Blog
Procurement Cycle In SAP MM
22 September, 2020
Related Blogs
PROCUREMENT CYCLE
1. Determination of Requirements
The material requirements are identified by the user departments or material planning & control
The requirement passed manually to the purchasing department [In case if you set MRP procedure for material in the material master R/3 system will automatically generate a purchasing requisition]
2. Source Determination
Identifies the potential source of supply
This is based on:
a) Past Order
b) existing long term purchasing requirement
3. Vendor Selection
The selection of vendors by comparing the prices of various quotations
Sending the rejection letters for the non-selected Vendors.
4. Purchase Order processing
Creating Purchase orders by including the Vendor schedule agreements and contracts
5. PO Monitoring
Sending the reminders to Vendors in pre-defined intervals
6. Goods Receipt & Inventory Management
Confirming the receipts of the Goods
Compare the Goods receipts quantities with the PO quantities.
Inform the limit over or under deliveries of order goods.
7. Invoice Verification
Invoices are checked for the accuracy of prices and contents
Noting of quantity and price variances based on purchase order & goods receipt data
8. Payment processing
Find accounting for vendor payments
Inclined to build a profession as SAP MM Developer? Then here is the blog post on, explore "SAP MM Training"
Purchasing Document
A purchasing document is used for purchasing for materials and services Structure of the Purchasing Document
It is common for all Purchasing documents. In earlier versions (i.e. before 4.6c) below three segments are as three screens.
In the latest versions, all three screen information is in single screen information with a tabular form called Enjoy Transaction (It ends with ‘n’ in Transaction code)
All documents are subject to the release of electronic approval
Confirmation settings for all documents are the same.
Types of Purchasing Documents
1. Internal Purchasing Documents
Purchase Requisition (PR) is an internal purchasing document
2. External Purchasing Documents
i) Request for Quotation (RFQ)
ii) Quotation
iii) Purchase Order (PO)
iv) Contract
v) Schedule Agreement (SA)
Purchase Requisition (PR)
It is a request to procure a certain quantity of material at a certain point of time/date.
It is an Internal Document and not used outside of the Enterprise.
Purchase Requisitions can be created:
- Manually
- fill the data manually
- By MRP
If you set up an MRP procedure for a material master the system automatically generates a PR.
Purchase Requisition does not have Header and Schedule lines.
There is no vendor detail to be filled-in in PR.
In PR you can indent more than one item or more than one plant
It does not influence financial updating.
When the system creates a purchase requisition automatically, a user program (MRP or order management) determines the material, PO quantity, and delivery date. If required the Purchase Requisition is automatically assigned to an account.
Purchasing converts the PR into a Request for Quotation, Purchase Order, or Out-line Agreement.
The tables related to PR are: EBAN (PR), EBKN (PR a/c assignment)
Some of the fields in these tables are:
EBAN EBKN
BANFN – PR Number BANFN – PR Number
BNFPO – Item number of PR BNFPO – Item number of PR
BSART – PR doc type ZEBKN – Prog. A/c assignment.
EKORG – Purchase Organization
MENG -- PR Quantity
MATNR -- Material Number
WERKS – Plant
IMG setting for Purchasing Requisition
Define Number Ranges (OMH7)
SPRO -> Material Management -> Purchasing Requisition ->Define Number Ranges
Define Document Types (SPRO)
SPRO -> Material Management -> Purchasing Requisition ->Define Document Types Assign number range to document type
Release Procedure
SPRO -> Material Management -> Purchasing Requisition ->Release Procedure
- The procedure with Classification - Edit Characteristics (CT04)
- Edit Classes (CL02)
- Set up Procedure with Classification (SPRO)
- Check Release Strategies (OMGQCK)
Related Articles of SAP MM Procurement