EGN_5620_Enterprise_Sys_Procurement Process Fall 2011

EGN_5620_Enterprise_Sys_Procurement Process Fall 2011 -...

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Unformatted text preview: Procurement Processes EGN 5620 Enterprise Systems Configuration Fall, 2011 Procurement Process Concepts & Theories EGN 5620 Enterprise Systems Configuration Fall, 2011 Procurement Process 1. 2. 3. 4. 5. 6. 7. 8. Requirements Determination – Requisition request Request for Quotation (RFQ) Vendor Selection Order Processing ­ Purchase Order Order Tracking Goods Receipt and Inventory Management Invoice Receipt and Verification Payment January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 3 Purchase Requisition (Request) Is an internal document Requests a certain quantity of certain material (or service) on a certain date Is generated: ◦ Manually ◦ MRP (automatically), or ◦ Sales orders, etc. With an optional request approval (or release) procedure January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 4 Purchase Requisition Sources Non­inventory items: manually specified by the user department for: ◦ Office supplies, ◦ Project­specific materials, and ◦ Prototype materials Inventory items: automatically created by a MRP/MPS planning mechanism for: ◦ Plant Maintenance ◦ Production Orders ◦ Sales Orders January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 5 Purchase Requisition Data Default data for line items (from the material master, vendor info record, & user preferences) ◦ Delivery dates, ◦ Plants, storage location ◦ Purchasing groups, etc. Individual line item data ◦ Material, ◦ Quantity, ◦ Delivery date Account assignment (if required) ◦ Cost center, ◦ General Ledger accounts, ◦ Project number, etc. Check data January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 6 Quotation Process 1. 2. 3. 4. 5. Request for Quotation (RFQ) Maintaining a Quotation Comparison of Prices Creating a Contract Creating a Release Order January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 7 Request for Quotation (RFQ) Is an invitation to a vendor to indicate their terms and conditions (in particular, their price) for the supply of a material (or service) by submitting a quotation Identifies the required material, quantity, and delivery dates January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 8 Request for Quotation Request for Quotation An RFQ is an invitation to a vendor by a Purchasing Organization to submit a bid for the supply of materials or services ◦ The accepted quotations will generate Purchasing Information Records ◦ Perform Quotation Price Comparisons ◦ Finally Select a Quotation P.O. 45…12 Quote Vendor 1 Pur Req. generate RFQ Vendor 2 Quote Vendor 3 Quote Eval. Reject Letter Maintaining a Quotation 1. 2. 3. 4. Enter each vendor's quotation in the associated Request for Quotation (RFQ) Compare prices using the price comparison list Store the best quote in an info record Optionally, send rejection letters to the losing bidders January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 10 10 Vendor Evaluation Vendor Evaluation Evaluate vendors (for sourcing) with respect to: Price ◦ Price Level ◦ Price History Quality ◦ Goods Receipt ◦ Quality Audit ◦ Complaints/Rejection level Delivery performance ◦ On­time delivery ◦ Quantity reliability ◦ Compliance with shipping instructions ◦ Confirmation Date A scoring range (1 ­100) may be used with weight factors to score each identified/qualified vendor. Comparison of Prices Compares the prices from all quotations from the competitive bidding process using a price comparison list Ranks the quotations in the comparison list by item from the lowest to highest price January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 12 12 Creating a Release Order Release order is a purchase order that references a contract; it specifies: ◦ Number of the contract ◦ Quantity to be released ◦ Delivery date When a release order is created, release order documentation is automatically updated against the contract (including open quantity, quantity released to date, total value) January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 13 13 Creating a Release Order (2) The vendor data, price data, and the delivery terms and conditions are copied directly to the release order Release orders can be created from a proposed purchase requisition generated off a MRP run (net requirements) ◦ Automatically ◦ Manually ◦ January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 14 14 Purchase Orders Purchase Orders are: ◦ a formal request to a vendor to provide materials or services ◦ An internal planning and tracking tool Purchase Orders specify: ◦ Vendor ◦ Material and/or service ◦ Quantity and price ◦ Delivery dates ◦ Terms of payment A purchase order can be for variety of purposes: ◦ Standard Stock or Consumption ◦ Services ◦ Subcontracting ◦ Consignment January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 15 15 Procurement Processes SAP Implementation EGN 5620 Enterprise Systems Configuration (Professional MSEM) Fall, 2011 Business Process Integration FI MM SD Data Master Rules F I M S D IF FI M M MM S D SD January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 17 17 Business Process Integration Purchase Process January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 18 18 Rules (review) Rules define the parameters for Master Data and Transactions Rules determine functionality for Master Data and Transactions Rules are relatively fixed Rules change, when corporate policy changes January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 19 19 Rules (review) Material Management • Fiscal Periods • Account Groups • Material Types • Plant Parameters • Purc./Rec./Inv. Tolerances • Automatic Account Assignment • Reservations • Material Group • Loading Group January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2007. All rights reserved. rights 20 Transaction Data (review) Transaction data are application data; each transaction is dynamic and unique, unlike master data and organization data which do not change very often. Transaction data use (is comprised of) organization data, master data, and rules Transaction data includes internal and external exchanges that describe business activities January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 21 21 Purchasing in SAP R/3 (review) The purchasing process resides in the Materials Management (MM) module of SAP R/3 as well as the Finance (FI) module Master data for the purchasing process exists in the (MM) and (FI) modules The purchasing process may interface with the modules below: ◦ Production Planning (to plan for production), ◦ Quality Management (to check quality at receipt), and ◦ Warehouse Management (to put away) January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 22 22 Procurement Process (Procure-to-Pay) Purchase Requisition Purchase Order Notify Vendor 3-Way Match Payment to Vendor Invoice Receipt January 2008 January Vendor Shipment Goods Receipt © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights SAP reserved. 23 23 Create & Save Purchase Order Create & Save Purchase Order Purchase Order in SAP Purchase Three sections in a purchase order: ◦ Header ◦ Item overview ◦ Line item Purchase Order Structure Purchase Order Structure Header Vendor Purch. Org. Purch. Org. group Company Date PO Price Item Overview Purchase Order 45......01 Materials Quantities Delivery Date Price/UofM Currency Plant Line Item PO History Line Price Delivery Schedule Tolerances Storage Purchase Order Structure: Header Header ­ information specific to the entire purchase order ◦Vendor ◦Purchase organization data ◦Condition (total purchase price) ◦Partner ◦Payment process ◦Status January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 27 27 Purchase Order Structure: Line Items Line item – purchasing information required for the item ◦ Item category ◦ Material ID and description ◦ Material or service quantity ◦ Delivery date ◦ Net price ◦ Currency ◦ Plant ◦ Storage location ◦ Measurement unit January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 28 28 Purchase Order Structure: Item Details ◦Material data for the item ◦Quantity/weight ◦Delivery schedule ◦Invoice ◦Conditions (Purchasing price for the item) ◦Delivery address ◦Confirmation ◦Condition control ◦Subcontracting January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 29 29 Purchase Order: Output Format Printed and mailed E­mail Electronic Data Interchange (EDI) Faxed (hardcopy or electronic) eXtensible Markup Language (XML) January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 30 30 Search Purchase Orders You can search for the purchase order number with ◦ Material number, ◦ Vendor number, etc. January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 31 31 MM: Goods Receipt MM: Goods Receipt Notify Vendor Purchase Order 45......01 Vendor Receipt Shipment Goods Receipt – Movement Types Movement types ­ stock transactions ◦ Goods receipt (from a vendor or production) ◦ Goods issue (to customer or production/use) ◦ Stock transfer (from one SL to another) Movement type determines which ◦ Quantity fields are updated ◦ Stock types are updated ◦ General Ledger (G/L) stock or consumption accounts are updated ◦ Fields are displayed during document entry January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 33 33 Material Movements Material Movements When a goods movement takes place it is represented by a Movement Type Movement types are three­digit keys used to represent a movement of goods 101 – goods receipt into warehouse 102 ­ reversal of goods receipt for purchase order into warehouse/stores 103 – goods receipt into GR blocked stock 122 – return delivery to vendor 501 ­ receipt w/o purchase order into unrestricted­use stock Goods Receipt Goods Receipt Goods receipt is a goods movement activity in which we accept goods into our system. If materials are delivered against a purchase order we will reference that order and SAP can: ◦ retrieve data from the PO for us to verify: material, quantity, and so on ◦ Update inventory G/L account automatically ◦ Update purchase order history with the receipt ◦ Update physical inventory Goods Receipt – Destinations Goods receipt into (destined for) the warehouse ◦ SAP increases total valuated stock by the delivered quantity. ◦ SAP updates the stock value at the same time. Goods receipt into consumption ◦ SAP only updates the consumption statistics in the material master record ◦ SAP does not update the consumption statistics if the goods movement posting uses the special stock types: sales order stock type and project stock. Goods receipt posted into blocked stock ◦ SAP maintains the same stock level. ◦ SAP only records it in good receipt block stock of the purchase order history. Note: ◦ If goods receipt is being posted into a storage location where data does not yet exist for the material, SAP automatically creates a storage location data in the material master record. January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 36 36 Goods Receipt – Effects Purchase Order (PO) history and Purchase Order (PO) updated Material Master ­ stock and value updated Notification of goods receipt issued (optional) Transfer request to the Warehouse Management module (if active) January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 37 37 Goods Receipt – Effects (continued) Material and financial documents created and/or updated Stock and consumption accounts updated Inspection notification in the Quality Management (QM) module ­ if active January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 38 38 Goods Receipt – Account Postings Inventory account is debited at standard price Goods Receipt/Inventory Receipt (GR/IR) clearing account is credited at purchase order price Price difference account is debited (credited) with difference between standard price and purchase order price January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 39 39 Goods Receipt – Account posting Goods Receipt – Account posting Purchase requisition Purchase order Goods receipt Inventory (account) Dr Cr $100 No impact on Financial Accounting (FI) Materials Management (MM) and Financial Accounting (FI) via automatic account assignment GR / IR Dr Cr $100 Invoice Receipt Process Tasks: Engage in 3­way match to validate the invoice. Enter PO number to retrieve the PO and view (verify) ◦ Open dollar amount. ◦ Quantity, ◦ Price, ◦ receiving date, ◦ Vendor name Enter the invoice number and the dollar amount to be paid Simulate invoice posting Post the invoice in SAP January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 41 41 3­Way Match for Payment Purchase Order Payment Program Invoice Receipt Debit Credit Verification Goods Receipt January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 42 42 Invoice Processing ­ 3­Way Match Invoice Processing ­ 3­Way Match Incoming Invoices are reference against a Purchase Order to verify their content, prices, and arithmetic. If discrepancies arise between the purchase order or goods receipt and the invoice the system with generate a warning or an error ◦ Depending on system configuration the difference could cause the system to Block the Invoice Purchase order - Target quantity - Target price - Invoice receipt - Actual price - Goods receipt - Actual quantity - Invoice Verification ­ 3­way match Matches the vendor’s invoice to the purchase order and the goods receipt (3rd part of 3­way match) Matches price and quantity Updates the purchase order and its history Updates accounting information January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 44 44 Financial effects of Invoice Posting Financial effects of Invoice Posting When an invoice is posted, SAP shifts the liability ◦ From the Goods Receipt/Invoice Receipt account (for the purchase order) ◦ To the vendor account Upon posting, SAP: ◦ Updates the Purchase Order ◦ Updates the Material Master ◦ Creates an Accounting Document ◦ Initiates the payment process within Financial Accounting Accounts Payable Integration MM Materials Mgmt. Goods Receipt Invoice Receipt FI Materials Mgmt. FI Financial Accounting MM Financial Accounting Increase to Inventory (debit) Increase to GR/IR (credit) FI Increase to A/P (vendor’s credit) Increase to GR/IR (debit) Financial Accounting Balance Sheet January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 46 46 Invoice Receipt Reconciliation Invoice Receipt Reconciliation Account Amount owed is assigned and transferred to vendor account payable Invoice receipt GR / IR Vendor Dr Dr $100 Cr Cr $100 A/P Dr automatic posting Cr $100 Accounts Payable Accounts Payable Reconciliation Account Vendor 100234 200 Vendor 100435 250 Accounts Payable (AP) Reconciliation 950 Vendor 100621 100 Vendor 100846 400 January 2008 © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 48 48 Invoice Payment Selects invoices for payment based on the payment terms in the vendor master or purchase order Generates payment for released invoices Updates accounting information January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 49 49 Accounts Payable Settlement Process Determines: ◦ Which open items to be paid ◦ When they will be paid ◦ Which bank to make payment ◦ Payment medium ◦ Who will get paid Payment process creates a financial accounting document to record the transaction January 2008 January © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 50 50 Payment to Vendor Payment to Vendor Can be done automatically or manually ◦ Post Outgoing Payment vs. Payment Program Elements of the Payment Transaction: ◦ Payment Method ◦ Bank from which they get paid ◦ Items to be Paid ◦ Calculate Payment Amount ◦ Print Payment Medium Process will create a financial accounting document to record the transaction Vendor Payment Vendor Payment Amount owed is paid to vendor and account payable is reduced Bank Vendor’s Dr $100 A/P Dr Cr Cr $100 automatic posting Bank’s Dr Cr $100 (FI – MM) Integration Points (FI – MM) Integration Points Goods Receipt Invoice Receipt Payment Program Vendor Dr Inventory Dr $100 GR / IR Cr Dr $100 Cr Cr $100 $100 Bank Dr $100 Cr $100 AP Dr $100 automatic posting Cr $100 Procurement Processes PEN, Inc. EGN 5620 Enterprise Systems Configuration Fall, 2011 700 Cxxx Pxxx xxx xxx 3 Check PO History (ME23) Check PO History (ME23) January 2008 © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 56 56 Check PO History (continued) Check PO History (continued) January 2008 © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 57 57 Check Inventory Check Inventory January 2008 © SAP AG - University Alliances and SAP The Rushmore Group, LLC 2008. All rights reserved. 58 58 Exercises: Exercises: 100. Create a Purchase order for Slick Pens 101. Create a purchase order for premier pens 102. Create a purchase order for Promotions Ltd. 103. Create receipts for the purchase orders 104. Create an invoice receipts from vendors 105. Post payments to vendors 106. Display vendor line items 107. Create purchase outline agreement (contract) for Stock item ...
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This note was uploaded on 12/03/2011 for the course EGN 5620 taught by Professor Chen during the Fall '11 term at FIU.

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