Purchasing

The Purchasing component has the following tasks:

External procurement of materials and services
Determination of possible sources of supply for a
requirement identified by the materials planning and
control system or arising directly within a user
department
Monitoring of deliveries from and payments to vendors

Determination
of
Requirements
Source
Determination

Invoice
Verification

GR & Inventory
Management

PROCUREMENT
WORKFLOW

Purchase
Order
Follow-Up

Purchase
Order
Processing

Vendor
Selection &
Comparison of
Quotations

Purchasing: Documents
A purchasing document is an instrument used by Purchasing to procure materials.
Request for quotation (RFQ)
Transmits a requirement defined in a requisition for a material or service to potential
vendors

Quotation
Contains a vendor's prices and conditions and is the basis for vendor selection.

Purchase order (PO)

The buying entitys request or instruction to a vendor to supply certain materials
formalizing a purchase transaction .

Contract
An "outline agreement", or a binding commitment to procure a certain material or service
from a vendor over a certain period of time.

Scheduling agreement
An "outline agreement" for the creation of delivery schedules specifying purchase
quantities, delivery dates, and possibly also precise times of delivery over a predefined
period .

Purchasing: Documents
Purchasing Info Record
The purchasing info record contains information on a specific
material and a vendor supplying the material.

Contents:
Data such as prices and conditions for the relevant purchasing organization
or plant.
Tolerance limits for over deliveries and under deliveries
Planned delivery time (lead time required by the vendor to deliver the
material)
Vendor evaluation data
Indicator showing whether the vendor counts as the regular vendor for the
material
Availability period during which the vendor can supply the material

Purchasing: Documents
Outline Purchase Agreement
An outline purchase agreement is a longer-term agreement between a
purchasing organization and a vendor regarding the supply of materials
within a certain period according to predefined terms and conditions.
Contracts
Scheduling agreements

Structure
Document header: contains information relating to the entire agreement.
For example, the vendor information and header conditions are in the
document header.
Items: containing the information specific to the relevant material.
oStatistics on ordering activities for the item
oQuantity or price of the item
oConditions, such as quantity discounts and surcharges

Purchasing: Documents
Contract
A contract is a type of outline purchase agreement against which
release orders (releases) can be issued for agreed materials or
services as and when required during a certain overall time-frame.
Quantity contracts
Use this type of contract if the total quantity to be ordered during the
validity period of the contract is known in advance. The contract is
regarded as fulfilled when release orders totaling a given quantity
have been issued.
Value contracts
Use this type of contract if the total value of all release orders issued
against the contract is not to exceed a certain predefined value. The
contract is regarded as fulfilled when release orders totaling a given
value have been issued.

Purchasing: Documents
Scheduling Agreement
A scheduling agreement is a form of outline purchase agreement under which
materials are procured on predetermined dates within a certain time period.
A scheduling agreemenmay be issued for the following procurement
types :
Standard
Subcontracting
Consignment
Stock transfer

Controls
With release documentation (document type LPA)
The release documentation allows you to display the releases transmitted
to a vendor over a certain period
Without release documentation (document type LP)
The schedule lines immediately have official character. This means that they
are transmitted to the vendor as soon as you save the schedule.

Purchasing: Documents
Purchase Requisitions
This component is used to notify Purchasing of requirements of
materials and keep track of such requirements.
Requisitions can be created
"Directly" means that someone from the requesting department enters a
purchase requisition manually.
"Indirectly" means initiated via another SAP component.
Via MRP - materials that need to be ordered on the basis of past consumption.
The order quantity and the delivery date are determined automatically.
Via Maintenance orders
Via Production orders e.g., Sub-contracting
Via Third Party Sales orders

It is an internal document: it is not used outside the enterprise.

Purchasing: Documents
Request for Quotation (RFQ) and Quotation
A request for quotation (RFQ) is an invitation extended to a vendor by a purchasing
org. to submit a quotation (bid) for the supply of materials or performance of services.
In contrast to other purchasing documents, you cannot enter an account
assignment in an RFQ.
A quotation is an offer by a vendor to a purchasing org. regarding the supply of
materials or performance of services subject to specified conditions.
The system can help you to choose which vendors are to receive an
RFQ if some or all of the information set out below is available:
Info records
Source list

Purchasing: Documents
Request for Quotation (RFQ) and Quotation

Structure -- RFQ
An RFQ consists of the RFQ header and the items.
RFQ header Contains general information on the RFQ, such as the
vendors address
Items
Contain the total quantities and delivery dates for the
materials or services specified in the RFQ.

In contrast to other purchasing documents, you

cannot enter an account assignment in an RFQ.

Purchasing: Documents
Request for Quotation (RFQ) and Quotation

Structure - QUOTATION
A quotation consists of items in which the total quantity and delivery
date of an offered material or service are specified.
An item of a quotation may contain a delivery schedule made up of a number
of schedule lines in which the total quantity is broken down into smaller
quantities to be delivered on the specified dates over a certain period.

Conditions can apply at various levels:

To the entire quotation
At item level, to the material to be supplied or to the planned
procurement in the case of services

Purchasing: Documents
Purchase Order
A purchase order is a formal request or instruction from a
purchasing organization to a vendor or a plant to supply
or provide a certain quantity of materials at or by a certain
point in time.

header and a number of items.

procurement types:

Standard

Subcontracting

Consignment

Stock transfer

External service

Purchasing: Documents
Purchase Order

Conditions
Conditions can apply at various levels:
to the entire purchase order
at item level, to the material / service
at service line level for individual services
(tasks or activities)

Purchasing: Documents
Purchase Order

Account Assignment
Costs can be apportioned among various Controlling
objects via the account assignment.

Vendor Confirmations
Vendors can issue confirmations to the relevant
purchasing organization indicating their compliance or
non-compliance with scheduled delivery dates.

Purchasing: Documents
Purchase Order
Item Category
determines whether a purchase order item

requires a material number

requires an account assignment

is to be placed in stock

requires a goods receipt (GR) and/or an invoice receipt (IR)

Purchasing: Documents
Purchase Order : Item Category
Item category

Characteristics

Standard

Goods and invoices can be received

Consignment

Material number necessary

No account assignments
Material kept in stock
GR necessary
Invoice receipt not necessary

Subcontracting

GR possible, IR necessary

Stock transfer

Material number necessary

GR necessary, No invoice receipt

Third-party

Account assignment necessary

GR and IR can take place

Limit

Account assignment, GR not necessary

IR necessary, Doc. type FO necessary

Purchasing: Documents
Purchase Order : Item Category
Standard
Standard are goods that are to be procured externally.
In this case, both goods and invoice receipts are possible.
Consignment
Consignment are items procured on a consignment basis.
Account assignments cannot be made for material ordered on
consignment.
Consignment stocks are managed separately and are not valuated
Subcontracting

Subcontracting - assemblies ordered from a subcontractor

(subcontractor requires items from you to produce such an assembly)
are entered as "material to be provided" items.

Purchasing: Documents
Purchase Order : Item Category
Stock Transfer
Stock transfer items occur in connection with stock transport
ordering.
Stock transport orders are a mechanism for the transfer of stock
from one plant to another (that is, transfers involving transport over
a longer distance).
Third-Party
Third-party - orders placed with vendors as part of a triangular
business deal,
latter to supply goods/ a service for a third party ( a customers).
The goods recipient is in this case the customer.
"Third-party" can be specified in the item category field of a
requisition or purchase order.

Purchasing: Documents
Purchase Order : Creating PO Zero Value

Create a zero-value purchase order for the material (i.e. a

PO with a price of "0").
This procedure can be used for articles supplied to you
free of charge (e.g. promotional materials or samples
ordered from a vendor).
You create a zero-value PO in the same way as you create
one that has a value. The following additional steps are
necessary.

Purchasing: Documents
Purchase Order : Creating PO Zero Value

1 Enter 0 as the price.

2 Branch to the item detail screen and cancel the IR
(invoice receipt) indicator.
3 Save the purchase order.
The system will not now accept any incoming
invoice relating to this purchase order.

Purchasing: Documents
Purchase Order : Account Assignment
Specification of the objects (e.g. cost center, sales order, project)
that are charged in the case of a purchase order for a material that
is intended for direct usage or consumption.
Account Assignment Category
The account assignment category determines:
The nature of the account assignment (cost center, sales order, and
so on)
Which accounts are to be charged when the incoming invoice or
goods receipt is posted
Which account assignment data you must provide

Purchasing: Documents
Purchase Order : Account Assignment
Description

Required account assignment data

Asset

Main asset number and sub-number

Order

Order and G/L account number

Production order

Production order number

Business process

Business process and G/L account number

Cost center

Cost center and G/L account number

Sales order

Sales order and G/L account number

Individual customer Sales order and G/L account number

requirement
Project

Project and G/L account number

Unknown

None

Purchasing: Documents
Purchase Order : Incoterms
Incoterms are internationally-recognized terms of delivery reflecting
the standards set by the International Chamber of Commerce (ICC).
Free on Board (FOB) means that seller fulfills his obligation to
deliver when the goods have passed over the ships rail at the
named port of shipment.

To enter the relevant Incoterm, choose

Header Details.
In the Incoterms field, you can specify two things.
In the first part, you enter the key for the Incoterm (for
example, FOB).
In the second, you can enter the destination (for example,
buyers plant).

Purchasing: Documents
Purchase Order : Shipping Instructions
These are the packing instructions the vendor has to comply
with when shipping the ordered materials.

Specifying Shipping Instructions

To enter shipping instructions, branch to the details screen enter the relevant
key in the field Shipping instr.

Item Details
Can also enter further shipping instructions in the header text

Header Texts Text overview.

Enter your instructions under the text type Shipping instructions.

Purchasing: Documents
Purchase Order : Controls
G/R-Based IV

In GR-based IV, the invoice relates not to the PO, but deliveries.

The reference document - the delivery note or the goods receipt document.

Advantage : when the order fulfilled by many partial deliveries.

Note the:

a goods receipt must occur before the invoice is entered in the system
the invoice may be entered with reference to a delivery note or a goods
receipt document

The relevant PO item must have the indicator for GR-based invoice verification.

Branch to the purchase order item detail screen.

Select the field GR-IV.