Chapter 4 PowerPoints SM

Chapter 4 PowerPoints SM - Chapter 4 The Procurement...

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Unformatted text preview: Chapter 4 The Procurement Process Click to edit Master subtitle style 1 1 Magal and Word | Integrated Business Processes with ERP Systems | © 2011 Learning Objectives 1. Describe the major organizational levels associated with the procurement process. 2. Discuss the four basic categories of master data that are utilized during the procurement process. 3. Explain the key concepts associated with the procurement process 4. Identify the key steps in the procurement process and the data, documents, and information. 2 2 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Learning Objectives (Continued) 5. Effectively use SAP ERP to execute the key steps in the procurement process 6. Utilize SAP ERP to extract meaningful information about the procurement process 3 3 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 A Basic Procurement Process 4 4 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Outline Organizational data Master data Key concepts Process Reporting 5 5 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Organizational Data Client Company code (CC) Plant Storage location (S Loc) Purchasing organization (P Org) Purchasing group 6 6 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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 7 7 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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 if valuated stock is maintained A storage location can belong to only one plant 8 8 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 GBI Storage Locations 9 9 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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 10 10 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Enterprise-Level Purchasing Organization as cross-company code model Also known One Purchasing Organization assigned to each plant, but not the CC Purchasing for all plants across all CC Highly centralized – corporate Purchasing Org 11 11 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Enterprise-Level Purchasing 12 12 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Company-Level Purchasing Organization as cross-plant model Also known Different Purchasing Organizations are assigned to each CC P Org is assigned to both the plant and CC Purchasing for all plants in one CC 13 13 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Company-Level Purchasing 14 14 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Plant-Level Purchasing Organization Also known as plant-specific model Each plant has its own Purchasing Organization P Org is assigned to plant and CC Highly decentralized 15 15 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Plant-Level Purchasing Organization 16 16 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reference Purchasing Organization Purchase Org for high-level One centralized decisions across the enterprise Multiple CC-specific and plant-specific Purchase Org 17 17 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 GBI Purchasing Organization Hybrid model One global enterprise level purchasing organization (GL00) Multiple company level purchasing organizations US00 (in Miami) DE00 (in Heidelberg) 18 18 Magal and Word | Integrated Business Processes with ERP Systems | (C) 2011 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 19 19 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Master Data Material Master Vendor Master Purchasing info record Conditions 20 20 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Material Master Data needed to execute transactions related to materials (along with org data) Data are grouped by different user areas (views) Data are specific to (defined for) for different organizational levels 21 21 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Material Master – Views Basic data Purchasing Accounting Forecasting Sales Plant / Storage Work Scheduling MRP Classification Warehouse Management Highlighted views are relevant to purchasing 22 22 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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, 23 23 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 etc.) Demo 4-1: Review Material Master some of the data included in a Review material master. 24 24 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Vendor Master Data needed to do business with vendors Data needed to execute transactions related to vendors (along with org data) Data are specific to (defined for) different organizational levels. The three segments are: Client level data (General) Company code level data (Accounting) Purchasing organization level data (Purchasing) 25 25 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Vendor Master Segments 26 26 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Data in the Vendor Master 27 27 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Vendor – General Data Client-level data Valid across all CC in a client Examples Name, Address Communication (phone, fax) Search term 28 28 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Vendor – Accounting Data Company code specific data Valid for the entire company code across purchasing areas Examples Account information Bank information Reconciliation account Payment terms and methods Communication (dunning) 29 29 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Vendor – Purchasing Data Separate for each Purchasing Organization Applies to the specified Purchase Org Examples Partner functions (vendor, invoicing party, payment recipient) InCoTerms: defines responsibilities and costs of shipment Freight, insurance, customs clearance, locations 30 30 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-2: Review Vendor Master some of the data included in a Review vendor master. 31 31 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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) 32 32 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchasing Info Record 33 33 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchasing Info Record 34 34 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Conditions Pricing Conditions Gross price Discounts and surcharges Freight / shipping Obtained from Purchasing info records Contracts and agreements Other sources 35 35 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-3: Review Purchasing Info Records Review data in a purchasing info record. 36 36 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Key Concepts Item categories Account determination Stock type/status Goods movement 37 37 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Item Categories Defines the process used to procure the item Categories Standard Subcontracting Components provided; finished product received Consignment Liability only when withdrawn from stock Service Stock transfer Third party order Ship to third party; bill to us (drop shipment) 38 38 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-4: Review Item CReview various item categories used in the ategories purchasing process. 39 39 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Account Determination Which GL account to assign to PO? For stock items: defined in material master (valuation class) For consumption T-shirts to be given away at a trade fair or company picnic Account assignment objects must be provided (who gets charged): e.g, cost center For non-stock items (no material master) Account assignment categories determine 40 40 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 account assignment object and G/L accounts Purchase for Stock vs. Consumption 41 41 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Stock Types / Status Based on usability of material Unrestricted use In quality inspection Blocked stock (damaged, unusable; wrong delivery) Stock in transit 42 42 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Goods Movement A transaction that causes a change in stock (value or status) 4 common movements Goods issue Goods receipt Stock transfer Transfer posting Specific Movement types Which movement What data are needed What G/L accounts will be updated Material document 43 43 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 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 44 44 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Goods Movements Transfer Posting Results in a change in material status In-quality inspection/ blocked/ unrestricted use One material type to another May or may not include a change in location (Sloc, plant) 45 45 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Movement Types Goods Receipt • 101: Goods receipt for a purchase order 102: Goods receipt for a purchase order - reversal 103: Goods receipt for a purchase order into blocked stock 122: Return delivery to vendor • • • Goods Issue • 261: Consumption for production order from warehouse 231: Consumption for sales order from warehouse • Transfer Posting • 321: Quality inspection to unrestricted 350: Quality inspection to blocked stock • Stock Transfer 46 46 Magal Plant to plant transfer 301: and Word | Integrated Business Processes with ERP Systems | (C)location to storage location transfer 311: Storage 2011 • • Structure of a Material Document 47 47 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-5: Review a Material Review data included in a material document. 48 48 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-6: Review Goods Movements and Movement Types Review various goods movements and movement types 49 49 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 A Detailed Procurement Process 50 50 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Process Steps Trigger Data Task details Outcomes 51 51 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 GBI Story Inventory of t-shirts (SHRT1000) is low (<=50) in the Miami plant Therefore it is necessary to procure more tshirts Spy Gear is the only supplier of t-shirts Quantity purchased is 500 Purchase price is $15 per t-shirt 52 52 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Elements of the Purchase Requisition Step 53 53 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Requisition Trigger Other processes Manually Data User input: Dates, materials, quantities Master data: Material master, Vendor, Info record Organizational data: Client, CC, P Group Task details: none Output Document: Purchase requisition Subsequent steps 54 54 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Order RFQ Data in a Purchase Requisition 55 55 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Converting a Purchase Requisition to a Purchase Order 56 56 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 GBI Scenario Material planning process has determined Re-order point = 50 Order quantity = 500 Miami plant employee reviews inventory report and determines that it is necessary to reorder Requisition: 500 SHRT1000 to be delivered at the Miami plant by a specified date 57 57 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-7: Create a Purchase Create a purchase requisition for stock material. 58 58 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Elements of the Purchase Order Step 59 59 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Order Creation Manually or automatically With or without reference to other documents Data Documents: Purchase requisition, Purchase order, RFQ, Quotation Master data: Material (characteristics) Vendor (terms) Info record (pricing) Conditions (pricing) 60 60 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Data in a Purchase Order 61 61 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Order Tasks Data automatically included from input sources Source determination using info records, agreements and contracts, and source lists Outcomes Purchase order Purchase requisition history – PO added Communicate with vendor (external procurement) using messages: fax, EDI, print Plant (internal procurement) using transfer orders 62 62 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Order Structure Header Document number, dates Vendor, currency, terms PO total Line items Material number, description Quantity, price, item total Delivery date 63 63 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 The Structure of a Purchase 64 64 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Requisition to Purchase Order 65 65 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Communicating with vendors 66 66 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Purchase Order Processing Options 67 67 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 GBI Scenario Create purchase order Material: SHRT1000 Quantity: 500 Vendor: Spy Gear (from source list or manual entry) Receiving plant: Miami Reference document: purchase requisition Price: $15 each (from info record) Total PO value: $7500 68 68 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-8: Convert Purchase RConvert a previously created purchase equisition to Purchase Order requisition into a purchase order Review data in the purchase requisition 69 69 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Elements of the Goods Receipt Step 70 70 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Goods Receipt Data Documents: PO, Delivery document (packing Task list) Master data Outcomes Verify materials receipt Create GR document Material documents Header: Document number, date, reference Details (items): Material, quantity, location, movement type Financial Accounting documents Header: Document number, date, reference, 71 71 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Goods Receipt Outcomes Notifications Material master: stock and value GL accounts (Stock/Consumption, GR/IR) PO history – Material document added Quality management Quality inspection lot Warehouse management 72 72 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Data In The Goods Receipt Step 73 73 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Financial Impact of Goods Receipt 74 74 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Material and Accounting Documents from a Goods 75 75 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-9: Receive goods aRecord the receipt of materials for the gainst a Purchase Order purchase order previously created. Review data in the associated purchase requisition. Review data in the associated purchase order. Review Material Document Review Accounting Document Review account balances 76 76 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Elements of the Invoice Verification Step 77 77 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Invoice Verification Data Vendor invoice Purchase order Material document Tasks Three-way match Outcomes Financial Accounting documents 78 78 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Data needed for Invoice Verification 79 79 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Invoice Verification Outcomes GL: vendor account, A/P, GR/IR PO history - invoice document added Material master : Stock value, Moving average price (if using moving price vs. standard price) 80 80 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Financial Impact of Invoice Verification 81 81 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-10: Receive and Verify an Invoice and record an invoice received from Verify a vendor. Review data in the associated purchase order Review Accounting Document Review account balances 82 82 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Elements of the Payment Step 83 83 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Payment Processing Creation: manually or via automatic payment program Data Three-way match (or other process) Payment method, account, items to pay, Tasks Calculate payment amount (discounts) Post payment document (accounting document) 84 84 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Payment Processing Outcomes Financial Accounting Documents Payments (checks, EFT, notifications) Updates GL accounts Material master :Moving average price (if using moving price vs. standard price) 85 85 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Data needed for Vendor Payment 86 86 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Financial Impact of Vendor Payment 87 87 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-11 Make payment to Record payment made to a vendor for previously recorded invoices. Review Accounting Document Review account balances 88 88 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Integration With Other Processes 89 89 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting Source of data Instance level reporting (status) Process level reporting Lists and reports Purchasing Information System Status (transaction documents) Lists ( online and work) Reports (logistics (purchasing) information system) Standard analysis Flexible analysis 90 90 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting - Sources Organizational data Master data Transaction data (documents) Purchasing documents Material documents Accounting documents Invoice documents 91 91 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting – Instance Status Status of a Requisition, Purchase Order 92 92 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 List of Invoices 93 93 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Work List – List of Requisitions 94 94 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-12: Display a List Report Retrieve and display a list of invoices (online list) Retrieve and display a list of open purchase requisitions (work list) 95 95 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting - Standard Process level reporting Standard reports / List displays Logistics Information System 96 96 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting – Logistics Information System Components Purchasing Information System Sales Information System Quality Management Information System Inventory Control Transportation Information System Shop Floor Information System Plant Maintenance Information System 97 97 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Reporting – Logistics Information System Information Structures Special tables of statistics from various modules that is constantly updated Selection criteria (types of information) Key figures: variables of interest Quantitative values on measurable facts Numbers (of orders, deliveries) Quantities (of material) Cost, delivery time Characteristics: used to organize key figures Vendors, material, organizational levels Timeframe Period: day, week, month, etc. 98 98 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Standard Analysis 99 99 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Demo 4-13: Display a report uGenerate a Purchasing Information sing the standard report using the purchasing information system for the US00 Purchasing Organization. Drill down to several levels of information in the report. 100 100 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 Flexible Analysis 101 101 Magal and Word | Integrated Business Processes with ERP Systems | (C)2011 © 2011 ...
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