What is SAP digital strategy to improve the procurement to pay process in an organization and how it can impact its financials.
tome 83
lecture_5.pptxLecture 5 Procurement to Pay (PTP)
FIN419
Learning Objectives
Understand the elements involved on the Procurement to Pay (PTP) process
Understand the goal of Purchasing (PU) and Inventory Management (IM)
Understand the PU elements involved on the PTP process
Understand the IM elements involved on the PTP process
Understand the FI elements involved on the PTP process
Understand the integration points between PU, IMWM and FICO
2
Procurement to Pay (PTP) Process
Material requisition
Internal request of needed material
Sourcing
Identification of approved sources of material
Order (no financial impact)
Formal request from a purchasing organization to a supplier for needed material
Good receipt (financial impact)
Checks the quantity of goods received against the order quantity.
Invoice receipt (financial impact)
Three way match between purchase order, goods receipt, and invoice.
Payment (financial impact)
3
Order processing
Inventory receipt
Invoice Receipt
Payment
PO requisition
Sourcing
Procurement to Pay (PTP) Organizational Structure
Client
An independent environment in the system
Company Code
Represents an independent legal accounting unit
Balanced set of books, as required by law, are prepared at this level
A client may have more than one company code
Plant
The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning.
Manufacturing, distribution, purchasing or maintenance facility
Storage location
An organizational unit allowing differentiation between the various stocks of a material in a plant
Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
Procurement to Pay (PTP) Organizational Structure (Cont)
Purchasing Organization
Unit within the enterprise that performs strategic activities related to purchasing for one or more plants.
Evaluates vendors
Identify vendors
Negotiates contracts and agreements, pricing and other terms
An enterprise may have more one or more purchasing organizations
Types
Enterprise level (central)
Company code (by legal entity)
Plant level (by site)
Purchasing group
Key that represents the buyer or group of buyers who are responsible for certain purchasing activities
Channel of communication for vendors
Procurement to Pay (PTP) Organizational Structure (Cont)
Types of Purchasing orgs
Central purchasing
Company code specific
Plant specific
Procurement to Pay (PTP) Global Bike Material Management Structure
Two company codes
Two Purchasing org
Five plants
3 under GBI
2 under Global Bike Germany
Multiple storage locations that determine inventory status
Procurement to Pay (PTP) Reflection
What of the tree purchase org configuration options do you think Global Bike has?
Why do you think GBI decided to implement this option?
Procurement to Pay Master Data Summary
The procurement to pay (PTP) involves elements of the material management (PU and IM) and finance. This includes the following master data
Material Master controls the material (Raw, WIP, finished goods)
Vendor master. Vendor purchasing data and AP ledger
Purchasing Info record. Vendor price and conditions by material
Source list. List of approved vendors
Purchasing (PU) Sub-modules
Part of Logistics/Material Management/Purchasing
Purchase order
Purchase requisition
Outline agreement
RFQ/Quotation
Master data
Purchasing (PU) Introduction
Purchasing contains the central elements of the procurement activates within the company from gathering requirements to the end of the procurement cycle and allow to control the largest part of the procurement to pay (PTP) process.
Purchasing
Requirements
Procurement
Quote
Purchasing (PU) Transactions
XK01 Create Vendor Master
ME11 Create info record
ME51N Create Purchase Requisition
ME21N Create Purchase Order
ME31L Create Scheduling agreement (Contract)
Purchasing (PU) Vendor Master (XK01)
Vendor Master Account is data needed to conduct business with vendors and execute transactions related with the purchasing process
General (Client)
Purchasing org
Account
Name
Address
Payment term
Salesman’ name
Partner function
Purchasing currency
Price determination
Purchasing and Inventory Management (PU& IM) Material Master Views
Basic
Sales (SD)
Purchasing
Plant
Forecast
Storage
Quality
Accounting
Controlling
Purchasing and Inventory Management Material Master
Contains all of the key information a company needs to manage a material within its organization.
The material master defines, among other things, how a product is sold, manufactured, purchased, inventoried and costed.
Information is grouped into views that are organized by business function.
The majority of views of master data are stored at the plant level.
Basic Data
Material
Purchasing & Material Management
Unit of measure
Material group
Description
Purchasing
MRP1, 2 and 3
Purchasing group
Sales org data 1, 2 and general
Storage 1
Purchasing (PU) Info record(ME11)
Contains the relationship between a vendor and a material containing data such us current or future prices or conditions, lead times, .
General (Client)
Purchasing org & plant
Account
Name
Address
Purchasing org
Control data
Conditions
Lead times
Shipping instructions
Tax code
Price and validities
Inco-terms
Purchasing (PU) Info record
Allows buyers to quickly determine: Which vendors have offered or supplied specific materials
Info Records contain: Data on pricing and conditions
Last purchase order
Tolerance limits for deliveries
Specific lead times
Availability periods
Vendor Evaluation data
Serves as default information for Purchase Orders
Purchasing (PU) Sourcing list (ME01)
Sourcing is the assignment of a source of supply to a requisition. It specifies the allowed sources of material for certain plant for a predefined period.
General
Purchasing
Material
Validity
Plant
Vendor
Purchasing org
Purchasing (PU) Sourcing Types
Internal.
Within the enterprise (STO)
Source list
Record with list of allowed vendors
Outline agreement
Long term purchasing agreements
Contracts
Scheduling agreements
Request for Quote (RFQ)
Source
Internal STO
External source list
External agreement
External RFQ
Purchasing (PU) Purchase Requisition
Internal Document instructing the purchasing department to request a specific good or service for a specified time
Requisitions can be created two ways:
Directly - Manually person creating determines: what, how much, and when
Indirectly - Automatically MRP, Production Orders, Maintenance Orders, Sales Orders
Enter/generation of requisition
Shopping cart
Approval
PO creation
Purchasing (PU) Purchase Requisition(ME51N)
Header data
Reason for the request
Item details
Material
Quantity
Delivery date
Plant
Storage location
Purchasing (PU) Purchase Order
Is a formal request to a vendor for a specific material or service under agreed stated conditions
Can be created manually
Reference another purchase order
Reference a purchase requisition
Reference a RFQ/Quotation
Without a reference
Can be created automatically
Types of purchase or orders
Standard (stock)
Services
Subcontracting
Third-party
Consignment
The PO type is identified in the item category
Purchasing (PU) Purchase Order(ME21N)
Header data
Purchase org
Purchase group
Company code
Others
Item details
Item category
Material
Quantity
Delivery date
Plant
Storage location
Purchasing (PU) Scheduling Agreement
One of the outline agreement options of source
Long term purchasing agreement where total quantity of materials is spread over a certain period in a delivery schedule, consisting of lines items indicating quantities and their planned delivery date
Determine requirements (MRP)
Scheduling agreement
Purchase order processing
Purchasing (PU) Scheduling Agreement (ME31L)
Header
Vendor
Agreement type and date
Purchasing org
Payment terms
Items details
Material
Quantity
Delivery date
Plant
Storage location
Purchasing (PU) Reflection
Why purchase requisitions are important for internal control?
What is the difference between a Purchase order and an scheduling agreement and when to use each one?
Why is important to have a vendor source list?
Inventory Management (IM) Introduction
Inventory and Warehouse management deals with placing and handling stock received from vendors in the correct place within the company’s premises and plays a relevant element in the procurement to pay (PTP) process.
Inventory control
Stock
Purchase
GL
Inventory Management (IM) Transactions
MM01 Material Master record
MIGO Good Receipts
MB03 Display Material Document
Inventory Management (IM) Goods Receipts
Goods movement in which we accept goods into our system
If material is delivered against a PO we will reference the PO
Review we received what we order
Material
Quantity
Updates physical inventory and create a history track within the PO
PO
Vendor notification
Vendor
Shipment
Goods receipts
Inventory Management (IM) Material Movements Types
It is a three digit key that represents a movement of goods
Examples of movement types
101, goods receipt into warehouse
103, good receipt into blocked stock
122, return goods to vendor
231, consumption for a sales order
Inventory Management (IM) Goods Receipts
Event series during a goods receipt
Material document
Stock quantities and values are updated
Accounting document
Inventory updates from price on material master
GRIR updates from PO reference
Any variance goes to PPV
PO is updated
Output generated
Material document
Inventory valuation
Accounting document
PO History
Transaction output
Inventory Management (IM) Goods Receipts (MIGO)
Type of movement
Purchasing order type
Purchasing document
Plant
Date
Quantity received
Inventory Management (IM) Display Material Document(MIGO)
Material document or
Material document list
Material
Plant
Vendor
Movement type
Logistics Invoice Verification (LIV) Transactions
MIRO Invoice Receipt
Logistics Invoice Verification (LIV) Invoice Receipt
Processing of vendor invoices against a purchase order or scheduling agreement and recognize an account payable balance with the vendor
Three way match
Purchase order
Goods receipt
Vendor invoice
If discrepancies happens during three way match, depending of tolerance configured in the system, the invoice will be block for investigation.
Logistics Invoice Verification (LIV) Invoice Receipt
Event series during a goods receipt
Material document
PO is updated
Accounting document
GRIR updates from PO reference
AP updates from invoice reference
Any variance goes to PPV
Material document
PO History
Accounting document
Logistics Invoice Verification (LIV) Invoice Receipt
Select company code
Invoice date
Posting date
Amount and currency
Tax code
Reference and text
Purchasing document
Inventory Management & Logistics Invoice (IM & LIV) Reflection
What is the primarily goal of goods receipt in SAP?
What do you think is the financial impact of a goods receipt?
What is the purpose of the account Goods Receipts/Invoice Receive (GRIR)?
What do you think is the financial impact of invoice receipt?
What is the difference between FI-AP and LIV?
Why is important to analyze purchase price variances?
Accounts Payable (FI-AP) Outgoing Payment
Can be done automatically or manually
Post outgoing (F-53)
Payment program (F110)
Payments elements
Payment method
Bank from which we pay
Invoices to be paid
Payments amounts
Payment medium
Checks, wires, etc
Event series during a goods receipt
Accounting document
Vendor references invoice
Bank reference payment
PO is updated
Output generated
Accounts Payable Outgoing Payments (F-53)
Company code
Posting & document date
Document type
Currency
Bank Data (credit)
Value Data (payment date)
Vendor Data (debit)
Additional selections for line items identification
40
Accounts Payable Mass Payments (F110)
Run date
Payment ID
Parameters
Posting date
Doc entry date reference
Company code
Payment terms
Next payment
Vendor range
Select printout/data medium
41
Procurement to Pay (PTP) Integration PU, IM, LIV & FI-AP
Goods receipts
Dr Inventory based on standard price
Cr GRIR based on PO
Invoice receipt
Dr GRIR based on PO
Cr Vendor based on invoice
Payment
Dr Vendor based on invoice
Cr Bank based on payment
Procurement to Pay (PTP) SAP Practice
Create vendor
RFQ
Evaluate vendors
Create PO from RFQ
Goods receipt
Create material
Purchase requisition
Invoice receipt
Post payment
