor For the exchange of another material

NOTE : To carryout stock transfer from Plant to Plant for a material that is subject to SPLIT VALUATION, you HAVE TO USE 1STEP or STO

SPECIAL STOCKS

Special stocks that are managed separately becoz they are not belonging to your company.

The special stocks and special procurement types are of 2 types

1. Company owned special stocks

2. Externally owned special stocks.

1. Company owned special stocks

The special stocks that are owned by the Company stored with Vendor or customer.

1. Stock material provided to Vendor/ subcontractor

2. Consignment stock at Customer

3. Returnable packaging at Customer

These Materials are managed at PLANT LEVEL. NOT at Storage location level. Only 2 types of stocks are possible. Unrestricted / Quality Inspection2. Externally owned special stocksStocks owned by Vendor/ Customer and stocked at your place.

1. Vendor Consignment

2. RTP (returnable Transport Packaging

3. Sales Order Stock

4. Project Stock

These materials are managed at STORAGE LOCATION LEVELAll the 3 stock types, UR/ Blocked/ QI are allowed

8 SPECIAL PROCUREMENT TYPES

1.Consignment (K)

2.Sub Contracting (L)

3. Stock Transfer using Stock Transport Order (U)

4. Third Party Processing (S)

5. RTP (R)

6. Pipeline Handling (P)

CONSIGNMENT PROCESS

When buying goods as a Consignment, the ordered goods still belong to Vendor, even after delivery. The goods become your property ONLY after they are consumed. The quantities consumed are periodically settled.

The Ownership of the material is with Vendor but storing at clients premises

The stocks are NOT VALUATED, but available for MRP The ownership of the material transfers to the client ONLY after issuing/ transferring it from the consignment stock

Consignment liabilities are settled periodically (thru MRKO) based on the consumption statement by the vendor

The prices of consignment stocks are defined in Info record and maintained periodically

We can use the conditions in Purchasing

CAN maintain ANY unit of measure with proper definition of conversion factor in material master

Physical Inventory of Consignment stock is possible

Consignment stocks are managed at STORAGE LOCATION level There will NOT be ANY VALUE in consignment purchase orders

In PO, No Price, No conditions, No Invoice receipt requirement but GR requirement

Stock movements are possible.

Consignment stocks can be displayed by Tcode MB54

We can issue the consignment material from Consignment stock using movement type 201+K

Item category K is used for consignments

We can post GRs for consignment WITH or WITHOUT reference of a PO. But the consignment prices are to be maintained before GR Consignment stocks can be managed at Unrestricted/ QI/ blocked and we can do the transfer posting between them.

But we can withdraw the consignment from UNRESTRICTED ONLY

Goods Issue from consignment unrestricted stock results in a liability to the consignment vendor

We can enter the invoice for consignment WITHOUT reference to a PO. Debits are posted to the Liabilities from consignment stores G/L account to which the credits were posted upon Goods issue from consignment G/L account

Consignment info record- The info record of consignment with different Plants (different prices at each plant) is having a SINGLE INFO RECORD number Info record should be created BEFORE creating a PO/ GR.

Process of Consignment Procurement & Settlement

1. Creation of Info record ME11

2. Create Purchase Order ME21N

Standard procedure.

Item category K

GR to consignment store

Invoice Receipt is NOT required

No Price in PO

3. Goods Receipt MIGO Receipt of Material to consignment store

The movement type 101+K

Please note that the GR can be with or without GR. Item will be in special stock while posting the GR

3. Transfer Posting MB1B. Transferring the material to own stock

The movement type 411K (the step is Not Mandatory)

4. Goods Issue MIGO

Goods Issue from consignment store to movement types 201/231/ 241/ 251/ 261

Note We can directly issue the material from consignment stock using movement type 201+K, without transferring to companys stock.

Process of Physical Inventory of Consignment

1. Creation of Physical Inventory document In the create screen enter K in special stock field2. Enter Physical Inventory document

3. Post the differences If you want to include QI/ blocked stock, enter a new material number and enter the relevant stock type in the filed of STY and post the difference as per your settingsSUBCONTRACTING PROCESS

The vendor receives the components from which he produces the finished product mentioned in the PO. The components are listed in the PO and can also be determined by the system via BOM

You order an end product from a vendor and specify in the PO with components, you will send to vendor to manufacture the end product

Issue of components to the vendor and good receipt of finished product with consumption detail of components

Vendor invoice is posted against the purchase order

A subsequent adjustment for excess/ under consumed components can be made.

Item category L is used in the PO, and several components can be attached to the Po

We can enter the components by manual or thru BOM explosion

System automatically creates reservation for the MRP relevant components

The purchase order price will be the price of subcontracting services

Conditions of subcontracting can be stored in Purchasing info record for subcontracting

We can link services specification with subcontracting items

The components with subcontractor (after issuing it) are managed as a special stock to the vendor. This stock is VALUATED and AVAILABLE for MRP as the components are your property. It is not allocated to a specific storage location becoz its still your property

We can monitor subcontracting stock by evaluations

Goods issues are made, 1. With respect to a Subcontracting PO 2. From the list of all the material of a subcontracting vendor

We can do the process of subcontracting thru SD. Through delivery and shipping

Good receipts are posted with respect to Subcontracting order item

Consumption of components posted at GR and subsequent settlement is possible with respect to PO

Invoice verification is same that of standard process.

The account postings at subcontracting at GR & invoice verification are;

SUBCONTRACTING SCENARIO

Order - SF Material

Component - Raw Material

A. At Goods Receipt

1. Stock account of SF Product - Debited @ (Order price + Valuation price of SF product)

2. Cost of Goods Manufactured - Credited @ (Order price + Valuation price of SF product)

3. Stock account of Raw Material - Credited @ Valuation price of Raw material

4. Consumption Account - Debited @ Valuation Price of Raw Material

5. GR/ IR Clearing Account - Credited @ Order Price

6. External Labor Account - Debited @ Order price

B. At Invoice Receipt

1) If there is NO deviation Price in Vendor invoice

Invoice Value = Order price

1. GR/ IR Clearing Account - Debited @ Order Price

2. Vendor account - Credited @ Invoice Price (Order price)

2) Invoice Value = Order price + deviation price from PO

1. Stock account of SF Product - Debited @ deviation amount in invoice

2. Cost of Goods Manufactured - Credited @ deviation amount in invoice

3. GR/ IR Clearing Account - Debited @ Order Price

4. External Labor Account - Debited @ deviation amount in invoice

5. Vendor account - Credited @ Invoice Price (Order price + deviation amount from PO)

i. Stock account fro Finished goods - ii. Stock account of raw materialiii. GR/ IR clearing accountiv. Vendor accountv. Cost of goods manufacturedvi. Consumption account (for components)vii. External labor account We can enter the material that is to be produced as a subcontract item in the scheduling agreement By the issue of components (thru transfer posting), the stock of components WILL NOT reduce from your stock. The stock will be produced at the time of receipt of Goods receipt of finished product CS01 is used for creating BOM/ components1. The order of the end product in PO. The components are attached to the item n PO

2. In Inventory management, components are posted to the stock of material provided to the vendor

3. Vendor supplies the end product with consumption details of components and it will posted to the system while GR

4. Any balance (+ or -) of components are done at subsequent adjustment transaction

5. Vendor submit his invoice for the services rendered and invoice will be posted in MIRO

Process of Subcontracting Process

1. Creation of Info Record ME11. Service with price of service2. Creation of Purchase Order ME21N Creation of PO with Item category L. Attach components to the item in PO3. Transfer Posting MB1B Transfer the components from your store to the subcontractor using the movement type 5414. Goods Receipt MIGO receive the end product (and components) to Stock by using the movement type 101 for main material and 543 for components5. Subsequent Settlement MB04 Subsequent adjustment of components, if any (other than the entry happened during GR). Movement type 544 for components and 545 for by product6. Invoice verification MIRO Normal process for invoice verification of vendor services The Master record of end product and components are to be made available before the creation of PO

The components with subcontractor / Subcontractor stock is your stock. It is available for MRP and it is valuated, it is managed at PLANT LEVEL.

BLOCKED STOCKS are not allowed for subcontracting (Components). But we can transfer the stocks between these 2 (UR&QI) stocks

Subcontracting in Inventory Management (Facilities)

1. Provision of components

2. Goods receipt of final product with consumption details of components. We can adjust the components at Goods receipt

3. Subsequent adjustment of components

4. Allowed transfer postings

a) Plant to Plant 1step (301)

b) Material to Material (309)

c) Between Unrestricted and QI ( 321 & 322)

Provision of components

Posting from Unrestricted stock Can be with respect to a PO or Without PO

The components can be delivered by another vendor

Issue PO to a Vendor for supplying the components, the delivery address should be the address of subcontracting vendor. Enter the check box provision at PO. When you are getting the information that the Vendor is supplied the components to your Subcontracting vendor. Make a Goods receipt (STATISTICAL GOODS RECEIPT) in the system so that the stock position will be updated

The Goods receipt for a Subcontracting Order is VALUATE the material at Subcontracting Price PLUS the value of the components consumed

Subsequent adjustmentIn this transaction the consumption account is already posted is available / displayed as a second line for each item

Use + or - sign to adjust the components. The movement type is 544.

Subsequent adjustment is possible ONLY for subcontracting orders (L)

Receipt of a BY PRODUCT generated during subcontracting The by products are entered in the subcontracting Purchase Order as components with NEGATIVE quantity

While receiving the good at GR, system automatically posts the receipt of byproducts

1. In the material document you can identify the by product by the movement type 545

2. By products are posted to the Stock of material provided to the Vendor

Due to the receipt of byproduct, the value of end product will be REDUCED.

To transfer the byproduct quantities from the Stock of material provided to Vendor to Unrestricted stock, make a transfer posting using the movement type 542Subcontracting for Sales Order stock and Project stock

An account will be assigned to a sales order or a WBS element

STOCK TRANSFER USING STOCK TRANSFER ORDER

Advantages of stock transfer with STO w.r.to transfer posting

1. Good receipt can be planned in receiving plant

2. Can include an additional vendors (freight, etc) in Stock Transport Order

3. Delivery costs can be entered in STO

4. Its a part of MRP PR created via MRP can be converted to STO

5. Goods Issue can be done through Shipping delivery

6. GR can be posted directly to consumption

7. Total process can be monitored through PO history

PLANT to PLANTSTOCK TRANSPORT ORDER

1 Step2 StepWithout SDWith SDWith Billing

ORDER TYPE Area - MM-PURUBUBUB

MOVEMENT TYPE Area -MM-IM301 (Transfer Posting)303 & 305351 & 101641 & 101643 & 101

645 for 1 step

DELIVERY TYPE Area - SDNLNLCC

BILLING TYPE Area - SDIV

DOCUMENT TYPE Area - MM-IVRE

PRICEValuation PriceValuation PriceValuation PriceValuation PricePricing in SD & MM

PLANNING ViaReservationPurchase OrderPurchase OrderPurchase Order

STOCK after GIStock in TransferStock-in-TransitStock-in-TransitStock-in-Transit Company code

DELIVERY COSTSPossiblePossiblePossible

CROSS-Company Code ViaCompany code clearing accountCompany code clearing accountCompany code clearing accountCompany code clearing accountRevenue account & GR/IR Clearing account

STOCK TRANSFER PLANT to PLANT 1 Step

Carried out ONLY in Inventory Management

Entered as a transfer posting MB1B

Can be planned by reservation

The quantity of unrestricted stock entering in sending plant posts IMMEDIATELY to unrestricted stock of receiving Plant

Postings are valuated at the price of sending plant

If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue

STOCK TRANSFER PLANT to PLANT 2 Step

Carried out ONLY in inventory management Transfer posting CAN NOT be planned through a reservation Goods issue sending plant > Stock-in-transit of receiving Plant > Goods Receipt of receiving Plant. Transfer posting (Goods issue-1step) is valuated at the price of sending plant If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue. If any offset, will post to Company code clearing account We can request and monitor stock transfer in purchasing through a PR, STO & Scheduling Agreement

For stock transfer scheduling agreement use document type LU and item category -U

STOCK TRANPORT ORDER WITHOUT SD DELIVERY

Goods Issue Sending Plant > Stock-in-transit of receiving plant > Goods receipt of receiving Plant

Delivery costs CAN BE entered in ST Order

Transfer posting (Goods issue-1step) is valuated at the price of sending plant If it is between 2 company codes, it will create 2 accounting documents at the time of goods issue. If any offset, will post to Company code clearing account

Process Flow

1. Creation of ST order in receiving Plant for sending plant with a document type UB in ME21N

2. Posting a goods issue through transfer posting MB1B at sending plant with a movement type 351

3. Posting a goods receipt MIGO at receiving plant with movement type 101

4. Invoice verification at receiving plant Normal MIRO

STOCK TRANSPORT ORDER WITH DELIVERY

Carried out in Purchasing (entering the STO), Shipping (delivery at sending Plant) and Inventory management (GR at receiving Plant)

Other characteristics are same as that of STO without delivery

Process Flow

i. Creation of STO at sending Plant

ii. Post goods issue through delivery (VL 10B or 10F) at sending plant with movement type 641

iii. Goods receipt (MIGO) at receiving plant with movement type -101

STOCK TRANSPORT ORDER WITH DELIVERY & BILLING

The transfer posting in NOT VALUATED at the valuation price of the material of sending Plant. But defined in both the sending and receiving plant using conditions Possible ONLY between plants at DIFFERENT COMPANY CODES

The areas are Purchasing (STO), Shipping (sending Plant delivery and goods issue), Billing Plant (Creation of Invoice at sending Plant), Inventory management (Receiving Plant goods receipt) and Invoice verification (MIRO at receiving plant)

Goods Issue through Delivery > Stock-in-transit Company code at receiving Plant > Goods receipt at receiving plant

Prices in purchasing as per the conditions maintained in Info record and inter company pricing procedure

Goods movements are valuated as per the accounting documents generated.

4 Accounting documents are generated

a. Goods Issue at sending Plant

b. Goods receipt at receiving Plant

c. Billing at sending Plant

d. Invoice verification at receiving plant

Process Flow

a. Creation of STO in receiving Plant for sending Plant. Document type UB and item category -U

b. Post delivery in sending Plant (Movement type 643)

c. Creation of billing document in sending plant

d. Post GR at receiving Plant

e. Post invoice at receiving Plant

GENERAL INFORMATIONS ON STO

Pre-requisites for Goods Issue in Shipping

b. In customizing in Purchasing, a delivery type (NL for STO with delivery and NLCC for delivery & billing) must be assigned to the PURCHASING DOCUMENT TYPE (UB)

c. Customer number for receiving plant to be created and that MUST be maintained in customizing in STO

d. In SD customizing, shipping point determination MUST be maintained

e. In material master, shipping data MUST be maintained

To display the stock-in-transit, we can use MMBE and MB53 Posting of GR for STO to a blocked stock is NOT POSSIBLE because the stock-in-transit is already valuated No accounting document will be generated for a GR of STOCROSS COMPANY STOCK TRANFER

We can do a cross company stock transfer in 3 ways

a. Stock transfer between 2 plants by 1 step or 2 step

b. An STO without delivery via shipping

c. STO with delivery via shipping (possible for plants in different company codes)

In all cases the value of transportation is posted to a company code clearing account in both the plants. The stock transfer is valuated at the valuation price of the material in sending plant

Valuation of stock transport with billing- INTERCOMAPNY EXAMPLE

Plant P1 orders 10Kg of material from Plant P2

Value of the material at P1 10

Price for inter company billing at P1 12

STO order price 11

Plant

Transaction

Value

Account

Remarks

P1

Goods Issue

100(-)- Stock Account (at price of P1)

100(+) Change inventory stocks(at price of P1)

P1

Billing

120(-) Sales revenue(Price Inter Co billing)

120(+) Customer clearing (Price Inter Co billing)

P2

Goods Receipt

110(-) GR/IR clearing ( P2 -STO Price)

110(+) Stock account ( P2 -STO Price)

P2

Invoice verify.

120(-)- Vendor account (Billing Price)

110(+) GR/IR clearing (STO Price)

10(+) PDA or Stock A/c (Difference)

THIRD PARTY PROCESSING

Company

Order

Pur. Order

Billing

Invoice

Customer

Vendor

Material

Customer places an order on your company

You are placing/ passing the same order to a Vendor

Vendor supplies the material to customer directly

Vendor submits his invoice to you

You are submitting your invoice to the customer

Process Flow (with SD component)

1. Entering a Sales Order

While entering a sales order with Item category S and account assignment X, system will automatically creates a PR for each item in the third party sales order.

2.Entering a Purchase Order

Process the PR generated above, assign a Vendor and convert it to a Purchase Order

The delivery address in the Purchase Order will be as that of the customer

3.Delivering goods to Customer

Vendor supplies the material directly to the Customer

Can create a STATISTICAL GOODS RECEIPT in the system, but NOT mandatory.

4.Enter the Invoice of VendorInvoice verification of the Vendor invoice. This CAN be a mandatory requirement as per the customized settings (If customized for creation of billing document after the posting of Vendor invoice)

5.Creating Billing document for the Customer

Billing document is created in SD.

Depending on the BILLING RELEVANT INDICATOR set for this item category in SD

The path in customizing for this is SPRO > SD > Sales > Sales Documents > Sales Document Item > Define Item Category > Check the details of TAS.

Billing Document cab be Quantity based on Order OR Quantity specified in Vendor Invoice

If the customer is billed on the basis of quantity, we CAN create billing document, IMMEDIATELY after the sales order is entered

If it is based on Vendor invoice, we CAN NOT create the billing document TILL the vendor invoice is entered/ posted in the system

Implications of Third Party Processing in SALES

By creating a Sales order for Third party, the resulting activities in Purchasing are 1. A Purchase Requisition will be created with one or more delivery schedule

2. Purchase Requisition numbers are updated in the sales order (Item details)

3. Item is scheduled automatically after considering the delivery time and purchasing processing time from material master

Implications of Third Party processing in PURCHASING

A PR is created automatically. We can do LIMITED changes in this automatically created PR, like purchasing group

Order quantity / Scheduled Delivery date CAN NOT be changed manually. It can be changed through sales order ONLY.

We can create a PR for third party processing manually using Item category S & account assignment X

We can create the PO with respect to PR or manually

GR Indicator- For account assignment category X, GR can be posted as per the customizing.

If the Purchase Order is with respect to a Purchase Requisition, the VENDOR ADDRESS CAN NOT be changed.

If the delivery address is same for all items, the delivery address will be printed on Header, other-wise it will be item-wise

Implications of Third Party processing in Inventory Management

We can enter the Goods receipt, if the GR indicator is set in PO Goods receipt for third party processing will be similar that of a GR for a PO with account assignmentRETURNABLE PACKING (RTP) VENDOR PROCESSING Its a multi-trip packaging medium

Property of your Vendor came along with material, stored at your place

It is NOT VALUATED

It is managed as a SPECIAL STOCK. So special stock data is required in addition to material master data.

Special stock Indicator is M

The special stock data is defined for EVERY vendor at storage location level. It is created automatically 1st receipt is posted to RTP stock.

This RTP stock can not be maintained manually, but updated automatically upon goods movements.

RTP is an UNRESTRICTED STOCK ALWAYS

Allows a Negative stock

We CAN NOT transfer RTP stock to your own stock

At Goods receipt, the movement type for RTP 501+M is selected automatically by the system. For returns, 502+M. Can use Goods Issue Others for returning to Vendor with 502+M

If we want to transfer these RTP material between storage locations, system selects the movement type 311+M RTP stocks are available in stock displays MMBE / MB53

PIPLINE MATERIAL PROCESSING

Material is ALWAYS available. It can be withdrawn any quantity at any time

These PIPE materials are NEITHER PRODUCED/ PROCURED Nor STORED

Pipeline movements are mandatory in all Valuation areas

For each material type, you can specify in the valuation area whether pipeline movements are Mandatory/ Allowed.

Info record is mandatory for movements

Pipeline withdrawals are to be for a Order/ Cost center

Considered as a special stock

The special stock indicator is P

Withdrawals are valuated at Info record price. Withdrawals leads to a payment liability to the Vendor and its Consumption history is updated.

In standard system, the same account is assigned for consignment and pipeline. But it can be separated by settings in customizing

Process Flow

1. Creation of PIPE material. Maintain purchasing and accounting views. Price control can be S or V

2. Creation of Info record

3. Maintain the source list (Not mandatory)

4. Posting of Goods Issue Movement type can be 201+P, 261+P, 281+P/ 291+P5. Settlement of Pipeline Liabilities (MRKO)

SALES ORDER STOCK

Stocks maintained for sales order

Special stock Indicator E

It can be Valuated / non valuated

If it is NOT valuated, it is managed via a Cost Center

Can be transferred to own stock using movement type 411+E

PROJECT STOCK

The stocks stored for a Project till the completion of the project

It can be valuated / non valuated

It is allocated to a WBS element (Work Breakdown Structure)

Components from this stock can be issued for a WBS element

The stock is available for MRP

Managed with a special stock Indicator Q

It can be transferred to own stock using the movement type 411 +Q

9 VALUATION AND ACCOUNT DETERMINATION

General Postings in MM

At Goods Receipt

Stock Account - Debited (+)

GR/IR clearing- Credited (-)

At Invoice Verification

GR/IR clearing- Debited (+)

Vendor

- Credited (-)

At Payment

Vendor

- Debited (+)

Bank cash

- Credited (-)

At Goods Issue

Consumption - Debited(+)

Stock Account- Credited (-)

Valuation Area Can be at Company code level or Plant level. SAP recommends the valuation at Plant Level.

Valuation at Plant level is MANDATORY if we want to use Production Planning (PP) or Product costing accounting components or retail system.

Once the valuation area is defined In the customizing, it is very DIFFICULT to reverse it.

If you want to have a storage location for storing materials non-valuated, you can have it through another Plant(Valuation area) where only quantity updation will take place

The transactions in inventory management that affects accounting are Goods Receipt, Goods Issue and Transfer Posting

These transactions can change the valuation price of the material depending on the price control of the material

The posting of invoice verification (MIRO) also can affect the material valuation

Material Valuation during :

1. RECEIPTS are valuated at current material price in the material master

2. a) GR for PO GR before IR Materials are valuated at PO Price

b) GR for PO GR after IR Materials are valuated at Invoice price

3. GOODS ISSUE Goods Issues are valuated at the current price of the material in material Master.

4. Free Delivery Zero Value

Materials that are to be valuated should have accounting data with valuation Class

Material Price Control

1. In standard pricing (S), Material is valuated at material master price and in case any difference, will be posted to Price Difference Account (PDA)

Exact value available for cost accounting/ Controlling purposes

In accounting view, the difference can be displayed.

The changing of this standard price in material master is possible

2. In moving average pricing (V),

GR at PO price and GI at material master price. Receipts are valuated at actual price (PO or IV)

In case of any difference, the difference is posted to Stock account, if sufficient stock available (in such case, the MAP will be changed)or it will be posted to a PDA.

System modifies the price in material master according to the delivered price

If the data is used for cost accounting, will have fluctuations

If the material is managed at Standard price, the moving average price will be recorded in the material master by the system

Changing of Material master price (MR21) from Standard to Moving average price is ALWAYS possible

Changing of Material master price from Moving average price to Standard is NOT POSSIBLE in 2 cases

1. If the material is valuated in SPLIT VALUATION

2. If the standard price is coming from COSTING and is NOT equal to the moving average price

3. Changing fro S to V & V to S are Possible, if POs are Not created or Stocks are not existing

Periodic Unit Price (PUP) Price that changes periodically as a result of goods movements and invoice postings PUP = Value of material / Quantity of material

PUP is used in single level or multi level price determination to valuate the material for closing period.

PUP can carryout in 3 currencies and 3 valuation areas

The valuation in current period, system uses standard pricing.

VALUATION AND ACCOUNT ASSIGNMENT

For automatic account determination

The system will automatically determine the relevant G/L accounts for each transaction in MM.

There are several accounting transactions are linking to a single MM Transaction

We can configure the automatic account determination facility to occur within the areas of Inventory management, Invoice verification and material valuation

Valuation area to be set before creating a material

Company code chart is assigned in FI module

Levels of valuation in automatic account determination

1. Chart of Accounts/ Company Code

2. Valuation area

3. Material Type/ Valuation class

4. Transactions (Movement type)

1. Chart of Accounts Influencing Factors

Chart of account is assigned to company code

Used as a key factor for account determination to enable a differentiation for the purpose of G/L account assignment

Configure separately for automatic account determination

Financial accounting, Cost & Revenue accounting uses the optional chart of accounting

2. Valuation Area- Valuation Grouping code Influencing factors

Key for account determination that enables a differentiation for G/L account assignment WITHIN Chart of accounts

By Valuation grouping code, dependency of accounts on Valuation area

If a valuation grouping code is there assign a code for each valuation area

Valuation Area is the level at which the materials are valuated

If the valuation is at company code, G/L account CAN NOT be assigned according to Plant

We can assign a totally different G/L accounts to Plant if it is having a separate Valuation grouping code

CHART OF ACCOUNTS

COMPANY CODE

PLANT

VALUATION

GROUPING CODE

3. Material Type Material Influencing Factors

Its a key in account determination that enables a differentiation for G/L Account assignment depends on Material

Material is assigned to a Valuation class, which depends on a Material type

More than 1 material type is allowed for a valuation class

MATERIAL TYPE

A/C ASSIGNMENT

VALUATION CLASS

CATEGORY

Raw Material ROH

3000

Finished Goods FERT

0001

3001

Oper.Supplies HIBE

3002

4. Transaction Influencing Factors

Its a key for account determination that symbolizes the transaction

Posting transactions will define the relevant accounting

Posting records are assigned to each Movement type to each invoice verification

a. Account grouping

Depending on Movement type and special stock indicators, we can assign an account grouping for individual transactions.

We can use the rules to define its configuration of automatic postings for a posting transaction depends on

1. Valuation Grouping code

2. Account grouping

3. Valuation class

ACCOUNT DETERMINATION Specific Information

Account determination is required if the system is to fulfill its integration promise and post financial transactions at the same time as the relevant operational transaction.

Accounts are determined differently, depending on which functional area you are using:

MM: The process of account determination varies depending on whether

the transaction involved has a movement type such as inventory management

or whether there is no movement type such as invoice verification and valuation.

Account determination in SD uses the condition technique.

This chapter looks at the account determination of MM transactions w. and w/o movement type only.

You can do most of the settings relevant for the account assignments for MM transactions either in the configuration menu for "valuation/account assignment" (settings for MM transactions w. movement type) or in the configuration menu for "invoice verification" (settings for MM transactions w/o movement type). You will get to the same tables but there are different simulation functions.It is also possible to access these tables via the configuration menu for accounting.

The valuation area is the level at which material valuations are carried out. In the MM application transactions, the valuation area is hidden. In customizing, you can choose whether the valuation area equals the company code or the plant. This setting must be carried out before creating materials and before entering transactions in MM inventory management. If PP is active the valuation area must be on plant level !

Grouping of organizational entities

The allocation of a company code to a chart of accounts is carried out in the FI customizing. The chart of accounts to be used is determined for each company code.

The valuation grouping code facilitates the allocation of G/L accounts with as little effort as possible. Valuation areas to be treated equally in terms of account assignment must be defined with the same valuation grouping code. Valuation grouping codes either serve as a means of fine differentiation within a chart of accounts or they correspond to a chart of accounts.

When making the basic settings for valuation, you can specify whether the valuation grouping code is active.

Grouping of material master entities

Account category reference is the grouping term for account determination depending on the material type.

Several valuation classes can be allocated to one account category reference.

Each material type is allocated to one account category reference. When maintaining the accounting data of a material of this material type, you can select one of the valuation classes that are defined for the corresponding account category reference.

The G/L account determination for a material is carried out according to the settings for this valuation class.

Via the Account category reference You can define the same G/L account determination for all materials of one or even several material types.

But you can also specify that different G/L accounts are determined for different materials of a material type.

INVOICE VERIFICATION

Invoice verification process the invoice in FI. By posting an invoice the data in MM & FI are updated.

UPDATION IN

UPDATION IN

MATERIALS MGT.

ACCOUNTING

1. PO Update

1. G/L accounts update

2. PO History updates

2