PROCUREMENT CYCLE In SAP MM
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 a material in the material master R/3 system will automatically generates 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 the Purchase orders by including the Vendor schedule agreements and contracts
5. PO Monitoring
• Sending the reminders to Vendors in a 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 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
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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 latest versions all three screen information is in a single screen information with 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 same.
Types of Purchasing Documents:
1. Internal Purchasing Documents
i) Purchase Requisition (PR) is an internal purchasing document
2. External Purchasing Documents
i) Request for Quotation (RFQ)
iii) Purchase Order (PO)
v) Schedule Agreement (SA)
Purchase Requisition (PR)
It is a request to procure certain quantity of material at certain point of time/date.
• It is an Internal Document and not used at out side of the Enterprise.
• Purchase Requisitions can be created
-Manually – fill the data manually
-By MRP — If you set up a 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 the 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 in to 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:
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
SPRO -> Material Management -> Purchasing Requisition ->Release Procedure
– Procedure with Classification
– Edit Characteristics (CT04)
– Edit Classes (CL02)
– Set up Procedure with Classification (SPRO)
– Check Release Strategies (OMGQCK)