In-Depth Notes on the Procurement Process in SAP ERP

Procurement Processes Overview

• Definition: Acquisition of materials and services from vendors.
• Categories:
  • Materials: raw materials, trading goods, supplies.
  • Services: consulting, janitorial, landscaping.
• Vendor Relationships: Typically based on predetermined agreements.
• Key Terms:
  • Purchase requisition
  • Purchase order
  • Goods receipt
  • Invoice verification
  • Vendor payment
• Controls: Configurations to minimize costs and regulate who can create purchase orders, approvals required, and limits on vendors and quantities.

Purchase Requisition

• Purpose: Formal request to buy goods or services.
• Details:
  • What to buy
  • Quantities needed
  • Delivery timelines
• Creation:
  • Automatically generated by other business processes.
  • Can also be created manually.

Purchase Order

• Role: Authorizes purchases based on requisitions or created independently.
• Details:
  • Items to procure, quantities, source, costs, terms and conditions.
• Outcomes: Establishes a commitment for procurement.

Goods Receipt

• Function: Record when materials are received.
• Verification: Check for order accuracy in quality and quantity.
• Impacts: Updates inventory counts and financial accounting (FI) and management accounting (CO) documents.

Invoice Verification

• Process: Ensures that invoices match goods received and purchase orders.
• Matching Types:
  • Two-way match (Invoice vs. Purchase Order)
  • Three-way match (Invoice vs. Purchase Order and Goods Receipt)
• Outcome: Generates financial documents and updates ledgers.

Vendor Payment

• Calculation: Amount to be paid is computed.
• Outcome: Updates FI documents and potentially CO documents depending on the transaction.

Enterprise Structure

• Components:
  • Client: highest organizational level in SAP.
  • Company Code: accounting unit.
  • Plant: Facility where business activities happen, impacts planning and execution.
  • Purchasing Organization: Responsible for procurement.
  • Purchasing Group: Operational focus on purchasing tasks.
  • Storage Locations: Areas designated for storing materials.

Business Rules and Parameters

• Types of Parameters:
  • Tax-related
  • Material types classification
  • Automatic account determination parameters for financial postings.
• Tax Jurisdictions: Defines tax authorities and procedures for tax calculations based on shipping locations.

Master Data

• Components:
  • Material Master: Key data includes dimensions, measurements, purchasing details, pricing models, and valuation methods.
  • Vendor Master: Contains vendor-specific data.
  • Pricing Conditions: Includes pricing references and agreements.
  • Purchasing Info Records: History of past purchases with specific vendors.

Automatic Account Determination

• Purpose: To ensure correct posting to financial accounts during procurement processes.
• Processes Involved:
  • Goods receipt
  • Invoice verification
  • Vendor payments

Testing

• Focus Areas:
  • Purchase requisition behavior
  • Purchase order processing
  • Goods receipt outcomes
  • Invoice verification efficiency
  • Vendor payment execution

Variance Management

• Tolerance Settings: Determine acceptable variances for purchase price differences, goods receipts, and invoices.
• Processing Variations: Adjustments based on set tolerances impacting invoice payments as well as pending transactions.

Vendor Payment Tolerances

• Group Tolerances: Vendors can be grouped based on similar tolerance limits for effective payment processing.
• Processing Differences: Managed automatically via account determination or may require manual review for discrepancies beyond established limits.