BBP_ SQR_MM_Ver1.0

SOLUTION ONLINE (SAP ECC 6.0 Implementation)

Business Blueprint for Material Management

Version 1.0

“SOLUTION ONLINE ” - Business Blueprint

DOCUMENT APPROVALS

Name Responsibility Signature Date

Note: This Blue print is approved with the assumption that the processes listed in the document will be demonstrated by Optimal during Unit Test and / or Integration Testing. So any changes that may need to be done to meet Super requirements listed in URS2.


DOCUMENT INFORMATION

Project Name Document Name Document LocationSOLUTION ONLINE Blue Print

DOCUMENT HISTORY

Version

Document Name

Date Author Reviewed BY

Change Control

1.0 Blue print 19/06/2011 C.B.Nirala Altaf


Table Content

1 EXECUTIVE SUMMARY........................................................................................51.1 BACKGROUND.................................................................................................51.2 BUSINESS BLUEPRINT OVERVIEW...............................................................71.3 MODULE DETAILS...........................................................................................81.3.1 MODULE INTEGRATION.....................................................................................112 ORGANISATION STRUCTURE..........................................................................123 MASTER DATA....................................................................................................164 BUSINESS PROCESSES....................................................................................275 MODULE INTEGRATION....................................................................................626 STANDARD INFORMATION SYSTEM...............................................................637 DEVELOPMENTS CONSIDERATIONS...............................................................657.1 Data Conversion Considerations.....................................................................657.2 Interface Considerations..................................................................................657.3 Reporting Considerations................................................................................657.4 Form Considerations.......................................................................................657.5 Enhancement Considerations.........................................................................668 AUTHORISATION CONSIDERATION.................................................................669 Annexures.............................................................................................................66

1 EXECUTIVE SUMMARY


1.1 BACKGROUND Company Background

Super started out as a small scale pharmaceutical venture in 1958. It was a partnership effort of four young and enterprising men whose determination and passion saw it through the turmoil of the incipient period.By its fourth year,Super turned into a profit-making organization.Super is the market leader of Bangladesh pharmaceuticals market since 1985. It is also the leading exporter of pharmaceutical products from Bangladesh. It has many product lines including human medicine, agrovet products, Herbal products, APIs, and Pet Bottle. It has a UK MHRA certified plant which is capable of manufacturing world standard medicines. Most of its new facilities are built to meet the requirements of world regulatory bodies like UK MHRA, US FDA, TGA, etc.

Infrastructure & Facilities

Super Pharmaceuticals Ltd.It has two separate sites for formulations. Plants located in these sites are all GMP compliant.

Pabna site:This site started its operation in 1958. It is a GMP compliant manufacturing plant for the formulation of solid oral dosage forms like tablet, capsules etc., liquid oral dosage forms, inhaler, injectable, suppository, different topical preparations like powder, cream, ointment etc.

Pharmaceutical Bulk Manufacturing Division (Chemical Division): This unit produces basic raw materials for the finished products. Product line includes basic API and pellets. These materials are used for both own consumption and many leading pharmaceutical companies of the country.

PET Bottle Unit: Produces PET bottles which are used for own consumption and also for sale to other pharmaceutical companies.

Agrovet Division: Agrovet Division, animal health unit of Super Pharmaceuticals Ltd., started its operation in the veterinary market of Bangladesh in 1998. It offers a wide range of veterinary products covering all major therapeutic classes.It also deals with versatile imported products of world renowned global veterinary pharmaceuticals.

Pesticide Unit: Pesticide Division is dedicated to the diversification of agro business through agricultural chemicals and public health insecticides. The unit was established with the initial prospect of becoming the market leader in agrochemicals sector in Bangladesh. The main operations include repacking, selling and marketing of insecticides, fungicides, and herbicides.

Dhaka Site:This site was constructed from green field site under the consultancy and supervision of world's renowned pharmaceutical consultants Bovis Lend Lease, of UK & Tpro (Telester Projects), Spain. The commercial production has started from 2001.All operations are carried out in a closed, contained & integrated system. All the processes are validated as per cGMP.

Dhaka Site consists of the following separate Manufacturing UnitsFormulation Unit - 1 (General Production Building) which is UK MHRA approved since 2007 & manufactures solid oral dosage forms.Formulation Unit - 2 (Small Volume Parenteral & Ophthalmic preparation).Formulation Unit - 3 is a dedicated facility for Insulin preparations.

Super Cephalosporins Ltd.Dedicated and state-of-the-art Cephalosporins manufacturing facility is built as per the requirements of international GMP standards like EMEA, TGA Australia, UK MHRA and US


FDA. This world class facility manufactures Cephalosporin antibiotics in Tablets, Capsules, Powder for suspension & Injectable dosage forms.

Super Herbal & Neutraceuticals Ltd.Super Herbal & Nutraceuticals Ltd. started its operation in 2005 with an objective to manufacture and market scientific evidence based products of natural origin. The products are manufactured in a dedicated facility of international standard. Herbal medicines are well accepted form of medication in the developed world. Super's endeavor is to popularize the herbal products in the domestic market through its commitment to quality of raw material &manufacturing practice. Super also aims at developed countries for marketing herbal products.

Exports

Countries where we are exportingEurope: UKSouth America: SurinameAfrica: Comoros Islands, Kenya, Mauritius, Rwanda, Eritrea, Libya, Mozambique, Sierra Leone, Gambia, Malawi, Niger, Somalia, Sudan, Ghana, Mauritania, Nigeria, and TanzaniaCentral America: Belize, Costa Rica, and GuatemalaAsia: Afghanistan, Iraq, Nepal, The Philippines, Bhutan, Macau, Papua New Guinea, Uzbekistan, Cambodia, Malaysia, Sri Lanka, Vietnam, Hong Kong, Myanmar, Tajikistan, and Yemen.

Super Group of Companies

SUPER Today is more than just an organization, it is an institute.In a career spanning across five decades, it has pioneered the development of the local business in fields as diverse as Pharmaceuticals, Toiletries, Garments, Textile, Information Technology, Healthcare Products, Food Products, Hospital etc. with annual turnover above US $ 500 million and with a workforce more than 27000, Super today is a true icon in Bangladesh business sector.

Strength in DiversificationToday Super is a corporate giant active in divergent business and industrial fields. Its present unassailable status is the outcome of its successful diversification.

Super Pharmaceuticals Ltd.Super Cephalosporins Ltd.Super Textiles Ltd.Super Toiletries Ltd.Super Consumer Products Ltd.Super Knit Fabrics Ltd.

Super Fashions Ltd.Super Informatix Ltd.Super Hospitals Ltd.Super Agro Development & Processing Ltd.Super Herbal & Neutraceuticals Ltd.Super Health & Hygiene Products Ltd.


1.2 BUSINESS BLUEPRINT OVERVIEWThis document summarizes the findings of the Optimal consulting team and SUPER Core Team, with respects to SAP processes to be implemented in – SOLUTION ONLINE Project.

Following activities were carried out during different phases of the project.

URS 2 -User requirement Specification Mapping Sites Visit FRS – Functional requirement Specification Mapping GAP Analysis - (Refer page number 66(9.1)) Organization Structure Workshop Stakeholders (Core team)/Process Owners Workshop CSBP – Current state business process

The information was gathered through above activities carried out during different phases of projects i.e. reviews of business processes, business procedures, documentation and relevant reports

The purpose of Business Blueprint document is to prepare to move forward with the implementation of SAP ECC 6.0 system. At the conclusion of the blueprint, the Optimal consultants will determine the SAP functionality required to run the SUPER business.

The Blueprint and its associated appendices present a summarized perspective of all functional business processes that will be implemented. As such, the Blueprint document will serve - from this point forward the dual role of both official project scope as well as system acceptance criteria.

The body of this document describes the organizational structure, Master Data, and ECC 6.0 functional process flows to be implemented at SUPER. Generally, requirements that can be met using standard ECC 6.0 functionality through routine configuration tasks are not explicitly documented. However, certain key requirements are explicitly identified and summarized to highlight their importance to Optimal and to document the approach proposed to meet the requirement.

The project team has discussed this list with agreement on the approach going forward. Acceptable approaches may require:

Additional programming or technical effort Recognition and acceptance of procedural changes ("Workarounds") using standard

ECC 6.0 Additional resource commitment The deferral of a feature to a later phase like in DMS or SRM module. Simply the recognition and acceptance of a limitation – meaning, the recognition and

acceptance of a product gap, arising due to the non-availability of the feature in the SAP software.

Other section of the document summarizes Organization Structure, Master Data and Business Processes. These were used as per Value SAP Methodology to discuss the SUPER requirements in detail.

The Blueprint reiterates the ECC 6.0 organizational structures that have been identified and will serve as the basis for the initial configuration activities. No significant configuration and customization choices have been identified that will prevent the future implementation of additional capabilities within the ECC 6.0 environment.


The information gathered and documented in the Blueprint is sufficient for the team to go forward into the Realization phase. However, it is critical that both the Optimal and SUPER team agree on the scope of the project as presented in this document. Acceptance - by both teams - is required to move the project into the next phase.

1.3 MODULE DETAILS

MATERIALS MANAGEMENTMATERIALS MANAGEMENTMaterials Managements module is used for mapping the Business process used in SUPER for Procurement, Receipts, Storage, Issues, Transfer Posting, Stock transfer order,Subcontracting,Vendor evaluation Physical Inventory, Valuation of materials & Invoice verification.

Bin Locations are assigned to the Storage location and detailed process is given in Warehouse management. It is sub divided into

Purchasing Inventory Management Valuation Logistics Invoice Verification

Consumption-based planning:

The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions). This target is achieved by using various materials planning methods which each cover different procedures.In consumption-based planning, the following MRP procedures are available:

Re-order point planning MRP Plan

Following values are important for defining reorder point Safety stock Average consumption Replenishment lead time

Indirect materials will be procured externally with manual re-order point with Replenishment up to Maximum stock level, fixed lot size or lot to lot size.

Purchasing:

The tasks of the MM Purchasing component are as follows:

External procurement and special 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

Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly.


The typical procurement cycle for a service or material consists of the following phases:

1. Determination of Requirements

Materials requirements are identified either in the user departments or via materials planning and control. (This can cover both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and MRP on the basis of past usage are important aspects of the latter.) You can create purchase requisitions manually or they can be generated automatically by the materials planning and control system.

2. Source Determination

The Purchasing helps you identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs), which can be sent to vendors. Source determination consists of Source list, Purchase Info record and contract.

3. Vendor Selection and Comparison of Quotations

The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations. Rejection can be done in the system for reference.

4. Purchase Order Processing

The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, you can generate PO’s yourself or have the system generate them with respect to PR or RFQ. Contracts (in the SAP System, types of longer-term purchase agreement with the vendor) are also supported.

5. Goods Receiving and Inventory Management

Goods receiving personnel can confirm the receipt of goods simply by entering the PO number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. Based on the tolerance limits given in purchase order, the Goods receiving personnel can confirm the receipt of goods excess than the given in purchase order quantity. In case of vendor supplies the same material at free of cost, the ware house has to communicate to purchase department & the respective department has to create a separate line item with free indicator.

If the vendor requests the material during discrepancy, send the material through Return Delivery, material document reference.

6. Invoice Verification

The system supports the checking and matching of invoices. The accounts payable is notified of quantity and price variances because the system has access to PO and goods receipt data. This speeds the process of auditing and clearing invoices for payment.7. Payment

Payments are processed in FI in accounts payable module.8. Inventory Management:

This component deals with the following tasks.

Management of material stocks on quantity and value basis.


Planning, Entry, and Documentation of all Goods Movements. Carrying out the Physical Inventory.

Stock of materials that must be managed separately for reasons of ownership or location.

Material is procured from external or internal sources on the basis of the requirements determined by Material Requirements Planning or manual requisition. The delivery is entered in Inventory Management as a goods receipt. The material is stored (and managed under Inventory Management) until it is delivered to customers (Sales & Distribution), or is used for internal purposes (for example, for production).

During all transactions, Inventory Management accesses both master data (such as material master data) and transaction data (such as purchasing documents) shared by all Logistics components.

Material Valuation:

This includes the following application areas:

Purchasing. Inventory Management. Logistics Invoice Verification.

Material Valuation determines or records the stock value of a material. The stock value is calculated using the formula:

Stock value = stock quantity x material unit price

Thus, if the stock quantity or the material price changes, the stock value changes.

Material Valuation serves the following purposes:

Adjusting material price to market price. Performing Revaluation Balance sheet valuation

Logistics Invoice Verification:

It is carried out at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.

You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and values) suggested by the system with that in the invoice and making any necessary corrections. You then post the invoice.

Integration Points

1.3.1 MODULE INTEGRATION

Materials Management is integrated with all relevant modules.


Production Planning – Material requirement planning, Inventory management etc. Sales & Distribution –Delivery, availability check, Stock transfers etc. Finance/Controlling – Material Valuation, Vendor payments, Material costing etc. Quality Management – Quality inspection at Goods Receipt, In-process inspection etc. Project systems- Relevant to Material master & Projects. Plant Maintenance- Procurement of spare part and valuation of maintenance of equipment.

2 ORGANISATION STRUCTUREIn SAP, a company is made up of a variety of operational groups. These groups or organizational units can include sales, purchasing, accounting, distribution, and so forth. SAP ECC 6.0 System is designed to support each of these groups. Different software applications in the ECC 6.0 System can be linked to these organization units to create a completely integrated company structure.

Flexible organizational units in the ECC 6.0 System let you represent your organization with a comprehensive company structure. The combination and integration of organizational units form the legal and structural basis of a company. For example, organizational units can interface with materials management, sales and distribution, and financial accounting. Different application areas in the ECC 6.0 System can be linked through organizational units to create a completely integrated company structure.

Company CodeA Company code represents the SUPER legal entity and accounting unit where balance sheet and profit and loss statements are created.

There will be Three Company Codes representing SUPER

Company Code Description

1000 SPL- Super Pharmaceuticals Ltd.2000 SCL- Super Cephalosporins Ltd.

3000SHNL- Super herbal and Neutraceuticals Ltd.

Above Data is given by the FI team.Only for the reference I incorporate into it.Any changes will be taken care by FI team.

PlantPlant is an organizational unit within Logistics, serving to subdivide an enterprise according to procurement, maintenance, and materials planning. A plant is a place where either material is produced, or goods and services are provided. Material stocks are valued at the plant level.

Plants defined for SUPER

Company Code

Plant (max 4 char)

Name1

1000 1001 Dhaka Unit1000 1002 Pabna1000 1003 ChemDiv1000 1004 AG. Div


1000 1005 Pest. U1000 1006 P.B.D1000 1000 Corporate1000

1900Central Distribution

2000 2001 Kaliakoir2000 2000 Corporate3000 3001 Pabna3000 3000 Corporate3000

3900Central Distribution

Storage LocationsA Storage location is the place where stocks are physically kept within a plant. Stocks are managed only on a quantity basis and not on a value basis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant. The Storage locations defined for various plants are as follows:

List Of Storage LocationsPlant Storage Location Description1001 1 1004 RM & PPM- GPB

2 1005 FG & PM- GPB3 1006 RM- SVPO4 1007 FG & PM- SVPO5 1008 RM & PM- Insulin6 1009 RM Freeze-17 1010 RM Freeze-28 1011 RM Freeze-39 1012 FG- Insulin

10 1013 RM- MDI11 1014 FG & PM- MDI12 1015 Reject Store13 1016 Solvent Store14 1017 Consumable St.15 1018 General & Spares16 1019 A/C Store17 1020 Project18 1021 Reagent & CRS19 1022 Spare Parts20 1023 Ret. Sample21 1024 DU- Stability22 1025 GPB RM23 1026 GPB PM24 1027 GPB SFG 125 1028 GPB SFG 226 1029 GPB Change Part27 1030 SVPO RM


28 1031 SVPO PM29 1032 SVPO SFG30 1033 SVPO Change Part31 1034 Ins. RM32 1035 Ins. PM33 1036 Ins. SFG34 1037 Ins. Change Part35 1038 MDI RM36 1039 MDI PM37 1040 MDI SFG38 1041 MDI Change Part

Additional storage locations will be added if required.Below attached documents have all the details regarding Plants and Storage locations.

Naming will be given as per the document attached above.

Purchasing Organization

Purchasing Organization is an organizational unit within Logistics, subdividing an enterprise according to the requirements of Purchasing. A Purchasing Organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transactions.

Master data: For every new Purchasing Organization created, a new set of master data at the Purchasing Organizational level will have to be created for vendor masters, purchasing information records, source lists, and pricing information.

Maintenance of purchasing documents: Many purchasing documents are purchasing Organization-specific. This is because the Purchasing Organization is a header field in the following SAP transaction documents - Purchase order, Contract.

Pricing Flexibility: The Purchasing Organization is - of the influencing factors in determination of pricing schemes. Different Purchasing Organizations within SUPER may choose to allow different types of prices, discounts, delivery costs, etc.

Reporting Flexibility: In any business function, reporting is - of the basic business requirements. The choice of the Purchasing Organization will influence the ease with which reports are being generated. In particular, reports that provide information on collective activities/transactions will be greatly affected by this decision. With multiple Purchasing Organizations, consolidating of information by plant will be more straightforward as Purchasing Organizations are used as selection criteria.


Authorisation Control: The Purchasing Organization is - of the authorisation objects in SAP. The adoption of multiple Purchasing Organizations implies that authorisation can be enforced via the Purchasing Organization. If this is not the case, authorisation may have to be enforced via other alternatives such as Purchasing Groups.

Purchasing Organization (max 4 char) Pur. Organization description

1000 SPL -PURORG

2000 SCL-PURORG

3000 SHNL-PURORG

Purchase Org Structure Model :-

Purchasing Groups

Purchasing Group is a buyer or a group of buyers’ responsible for certain purchasing activities. It is also being used for configuring release strategies. The Purchasing Groups defined for are:

Purchasing group Description101 SCMD –Imp201 SCMD- Dom301 TSD-Engg401 TSD-Phar501 PBN-PUR601 DHU-PUR

We can create more Purchase group if required during realization phase.

Purchasing Org: 1000

Plant 1001 Plant 1002

Company Code: 1000


Below attached documents have the Complete Org. Structure of SUPER from Material Management Module.

3 MASTER DATA

Material Master

The Material master contains information on all the materials that a company procures or produces, stores, and sells. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records. A material master record contains data of a descriptive nature (such as size, dimension and weight) and data with a control function (such as Material type, MRP type and price control, Purchase group, Profit centre etc.). Description of the material is at Client level. In addition to this data, which can be directly maintained by the user, it also contains data that is automatically updated by the system (such as stock levels).

The material master is used by all components in SAP logistics. The integration of all material data in single database object eliminates redundant data storage. In the SAP Logistics System, the data contained in the material master is required, for example, for the following functions:

In Purchasing for ordering. In Inventory Management for goods movement postings and physical inventory. In Invoice Verification for posting vendor invoices. In Sales and Distribution for sales order processing. In Production Planning and Control for material requirements planning, scheduling, and

work scheduling.

Master data is common across all plants. There are no multi-lingual descriptions for the materials. In addition to the basic description, Purchase Order Text will be maintained for the materials. All the existing materials will be loaded to the SAP system; to avoid duplication of master data a central department will create new materials. SUPER will be operating in a multi-plant environment in SAP ECC 6.0. For common materials, master data in more than One plant will have to be maintained on an ongoing basis. The ownership and corresponding process for maintenance of these master data has to be finalized by SUPER, in the Realization Phase and documented.

When we create a material master record, it is required to classify the material according to industry sector and material type.

Industry

It is a factor determining the screen sequence and field selection in a material master record. Once assigned an industry sector to a material, it cannot change the industry sector again afterwards.


As per Super business the industry type is Pharmaceuticals.

Material Type

Material type groups’ together material with the same basic attributes, for example, raw materials, semi-finished products, or finished products. When creating a material master record, materials are assigned to a material type. Material type determines whether the material number can be assigned internally or externally and the number range from which the material number is drawn.

When a material master record is created, the material type determines:

Whether the material is intended for a specific purpose, for example, as a process material. Whether the material number can be assigned internally or externally. The number range from which the material number is taken. Which screens appear and in what sequence. Which departmental data is allowed to enter. What procurement type the material has; that is, whether it is manufactured in-house or

procured externally, or both.

Together with the plant, the material type determines the material's inventory management requirement; that is:

Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting.

In addition, the accounts affected by a material entering or leaving the Warehouse depend on the material type.

In SUPER, currently the Material Master is maintained independently at plant level and for the projects the materials are created as and when required. The concept of material type is followed to distinguish the material.

Users should ensure that non-valuated materials are neither produced nor purchased for stock. In all these cases it is advised to create them as non - valuated material.

The following Material types will be used in SUPER.


Serial No Material Type - Key Description

1 ZROH Raw materials

2 ZPAK Packaging materials

3 ZSFG Semi-finished materials

4 ZFET Finished products

5 ZERS Spares & Accessories

6 ZSAM Sample

7 ZSCR Scrap

8 ZCVL Construction Materials

9 ZNOV Non Valuated

Note:

Manufacturing part profile has to maintain for ZERS material type. Material type may be increase during realization phase will updated in next versions.

Material Numbering

For every material a material master record in the material master must exit. A material number uniquely identifies this record.

Material numbering will be *internally/externally generated according to the material type. However the existing stock numbers in the legacy system will be transferred to SAP as an Old material number in the material master record. The maximum number of characters will be *18. In the case of external if the number of characters is less, then the leading zeros will not be displayed and for internal number assignment system will use the number from the range allocated.

S.No.Material Type Description

Material Type

Number Range From

Number Range To

Internal / External Number range

1 Raw Materials ZROH 100000000 199999999 Internal2 Packaging Materials ZPAK 200000000 299999999 Internal3 Semi Finished Goods ZSFG 300000000 399999999 Internal4 Finished Goods ZFET 400000000 499999999 Internal5 Spares & Accessories ZERS 500000000 599999999 Internal6 Sample ZSAM 640000000 649999999 Internal7 Scrap ZSCR 850000000 859999999 Internal 8 Construction materials ZCVL 950000000 959999999 Internal9 Non valuated ZNOV 700000000 799999999 Internal

Above number ranges are the proposed one.

Material Group


A key that is used to group together several materials or services with same attributes. Each material can belong to only - material group. Material groups can be used to restrict the scope of analysis and search specifically for material master records via search helps. Material groups can access necessary reports.

Unit of measure

The ECC 6.0 System distinguishes between the following units of measure:

Base unit of measureThis is the unit of measure in which the stocks of a material are managed. The system converts all quantities entered in other units to the base unit of measure.

Alternative units of measureIndividual departments may have their own units of measure. For example, Purchasing may use a different unit than Sales or Warehouse Management (WM). All units of measure other than the base unit of measure are referred to as alternative units of measure. The ECC 6.0 System supports the following alternative units of measure:

o Order unit Allows a material to be ordered in a unit differing from the base unit of measure. The order unit is proposed automatically in purchasing functions, where it can be changed.

o Sales unit Allows a material to be sold in a unit differing from the base unit of measure. The sales unit is proposed automatically in the sales order, where it can be changed.

o Unit of issue Unit of measure is the unit in which the material is issued from the Warehouse. It allows consumption, stock transfers, transfer postings, and physical inventories to be recorded in a unit differing from the base unit of measure and from the stockkeeping unit.

o WM unit Unit of measure in which materials are managed in Warehouse Management. For inventory management, the system converts the quantities entered in the WM unit to the base unit of measure. For example, if a material is normally managed using pieces as the base unit of measure, but several thousand pieces are contained in a box, it may be more appropriate to define a WM unit that is more manageable for WM purposes.

The relationship between the base unit of measure and alternative units of measure


Material Valuation

Material valuation is the determination of the value of a stock of materials. The valuation relevant data on a material include:

a) Valuation price.

b) Assignment to a valuation class, Valuation class is used to determine the G/ L account during the material movement.

c) Selection of the valuation method using the price control indicator, S – Standard Price , V – Moving Average Price.

The materials will be valuated at Standard Price and Moving average price. For Standard Price Control indicator will be S and Moving average price control indicator will be V. The Standard / moving average price should be entered at the time of creation of the Material Master. Standard cost estimate can be carried out in SAP to arrive at the standard price and can automatically update the current standard price of the material. Also the standard price can be changed manually through the price change functionality in SAP. Necessary authorization control will be put in place to restrict unauthorized change in the standard price.

Period end closing has to be carried out in Materials Management at the end of each period to allow goods movement in the next period. This is required as the price; stock value and quantity are managed period wise in the system.As per the business requirement Authorization of closing and opening of posting period is given.

Split valuation gives the option of allowing different stocks of the same material to be valuated separately. The various sub-stocks present are Import, Domestic. In SUPER, split valuation will be specifically used in imported material and domestic procured scenarios.

Material DescriptionMaterial Type Split Valuation

Raw Materials ZROH Import & DomesticPackaging Materials ZPAK Import & DomesticSpares & Accessories ZERS New


Repaired &Defective

Finished product ZFET Export & Local

SampleZSAM Export &

Local

For other materials type, there is no split valuation maintained.

Valuation Category that will be used for sub stocks – Split Valuation.

The valuation classes that will be used are listed down any changes required will be looked into during the realization.

SL No

Valuation Description MaterialClass Types

Raw Materials 1 3000 RM –Domestic ZROH2 3001 RM-Import ZROH

Packing Material 3 3050 PM-Domestic ZPAK4 3051 PM-Import ZPAK

Spares & Accessories 5 3010 New ZERS6 3011 Repaired ZERS7 3012 Defective ZERS

Sample 8 7940 Sample-Local ZSAM9 7950 Sample- Export ZSAM

10 3080 Construction Material ZCVLSemi Finished Goods

11 7900 Semi Finished Goods ZSFGFinished Goods

12 7920 Finished Goods -Local ZFET13 7930 Finished Goods -Export ZFET14 3003 Scrap Material ZSCR

Below is the attached document for the URS2 and FRS for the Material Master.

Vendor Master

Vendor master record is the data record containing all the information necessary for any contact with a certain vendor, in particular for carrying out business transactions. Data in the vendor master record is organized under general data, company code data and purchasing organization data.


Vendor master records have the following structures:

It consists of data like Vendor name, address, reconciliation account, payment terms, Schema group etc. The vendor master will be created centrally and the required purchasing data will be maintained in the respective purchasing organization level. The order currency and the terms of payment will be in the display field in the purchasing organization data. If the master data currency differs from the purchasing currency it can be changed in the Purchase order.

Business partners have a number of different functions, described as partner functions, in connection with your company. You use partner functions to define the rights and responsibilities of each partner type in a business transaction.

As per Super business local agent maintained as partner functions ,for example, your business partners can assume partner functions such as: Ordering Address

Vendor Account Group

Vendor account group is a classifying feature within vendor master records that determines:

The type of number assignment, internal or external. A number range for assigning account numbers. Which fields are displayed and whether their entry is optional or required (field status)

when you enter or change vendor master data. Whether the account is for one time vendors.

To create a master record, an account group must be specified. The account group cannot be changed after you create the master record.

The following account groups will be created for SUPER:

Account Group Description From Number To Number

ZIMP Import Vendor 1000000 1999999

ZDOM Domestic Vendor 2000000 2999999

ZOTV One Time Vendor 3000000 3999999

ZSRV Service Vendor 4000000 4999999

ZASC Associated Companies 5000000 5999999


ZEXP Expense 6000000 6999999

ZFIV FI Vendor 7000000 7999999

ZBNK Bank 8000000 8999999

ZEMP Employee 9100000 9199999

ZDCT Doctor 9200000 9299999

Above number ranges is the proposed only.Number range will be finalized in realization phase.Employee,Doctor etc are considered as Internal vendor.

Vendor Purchasing Organization data

Vendors can be maintained for each company code and for a purchasing organization. Wherever a Vendor exists in both a Company Code and a Purchasing Organization, the vendor master data can be copied to the other Purchasing Organizations or Company Codes.

If required, default data for the material master like the planned delivery time, purchasing groups, etc. can be maintained at the vendor level in the vendor master. The data maintained in the vendor master will be defaulted and can be changed when purchasing.

SUPER Payment terms are on credit as well as on delivery & against advance. These terms will be maintained in the system along with the standard SAP payment terms as below:

Below are the List of Standard Payment terms:

S No Payment Terms Description1 001 Pay immediately due net2 009 Payable in 3 installments3 NT00 During delivery4 NT15 Net due in 15 days of delivery5 NT30 Net due in 30 days of delivery6 NT45 Net due in 45 days of delivery7 NT60 Net due in 60 days of delivery8 NTAD Advance Payment in Full9 NTIS Letter of Credit – irrevocable at sight10 NTII Letter of Credit – irrevocable with installment11 NTBD Partial Advance% Balance After Delivery12 NTDD Partial Advance% Balance During Delivery

Incoterm is international commercial terms negotiated with vendor.

The following Incoterm will be maintained in the SAP system.

Incoterm DescriptionCFR Costs and freightCIF Costs, insurance & freightCIP Insured freight-freeCPT Freight-freeDAF Delivered at frontier


DDP Delivered Duty paidDDU Delivered Duty Unpaid.DEQ Delivered Ex quay (duty paid)DES Delivered Ex shipEXW From plantFAS Free along sideFCA Free CarrierFOB Free on boardFH Free Delivery

Below is the attached document for the URS2 and FRS for the Vendor Master.

Service Master

Services that are procured on a regular basis can be created as a service master. In the service master service specifications will be maintained.

A service master record contains the following principal information for the unique description of a service:

Service number Service category Descriptive texts (short and long text) Base unit of measure Material group Valuation class

Service masters can be referenced at the time of creation of the Purchase requisition and all the Purchasing documents.

Service Category

Description From Number To Number Internal /External

SERV Services-Purchasing 3000000 3999999 Internal

Purchasing Info record

Purchasing info record contains concise information about a material and a vendor supplying that material. Information like price, lead times, reminders, etc. can be stored in the info record. An info record thus represents a material-vendor relationship. Info records can be created for different procurement types (standard, sub-contracting and consignment). Info records can be created with material master. New data will be maintained on line in the info record prior to purchasing.


Automatically it will be updated during the quotation process. The number range will be ten digits and will be system generated.

Info records can be created with or without a material master record.

From number Max 10 digits

To Number Max 10 digits

Internal (I) / External(E)

Info record with material master record

5300000000 5399999999 Internal

Below is the attached document for the URS2 and FRS for the Purchasing Info record.

Source List

A Source list specifies the allowed and disallowed sources of a material for a certain plant within a predefined period. Each source is defined by means of a source list. A Source list is also used to define a source as fixed for a period. In this case the system takes this source as a preferred source over that period. It is also used to define a vendor/source as blocked over a period of time; it can also be used as an aid in an optimized purchase.

In SUPER, the source list will be used to maintain the preferred vendor list. If a contract exists it will be maintained in the Source list.

Currently in some of the plants preferred vendors exist for supplying certain parts, these will be maintained in the source list in SAP

No restriction will be placed initially for procurement only from the vendors maintained in the source list. There is no requirement to restrict suppliers according to their region.

Also the Authorization of source list in SUPER business is given to Quality team (mainly Raw and Packaging material) for blocking and unblocking of the Vendor.

Condition Master

Master record for condition Maintenance in MM module contains data or records with concrete values for search and result fields relating to purchasing of materials and services. This condition enables users to keep pricing stipulations agreed with the vendor in the system. In doing so it is necessary to determine condition techniques to relate which values is defined for which fields and how the search for condition records should run in the system. The calculation type is specified in customizing for a condition type.

This process involves the data that is entered into the Material Master. This master data is stored in the form of condition records.

Below is the attached document for the URS2 and FRS for the Condition Master.


4 BUSINESS PROCESSES

4.1 Purchasing

The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification.

The tasks of the MM Purchasing component are as follows:

External procurement and special 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.

Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly.

Purchase requisitions are usually regarded as internal documents used within Purchasing. Requisitions can be created either directly or indirectly.

"Directly" means that some- from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date.

"Indirectly" means that the purchase requisition is initiated via MRP.

There are primary type of procurement in SAP

Procurement for Stock

A stock material is a material that is kept in stock. Such materials are placed in storage following a goods receipt. When goods are received by or issued from stores or the Warehouse, the stock on hand is increased or reduced by the amount of the quantity received or issued.

When you order a material for stock, the system does not require an account assignment. This is because the posting to the appropriate stock and consumption accounts occurs automatically after each goods movement (for example, after a material is received by the stores or issued from stores). Furthermore, the value and the quantity of the stocked material are updated in the material master record.

To order a material for stock, the material must have a master record.


Procurement for Direct Consumption

When you procure for direct consumption, you specify the consumption purpose by entering an account assignment (for example, a cost center). On goods receipt, the material or service counts as having been consumed. If a material is procured for direct consumption, the consumption accounts in Financial Accounting are posted when the goods receipt is entered. The total quantity and value of existing stocks of the material are not affected.

Asset procurement

In the PR we define the Item category ‘A’ and in the text field we put the asset required name. It will ask Asset class, please mention the asset class. Then create PO against that PR. Then GRN against PO.and final Invoice verification will be done.AUC to Main asset settlement will be done by FI team.If it is Project asset it will settle against WBS element by FI or PS team.

The following list shows the various external purchasing documents available in the standard SAP System.

Request for Quotation(RFQ)Transmits a requirement defined in a requisition for a material or service to potential vendors.

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

Purchase Order(PO)

The buying entity’s request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works, formalizing a purchase transaction.

ContractIn the SAP Purchasing component, a type of "outline agreement", or longer-term buying agreement. The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time.

For each item of a purchasing document, specify whether procurement is for stock or for direct consumption. In a purchasing document, can enter items with or without account assignments.

If you order stock materials, the ordered material must have a material master record. If order is for consumable materials, the ordered material may have a material master record.

Account assignments are possible for the following purchasing documents:

Purchase requisitions Purchase orders Outline agreements

Before ordering a material or service from a vendor, it must be decided which purchasing instrument wish to employ. This section describes the two basic forms of external procurement supported by the MM Purchasing component:


One time purchase orders Longer-term contracts with the subsequent issue of release orders

One Time Purchase Order:You use one time orders for materials or services that are ordered irregularly. You can reference a purchase requisition, RFQ, or another PO when creating a one time order. The vendor’s current conditions for the material are adopted from the purchasing information record when the new PO is created.

Contract and Release Orders:For materials that are ordered regularly and in sufficient quantity, can negotiate longer-term pricing and conditions with the vendor and record them in a contract. In the contract, specify its validity period and the total target quantity or total BDT/USD value covered.

When creating a contract, we can reference an RFQ or another contract. The purchase requisition (representing a request to set up a longer-term contract) can also simplify the data entry process by serving as a reference document.

When creating the associated release orders, information is adopted from the contract. Individual deliveries are affected on the basis of the release orders, which specify the exact order quantity and the delivery date.

External service management:

MM External Services Management provides a basic process for the procurement of externally performed services. This basic process comprises the following functionality:

Service master records, in which descriptions of all services that may need to be procured can be stored.

1. In the individual documents, you can enter items with materials in addition to those with external services (or complete sets of service specifications).

2. When creating voluminous sets of service specifications, you need not laboriously enter each individual service manually. Instead, you can make use of the referencing technique and the selection function to copy quickly and simply from existing master data and documents.

MM External Services Management offers two basic ways of specifying services:

1. As planned services with description, quantity, and price.

By “planned services” we mean services whose nature and scope is known at the start of a procurement project or transaction. At the time the services are requested, the individual specifications are entered either with the aid of a service master record or directly as short and long texts. Price and quantity are specified in both cases.

2. As unplanned services with the setting of a value limit only.


By unplanned services, we mean services that cannot be specified in detail because their precise nature and scope are not initially known, or services which - for various reasons - do not wish to plan. Unplanned services therefore have no descriptions.They are entered in the form of maximum values in the relevant currency. Services may be performed up to a value not exceeding these value limits. This ensures an element of cost control. It facilitates the following:

One Can analyze data already available in the system in order to find suitable sources of supply for certain services.

One Can also carry out a bid invitation process and evaluate the bids submitted in response using the price comparison list function. Can then award a contract to (or place an order with) the desired vendor.

During the phase of service performance (execution of work), various lists and totals displays enable you to retain an up-to-date overview of your service specifications, the progress of the work, and the costs being incurred.

One Can record the performance of services or work in service entry sheets. One Can indicate your acceptance of the work set out in the entry sheets in various ways. Following acceptance, the vendor’s invoice can be verified and released for payment

Purpose

Various activities are involved in Purchasing

Requirements identification Source determination Vendor selection & comparison of quotations Ordering the requirements Purchaser order follow up Vendor evaluations

Every document stores the history & subsequent relevant flow to have traceability & reporting purpose. Required purchasing documents will go through release strategy for better control on purchasing.

MM External Services Management is an application component within the Materials Management (MM) module. It supports the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process.

Master Data

Material master Vendor master Service master Purchasing info record Source list Conditions

In SUPER


Contracts will be released for direct materials once the fixed and floating values are placed. Release Orders are created for the respective units mentioning the quantity. Goods Receipt is carried out based on the Release Orders.

For stock material every time PR is get converted into RFQ,Quotation,Comparision and then PO for selected vendor.

For non stock materials PR will be converted to RFQ, Quotation, comparison and then PO created for the selected vendor.

Vendor evaluation will be online for each purchase organization. Online approval process will follow for Purchase order and Purchase requisitions on

predefined Conditions. Document history with all reference is available. Reduction in purchase cycle time due to online across purchase organizations visibility. Services will be coded & tracking will be simple. Pricing break up like discount, freight, packing, insurance etc will be available for each

every material ordered in every purchase order/contract. Central vendor master record avoids duplication of master data. Reporting will be very easy across - on procurement.

Business Process

Identifying requirement

Purchase Requistion:

The task in purchasing starts from identifying the purchasing requirement, which could be originated either by MRP or by manual. Manually and MRP via created requisition will go through release strategy. Several selection criteria available to get list like PR, MRP outputted PR, Manually crated PR, approved PR etc for buyers as well as indenters.

In case of services, manual PR will be created with service numbers indicating service wise qty & tentative rate will be paid for each service rendered.


Release strategy will be set up with pre requisites for requisitions that need to be fulfilled by respective release code approver. This will ensure administrative control as well as visibility across organization.

Order Type Description

From number

To Number Internal (I) / External(E)

NB Standard Purchase Requisition 0010000000 0019999999 Internal

Number ranges can be changed at the time realization.Above is the proposed number ranges.

Below is the attached document for the URS2 and FRS for the Purchase Requisition.

Requirements processing

The approved requisitions (PR) can be converted to a Purchase order, if there is preferred vendor or if there is an existing contract. Using the create with reference functionality, a single PO can be created with reference to multiple PR’s. Individual PR’s will be represented as separate line items in the PO to maintain the reference of the PR and through the same functionality a single PR can be split into multiple PO’s.

An identifier allowing differentiation between the various forms of a document category. PR types can be used to setup different number ranges and release strategies.

In the absence of the above, a Request for Quotation (RFQ) will be raised in the system with reference to the PR. SAP System doesn’t restrict the number of quotations to be created.

In SAP the quotation number is generated internally for each vendor. All these quotations can be linked through a collective number. The quotation can be sent electronically or can be printed and the hard copy forwarded. Vendor selection can be decided with the help of the Info Record and the source list or vendor evaluation parameters available in the SAP.

In SAP both the Requests for Quotation and the vendor’s response to the quotation documents will be handled through the Request for Quotation function.

The vendors pricing and different conditions can be entered in the maintenance of the quotation document. VAT can be maintained through the tax code.

History of all generated RFQ/quotations/Comparisons is available in the system for future reference or any traceability. This will help for vendor selection for RFQ also.

Service PR can also be converted to RFQ, quotation, comparison in the same line as material.For revised price we have to create another quotation with revised price and in that we can put the old number in the reference text.


Vendor selection & comparison of quotation

Through the price comparison screen SAP ranks all the quotations based on the price. Price comparison can have the break of pricing components like discount. The other details such as delivery date and related information is also displayed. The entire quotation of the vendors also can be viewed from the same screen. If quotation is submitted in foreign currency it can be converted to local currency.

The decision to select a vendor or a reject a vendor can be based on the price comparison list generated by the system and by checking the vendors technical competency (specifications, delivery terms), which will be the- outside the system.

Services will follow the same procedure.

Order Type Description From number To Number Internal (I) / External(E)

AN Standard RFQ 6000000000 6099999999 Internal

Above is the proposed number ranges and can be changed as per the business requirement at the time of realization.Below is the attached document for the URS2 and FRS for the RFQ Processing.

Ordering the requirements

Purchase orders/contracts/Schedule Agreements can be created with reference to the quotation. Contracts will be created if there is a continuous requirement over a period of time. Normally contracts will be created for direct materials and service item s& Purchase orders will be created for non stock materials. Purchase orders will go through release strategy for approval. Ordering can be done different unit of measure than stock keeping unit.

Contracts can be a value contract or a quantity contract. Contracts will have a validity period and a price specified for this period and the price can be maintained against a quantity scale.

Delivery schedules can be maintained in Purchase Order for every line item. The reference document information is maintained in the consecutive document.

The necessary payment terms and the Inco terms are automatically copied from the quotation and it can be changed in the purchase order if required. Purchase orders can be raised in foreign currency, standard functionality is available to maintain the foreign currency requirements.

In the purchase order delivery address, if there is a requirement to maintain delivery addresses other than the ordering plant, then they can be maintained at item level.

In the Purchase order/Contract/Schedule Agreement apart from the material price, freight, Insurance, excise, tax and other delivery charges can be maintained in the pricing condition. These will be maintained through separate Condition types. Condition types are the various


elements in the pricing of the Purchase order. Different condition types will be defined to meet the requirements of Import purchases and local purchases.

The other delivery charges can be maintained in the Header level i.e. applicable to the whole Purchase order or in the item level of the Purchase order.

If the delivery charges are maintained at Purchase order level, then the system will treat them as planned delivery costs. For freight and other delivery charges, if there is a different vendor for the planned delivery costs, the vendor details can be maintained in the Purchase order against each of the condition types. Vendor pricing schema will decide which pricing procedure is applicable for the specific vendor.

The Purchase Order/Contract created will be subjected to an approval process. In the approval process certain approving personnel can be maintained as mandatory and non mandatory. If the person is not available alternative persons can be configured in the system to approve the document.

Purchase Orders/Contracts will have a 10-digit number.

Order Types

An document type allowing differentiation between the various types of a document category. Order types can be used to setup different number ranges and release strategies.

Purchase Order types Contract Types

Department Purchase Group Created By Approved By 1 Approved By 2SCM Import User Manager, Import DGMSCM Domestic

ProcurementUser Manager, Domestic

ProcurementDGM

TSD Engineering User Sr. Manager, EnggTSD Pharmacy User Sr. Manager, Pharm Sr. Manager, EnggPabna Plant HRD- Pabna Plant User Head of HR Head of PlantDhaka Plant HRD- Dhaka Plant User Head of HR Head of Plant

Version Management is activated for Purchase Orders. When a purchasing document is changed, the changes are recorded in a change document. Change documents from a certain period are collected in a version and are then available for analyses.

Procurement types are primarily getting divided based on account assignment & Item category given in the purchasing document. For all procurement types overall all purchasing cycle remains the same. Various types of Purchasing involved in SUPER are:

Procurement for stock Material:All purchasing document having materials code & no account assignment, all such materials receipts will go to inventory. It will be issued from inventory for usage.

Procurement of non-stock items:Non valuated material having the material code.


Materials with material type non-valuated or all purchasing document having account assignment will get consumed on receipt. Such Purchasing documents need to have consumption G/L account defined in the document.

Procurement of Capital items:Procurement of capital items will be carried out through Project Systems through WBS element. We can also procure the capital material via asset procurement in MM.

Item Categories: Item Category defines the procurement of Materials and Services. Standard Item categories are used for SUPER:-

StandardK Cost CentreL SubcontractingQ Proj. make-to-orderD Service

Account Assignment Categories:Account assignment categories define if accounting for a item is effected by a auxillary account. Standard Account assignment categories are used for SUPER.

A AssetK Cost centerP ProjectQ Proj. make-to-order

Order Type

Description From number

To Number Internal (I) / External(E)

MK Quantity Contract 4600000000 4699999999 InternalWK Value Contract 4600000000 4699999999 Internal

ZNBDomestic Purchase Order

4500000000 4599999999 Internal

ZIMPImport Purchase Order

4700000000 4799999999 Internal

ZSERService Purchase Order

4200000000 4299999999 Internal

ZSUBSub contract Purchase Order

4800000000 4899999999 Internal

ZUB STO 4900000000 4999999999 Internal Above number ranges are the proposed one.Contract can be classified by document type,so having the same number ranges.Internal number ranges means system generated the number.


Below is the attached document for the URS2 and FRS for the Contract, Contract Release and Purchase Order Processing.

Sub-contracting orders processing:

The material to be produced by the vendor can be ordered as a subcontract item in a purchase requisition, purchase order, or scheduling agreement. Each subcontract item has one or more sub-items that contain the individual components the vendor needs to perform the subcontract work or value-added service.

The individual component items can either be Entered or changed manually Copied from an existing bill of material (this is known as a BOM explosion)

Use

In subcontract order processing, the vendor receives materials (components) with which it produces the end product. The following are involved:

1. You order the end product using a subcontract order. The components that the vendor needs to manufacture the end product are specified in the purchase order.2. In Inventory Management, the components are posted to the stock of material provided to vendor. The components are then supplied to the vendor.3. The vendor performs its service and delivers the ordered material (the end product). The consumption of the components is posted.4. If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment.5. The vendor charges for his or her service. The invoice is posted in Invoice Verification.

Stock of Material Provided to Vendor

The quantities of the components to be provided to the vendor are entered into the stock of material to be provided to vendor. This stock has the following features:

It is managed as part of your total valuated stock, and is available for MRP. It is only managed at plant level, since it is not stored at your own company but on the

Vendor’s site.


Below is the attached document for the URS2 and FRS for the Subcontractor Processing.

PROCUREMENT OF EXTERNAL SERVICES

The procurement of services may involve the following steps:

Determination and recording of requirements

A need for certain services can arise in a user department of your enterprise, within the framework of a project (such as the translation of software) or with regard to regular maintenance work (such as the outsourcing of routine electrical jobs) for instance. The user department can either prepare a purchase requisition itself, or request Purchasing to do so. In each case, the requisition is the trigger for procurement activities in MM Purchasing.

Determination of possible sources

In the source determination facility, an instrument for analysing this data, enabling to establish whether suitable potential bidders exist for the requested services and whether longer-term business relationships have already been set up with certain service providers in the form of contracts. The price simulation function can help to choose the desired source of supply from the sources suggested by the system. In this case, the requisition can then be converted directly into a


standard purchase order or a release order to be issued against a contract that already exists with the service provider.

Bid invitation procedure

If a bid invitation process is to be initiated for services, an RFQ must be created.

Entry of data from quotations submitted by bidders

When quotations (bids) are received from bidders, the latter’s prices and conditions are entered in the RFQs that already exist in the system. The status of the RFQs is then changed: the RFQs in fact become quotations.

Comparison of quotations

When all quotations have been received and entered, the most favourable - is quickly determined using the price comparison list. The price comparison list evaluates the quotations for you at different levels. You can make your decision on the basis of list of all quotations ranked by total value or compare the quotations at individual outline levels. The system provides comparative data right down to the individual service (task or activity) level if required.

A brief note can be noted, by going to the particular RFQ.

Award phase (order placement)

The successful bidder receives either a standard purchase order or a release order issued against an existing contract, either of which is created by conversion of the relevant quotation.

Monitoring of purchase orders

During the phase of service performance, the cumulative "actual" values (for the services actually performed) are continually updated in the underlying purchase order (standard PO release order).

Entry of services actually performed

You enter services that have actually been performed by means of service entry sheets with reference the PO. Each individual service is recorded together with quantities and values.

Acceptance of services performed

After services that have been performed for the firm has been recorded in the service entry sheet check & formally accept the services.

Verification of invoices for services

At the conclusion of the procurement process, the service provider’s invoices are checked for correctness. This involves comparing the value from the accepted entry sheet with that shown in the invoice and checking that the tax amounts are correct.

Below is the attached FRS and URS2 document related to services.


Vendor evaluation

Vendor evaluation is the process of evaluating the vendors on the basis of following main criteria:

Quality Delivery Service

SAP offers scoring from the range of 1 to 100, which is used to measure the performance of the vendor. You can compare different vendors on the basis of their overall scores without generating a detailed analysis of their evaluations. The overall score represents the general evaluation of a vendor. It is a combination of the scores the vendor has achieved for all the main criteria. The main criteria form the basis for assessing the performance of a vendor. The system calculates the vendor's overall score from the scores achieved for the main criteria. Sub criteria are the smallest units for which scores are awarded in Vendor Evaluation. The system calculates a score for the relevant higher-level main criterion based on the scores a vendor receives for the various sub criteria.

There are three types of sub criterion:1. Manual

Enter the score into the system yourself before carrying out an evaluation.

2. Semi-automaticEnter scores for quality and timeliness of delivery or performance at info record level (for a material) or in the service entry sheet (for an externally performed service).

3. Fully automatic

The system calculates the scores for automatic sub criteria on the basis of data from other areas of the enterprise outside the Vendor Evaluation system (for example, Goods Receiving or Quality Management). The individual scoring methods fulfill different purposes and involve different kinds of maintenance.

In Super Business ,below are the criteria with the respective weigtage:-

Quality – 70%(Automatic)Goods receipt

Delivery – 25%(Automatic) ETD and Actual date(Development)

Service – 5%(Manual)

Below is the attached document for the URS2 and FRS for the Vendor Evaluation.


4.2 Inventory management

Material is procured from external or internal sources on the basis of the requirements determined by Material Requirements Planning. The delivery is entered in Inventory Management as a goods receipt. The material is stored (and managed under Inventory Management) until it is delivered to customers (Sales & Distribution), or is used for internal purposes (for example, for production).

During all transactions, Inventory Management accesses both master data (such as material master data) and transaction data (such as purchasing documents) shared by all Logistics components.

It involves

Management of material stocks on a quantity and value basis Planning, Entry, and Documentation of all Goods Movements

All transactions that bring about a change in stock are entered in real time, as are the stock updates resulting from these changes. You can obtain an overview of the current stock situation of any given material at any time. This, for example, applies to stocks that:

Are located in the Warehouse Have already been ordered, but have not yet been received Are located in the Warehouse, but have already been reserved for production or a

customer Are in quality inspection.

If a further subdivision by lots is required for a material, - batch per lot is possible. These batches are then managed individually in the stock.

Inventory Management can manage various types of a company’s own special stocks and externally owned special stocks separately from standard stock.

The stocks are managed not only on a quantity basis but also by value. The system automatically updates the following data each time there is a goods movement:

Quantity and value for Inventory Management Account assignment for cost accounting G/L accounts for financial accounting via automatic account assignment

The valuation area is the organizational level at which a material's stock value is managed. The valuation area can be plant level or company code level. In Inventory Management, work is basically done at plant and storage location levels. When you enter a goods movement, you only have to enter the plant and the storage location of the goods. The system derives the company code from the plant via the valuation area.

When Good receipt for the purchase order is done, system automatically updates stock quantities & values including C&F, Freight, Delivery charges, incidental charges mention in the PO. For PO’s having account assignment cost will be debited to relevant G/L account indicated in PO.


Goods movements include both "external" movements (goods receipts from external procurement, goods issues for sales orders) and "internal" movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings).

For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements.

Inventory management basically involves:

Goods receipt

A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in Warehouse stock.The System distinguishes between the following types of goods receipts:

1. Goods receipts with reference to an order 2. Other goods receipts3. If the material received & discrepancy found & vendor intended to give them at free of

cost, then the user will do the return delivery, then they transfer that material to Discrepancy material by using movement type 102/122/161, mentioning the PO number in the Document header text for reference

Goods issue

A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a reduction in Warehouse stock.

The Inventory Management system supports the following types of goods issues:

1. Withdrawal of material for production orders 2. Scrapping and withdrawal of material for sampling 3. Return deliveries to vendors 4. Goods Issue against reservation

Stock transfer

A stock transfer is the removal of material from - storage location and its transfer to another storage location. Stock transfers can occur either within the same plant or between two plants.

There are two methods of stock transfer.

One Step Procedure:

During a one step stock transfer, the system creates issue of stock at sender plant & receipt of stocks at receiver plant with in the same step.

Two-Step Procedure: During two step process, system transfers material from issuing plant to stock in transit. At

receiver plant after receipt document is posted stock in transit gets transferred to receiver plant.

Transfer posting


A transfer posting is a general term for stock transfers and changes in stock type or stock category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not.

Reservations

With this component, a request to the Warehouse to keep materials ready for withdrawal at a later date and for a certain purpose can be made. A reservation for goods issue can be requested by various departments for various account assignment objects (such as cost centre, order, asset, etc.).

The purpose of a reservation is to ensure that a material will be available when it is needed. It also serves to simplify and accelerate the goods issue process and prepare the tasks at the point of goods issue. It is also important that Material Requirements Planning (MRP) takes reservations into account. It means that required materials are procured in time if they are out of stock.

Purpose

o Material tracking with value or only qty tracking is effectively achieved.o Physical location identification of material stocks within location or across locations

online will be possible.o Stocks status of the materials like under quality, blocked, In transit, unrestricted

can be easily availableo Special stocks like material with sub-contractor, are tracked online.

Master Data

Material master

Feature of Super

Transparency of stocks available, through common database, across locations. Planning will be effective considering expected receipts, expected issues & online

correct stocks. Stock transfer activities are planned. Quantity and Value updating on receipts/ issues is done.

Reduction in inventory holding cost. Availability checks on goods issue and stock transfers. Updating of consumption accounts and Inventory accounts online.

Business Process

Goods receipts

Goods receipts for Purchase Orders, goods receipts for production orders, subsequent adjustment of subcontract orders, initial entry of stock balances in to SAP, vendor returns and customer returns all will be treated as Goods receipt in SAP.

Material documents are generated when there is a goods movement registered in the system. Numbering of these documents are based on the transaction / event types of the transaction. Numbering is defined for a fiscal year and internal numbering has been defined for a material document as per business requirement.

Goods receipt for purchase order process as follows:


1. Choose Goods movement ® Goods receipt ® For purchase order ® PO number known or PO number unknown.

2. Enter the data on the initial screen:

a. Enter the header data. b. Select the movement type.

If the quantity delivered is intended for the Warehouse or for consumption/usage, select Movement type ® PO to Warehouse (Movement type 101 ).

c. Enter the purchase order number. In addition, can enter the plant and a purchase order item, in order to restrict selection of the purchase order items.

If you selected PO number not known, you can specify search criteria for the purchase orders on the initial screen. The system then displays a list of purchase orders. Select and copy the required purchase order items.The item selection list is displayed. This list contains all of the purchase order items that satisfy the criteria entered.

3. Select the purchase order items to be copied. If necessary, you can change data in the selected items on this screen.

4. Copy (adopt) the selected items.

5. Post the document. Below is the attached document for the URS2 and FRS for the GRN for Stock/Non stock/Goods return/GR against Process Order.

Goods Issue

A Goods Issue document can be created with reference to the Reservation document or without any reference, the delivery in SD creates a goods issue document in the background. When the document is saved the system generates a material document and an accounting document. The material document updates the stock quantity and records the movements and the accounting document updates the stock value. The accounting entry will be debit consumption account and credit inventory.

Entering a goods receipt without referencing a document involves the following steps:

1. Select Goods movement - Goods issue from the Inventory Management menu. The initial screen for this function appears.


2. Enter the data on the initial screen: a. Enter the header data. b. Select Movement type - Consumption and the desired option. c. Enter a plant and, if necessary, a storage location, as defaults for the items in the

document.3. Press ENTER. The collective entry screen appears. Here you enter the account

assignment and the individual items 4. Check data on the overview screen. 5. Post the document.

To enter a goods issue with reference to a reservation procedure as follows:

1. From the Inventory Management menu, select Goods movement - Goods issue. This takes you to the initial screen for this function.

2. On the initial screen, enter the header data. You need not enter the movement type or the plant, as these are automatically copied from the reservation.

3. To reference the reservation, select Goods issue Create with reference - To reservation.... A box for selecting the reservation appears.

4. Adopt (copy) the desired reservation items. The account assignment specified in the reservation is automatically used in the goods issue items.If no account was entered in the reservation, the system determines the accounts to which postings are to be made through automatic account determination.If an account was entered manually in the reservation, the system uses this account from the reservation as the offsetting entry for the inventory posting.

5. Check data on the overview screen. 6. Post the document.

Below is the attached document for the URS2 and FRS for the GI against Production/Process Order and GI for Consumption.

Transfer Posting and Stock Transfer

Levels for Stock Transfers

In a company, goods movements do not only occur in the form of goods receipts and goods issues. Depending on the organization of the company (for example, decentralized storage) and its sales policy, internal stock transfers might also be necessary.Stock transfers can occur at three different levels:

Stock transfer from company code to company code Stock transfer from plant to plant From storage location to storage location (in the plant)

Stock Transfer from Company Code to Company Code


A stock transfer from company code to company code corresponds to a stock transfer from plant to plant, with both plants belonging to different company codes.During the stock transfer, two accounting documents are created in addition to the material document:

An accounting document for the removal from storage at the issuing company code An accounting document for the placement into storage at the receiving company code

In the Super Business SPL (Super Pharmaceuticals) Purchase the Material from the SCL(Super Cephalosporin’s) through STO purchase order. Delivery has been created by SPL subsequent to PGI (post goods issue).Then Material can be inventoried through MIGO and invoice verification is done against PO.

Stock Transfer from Plant to Plant

A stock transfer from plant to plant not only leads to a change in stock quantity in both plants; if both plants are assigned to different valuation areas, an accounting document is also created.This type of stock transfer can only be carried out from unrestricted-use stock of the issuing plant to unrestricted-use stock of the receiving plant.

Stock transfers from plant to plant are relevant for Material Planning, since Materials Planning operates at plant level.Stock transfer between Plant to Plant within one company code (Intra company code) can take place through the PO with document type UB and mvt type 351.

From Storage Location to Storage Location (in the Plant)

A stock transfer from storage location to storage location in the same plant simply causes an update of the stock quantities in both storage locations. The stock value remains unchanged, and the event is not relevant for accounting.

A stock transfer from storage location to storage location is possible for all stock types.

Transfer Postings from Material to Material

If a material changes over time in such a way that it no longer corresponds to the features defined in the material master record, but to the features of a different material number, you have to carry out a transfer posting from material to material. This is often the case in the chemical and pharmaceuticals industry, for example.A transfer posting from material to material results in the transferred quantity being managed under a different material number. A material master record must already exist for the receiving material.

Stock Transfer Procedures

There are three different procedures for carrying out a stock transfer:

Stock transfer via stock transfer posting using one-step procedure. Stock transfer via stock transfer posting using two-step procedure. Stock transfer using stock transport order.


Below is the attached document for the URS2 and FRS for the Transfer Posting, Stock transfer one step, stock transfer two step procedure.

Goods Reservation

In SAP the user department specifying where the material is required, what quantity is required, and when it is required can create a Reservation. Based on the Reservation, the system will generate automatically a Purchase requisition, while running the material planning, if there is not enough stock on the requirements day. Reservations can be created from other modules automatically. Reservations do not block the stock from being issued to any other requirement.Reservations created manually or automatically(after process order release).

Below is the attached document for the URS2 and FRS for the Reservation processing procedure.

In SAP standard movement types are defined to differentiate between the various types of goods movement described above. The following is the list of some of the commonly used movement types that will be used in SUPER.

Movement type Description Remarks

101 GR goods receipt for Purchase Order (B) & Order (F)

A purchase Order reference is required

102 Reversal / Cancellation of GR for Purchase Order (B) & Order (F)

122 / 123 Return delivery to supplier or to production

You can use this movement type to differentiate between cancellations and return

201 /202 Goods Issue for a Cost centre

261 / 262 Goods issue to an order This refers to issue to all orders like, maintenance order, Production order. The movement type will be picked automatically when the concerned orders are confirmed.


309 /310 Transfer Posting from material to material

This will be used when transfer of stock from - valuation to another valuation type is required.

311 /312 Transfer Posting from Storage location to storage location

351 / 352

411 Q

412 Q

Transfer Posting – Plant to Plant (MM Route)

Transfer posting project to own

Transfer posting project to own - reversal

451/452 Returns from Customer(without shipping)

This is used when returns are posted without reference to a return delivery.

501 / 502 Goods Receipt for Others

521 / 522 Goods Receipt without Production Order

541 Transfer Posting unrestricted use stock to Stock of material provided to Subcontractor

542 Reversal of Transfer Posting unrestricted use stock to Stock of material provided to Subcontractor

543 / 544 Consumption of Materials at Subcontractor Stock

551/552 Scrapping from Unrestricted stock

561/562 Initial entry of stock balances This movement type will be used to migrate the opening stock balance into SAP; there is a provision to enter the value of the goods movement.

601/602 Goods Issue for delivery This movement type is used with the Goods issue delivery function in SD.

641 / 642 Transfer posting from Plant to Plant (SD Route)

701 GR phys.inv.: whse Used in Physical inventory postings

702 GI phys.inv.: whse Used in Physical inventory postings


4.3 Physical Inventory

In SAP ECC 6.0, physical inventory can be carried out both for a company’s own stock and for special stock. Inventory for a company’s stock and for special stocks (such as consignment stock at customer, external consignment stock from vendor, or returnable packaging) must be taken separately (in different physical inventory documents), however. Note that the blocked stock returns and the stock in transfer cannot be inventoried. If these stocks are still to be counted in a physical inventory, must be transfer post these stocks to other stocks capable of inclusion in a physical inventory.

The stock in a Warehouse can be divided into stock types. In the standard system, a physical inventory can be carried out for the following stock types:

Unrestricted-use Quality inspection stock Blocked stock

Inventory of all stock types mentioned can be taken in a single transaction. For the materials to be inventoried, item is created in the physical inventory document for every stock type.

Physical inventory takes place at storage location level. A separate physical inventory document is created for every storage location.

If a material does not exist in a storage location, this means that no goods movement has ever taken place for the material in the storage location. The material, therefore, has never had any stock in this storage location. The material does not exist at stock management level in the storage location. It is therefore not possible to carry out a physical inventory for the material in this storage location.

This is not to be confused with a material for which a goods movement has taken place and for which the stock balance is currently zero. A physical inventory must be carried out in this case, since storage location data is not deleted when the stock balance is zero.

SAP ECC 6.0 supports the following physical inventory procedures:

Periodic inventory Continuous inventory Inventory sampling

In material management only periodic inventory is available.

Periodic InventoryIn a periodic inventory, all stocks of the company are physically counted on the balance sheet key date. In this case, every material must be counted. During counting, the entire Warehouse must be blocked for material movements.

Continuous InventoryIn the continuous inventory procedure, stocks are counted continuously during the entire fiscal year. In this case, it is important to ensure that every material is physically counted at least once during the year.

Cycle CountingCycle counting is a method of physical inventory where inventory is counted at regular intervals within a fiscal year. These intervals (or cycles) depend on the cycle counting indicator set for the materials.


The Cycle Counting Method of Physical Inventory allows fast-moving items to be counted more frequently than slow-moving items.

Inventory SamplingIn MM Inventory sampling randomly selected stocks of the company are physically counted on the balance sheet key date. If the variances between the result of the count and the book inventory balance are small enough, it is presumed that the book inventory balances for the other stocks are correct.

Purpose

This component allows you to carry out a physical inventory of your company’s Warehouse stocks for balance sheet purposes.

Master Data

Material master

SUPER will follow Periodic inventory as, all stocks of the company are physically counted on the balance sheet key date.

Visibility of inventory differences with every inventory count across plants is available. Inventory counting is done for every material, storage location in the plant. Posting of difference can be controlled through authorizations.

Business Process

The physical inventory procedure is carried out in three steps:

1. Creating a Physical Inventory Document2. Entering the Physical Inventory Count3. Posting inventory differences

Below is the attached document for the URS2 and FRS for the Physical Inventory.

4.4 Material Valuation

Material Valuation is not an independent application area, since most Material Valuation functions take place automatically in the SAP System. Depending on how a company is structured, tasks that have to be carried out manually belong to either Inventory Management or Invoice Verification.

Material Valuation represents a link between Materials Management (MM) and Financial Accounting (FI), since it updates the G/L accounts in Financial Accounting.


Material Valuation serves the following purposes:

Adjusting material prices (Material Master Price) to market prices (PO price) Performing revaluations Executing balance sheet valuation

Material Valuation is basically controlled by two factors:

System settings Material master record

System setting

Plant level materials will be valuated.Movement types will decide which are relevant for financial posting Material Master Record

As a rule, a material master record is created for every material. The information contained in this record includes valuation data for the material. When maintaining the material master record, Must decide the following:

Whether a particular material should be valuated at all Whether different sub-stocks of a material should be valuated differently Whether the stock of a material should be valuated at a constant price (standard price) or

whether the price should change in accordance with the delivered price (moving average price)

Which G/L account the stock value of a material should be managed inThe stock quantity and value of a material and the material price are also recorded in the

material master record.

In the SAP System, there are two types of price control: Standard price Moving average price

These two types of price control differ in how they handle price variances resulting from goods receipts or invoice receipts.

Valuation using a standard price has the following features: All inventory postings are carried out at the standard price Variances are posted to price difference accounts Variances are updated Price changes can be monitored

Valuation using a moving average price results in the following: Goods receipts are posted at the goods receipt value. The price in the material master is adjusted to the delivered price. Price differences occur only in exceptional circumstances. Manual price changes are usually unnecessary. However, they are possible.

Split valuation

If a material is subject to split valuation, the material is managed as several valuated stocks; each Valuated stock is valuated separately.


Each transaction that is relevant for valuation be it a goods receipt, goods issue, invoice receipt or physical inventory, is carried out at the level of the valuated stock. When one of these transactions used, must always specify which valuated stock is involved. This means that only the valuated stock in question is affected by a change in value, the other valuated stocks remain unaffected.Alongside the valuated stocks, the total stock is also updated. The calculation of the value of the total stock results from the total of the stock values and stock quantities of the valuated stocks.

Can define whether the material is subject to split valuation on the accounting view of the material master record. There are two fields for this:

The valuation category specifies which criterion should be used as the basis for differentiating between the various valuated stocks.

The valuation type specifies an individual characteristic of a valuated stock.

Material 1 is managed separately according to origin (valuation category H). In the valuation header record, the separate stocks are cumulated:

The total stock in the plant is 100. The moving average price is calculated from valuation of the individual stocks:

Average price = total value / total quantity

Data on a material is valuated using the following structure: Valuation area

Valuation area = plant

The stocks of a particular material in this individual plant are valuated together. Stocks in other plants are not included in this valuation area.

Valuation class

You group together different materials with similar properties into valuation classes so that you do not have to manage a separate stock account for every material.Which valuation class a material can be assigned to depends on the material type. You can define the following assignments in Customizing:

All materials with the same material type are assigned to just one valuation class. Different materials with the same material type are assigned to different valuation classes. Materials with different material types are assigned to a single valuation class.

A material is assigned to a valuation class in the material master record. The system checks whether the material type allows the material to be assigned to the valuation class specified.The system refers to the valuation class of a material to determine which stock account to post to when a posting is made for this material.

Valuation category Criterion according to which split valuation is carried out:

ProcurementYou can valuate a material differently depending on whether it is manufactured in-house or procured externally.

OriginYou can valuate a material differently depending on where it comes from (such as home or abroad).


Valuation type The valuation type specifies the individual characteristic of the valuation category, such as internal or external, in the case of Procurement. Within the valuation category Origin, you can define the different countries as the valuation types. You define valuation types in Customizing. You first determine all the valid valuation types for a valuation category.

You define in the material master record which valuation types are allowed for a particular material. For every material subject to split valuation, you must enter all the valuation types allowed in the material master record.

Material type You assign every material to a material type when you create it. Examples of material types in the standard system include raw materials, and finished products.The material type controls the properties of a material and which data must be maintained for the material. The following control features are important for valuation:

material managed by quantity material managed by value Price control type may be used for the material Valuation class can the material be assigned to

Movement type

For every material movement, there is a movement type in the SAP System. The movement type controls the properties of the movement, for example, which entries you must make when entering a material movement, and which updates are carried out when the movement is posted. The following control features are important for valuation:

Material movement cause the quantity to be updated Material movement cause the value to be updated Material movement lead to postings in Accounting Material movement relevant for LIFO/FIFO valuation

Master Data

Material master

In SUPER All raw materials/spares/packing materials/ scrap/semifinished will be valuated at

moving average price. Finished products will be valuated at standard price. All stock valuation will be online across location at plant level. Split valuation will give import & Domestic. Transfer posting between plants will be available.

Business Process

Material Valuation is not an independent application area, since most Material Valuation functions take place automatically in the SAP System.

All the materials will be created in the system with accounting & costing views which needs to be valuated either with price control S or V. Initial price will be updated in material master while


creation. Based on receipts value moving average price will keep on getting updated online for every receipt. Material having standard price will have moving average price updation only for statistical purpose. Every issue will be with corresponding price in the material master with relevant financial posting.

Split valuation

Materials, which are getting procured domestic & imported, also will be subjected to split valuation. Specific Materials will require separate valuation will be created with valuation category & valuation type. Split valuation will be activated for all plants. For every material movement valuation type will be updated which will ensure the correct valuation at valuation type level along with stock qty.

4.5 Logistics Invoice Verification

In Materials Management, Logistics Invoice Verification has the following features:

It completes the material procurement process, which has started with the purchase requisition and resulted in a goods receipt.

It allows invoices that do not originate in materials procurement (such as services, expenses, course costs) to be processed.

It allows credit memos to be processed, either as invoice reversals or return deliveries.

An invoice can be processed in Logistics Invoice Verification in various ways:

Invoice Verification Online

You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and values) suggested by the system with that in the invoice and making any necessary corrections. You then post the invoice. In the SAP ECC 6.0 System, a distinction is made between the following types of invoices: Invoices with purchase order reference.

All the items in a purchase order can be settled. With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together, regardless of whether an item has been received in several partial deliveries.

Invoices with goods receipt reference.Each goods receipt is settled separately.Invoices without purchase order reference.Invoices can be posted directly to G/L accounts and material accounts.

Document ParkingWhen company receives an invoice, enter the data in the system, and save the invoice document. The system does not make any postings. Parked documents can be changed. When finished changing the document, can post the parked document.

Invoice Verification in the BackgroundWhen receive an invoice, only enter the total amount of the invoice and match the invoice up with another system document. The system then checks the invoice in the background. If no errors occur, the system also posts the invoice in the background. If errors do occur, the system saves the invoice and then has to process it in a separate step.

An invoice contains various information, such as:

Amount paid to vendor


Which transaction does the invoice refer to How much tax do we have to pay

One of the basic questions is the invoice reference, which enables you to clearly allocate the invoice to a business transaction. If such a reference exists, the system uses "knowledge" that it already has and proposes the appropriate values when verifying the invoice, for example:

Agreed terms of payment Quantities to be invoiced Amounts expected for each item

If the vendor invoice contains different information, you can overwrite the data proposed. The system checks whether your entries are allowed and display a warning or error message if anything is incorrect.

Delivery costs are costs that are invoiced for a delivery over and above the value of the delivery itself. This includes freight charges, customs duty, or other costs.

There are the following types of delivery costs:

Planned Delivery Costs Planned delivery costs are entered in the purchase order on an item basis. Provisions are set up for the relevant costs at goods receipt. The delivery costs planned in the purchase order are referenced when the invoice is entered. The provisions are cleared. The values proposed for the items come from the purchase order history.

Unplanned Delivery Costs Unplanned delivery costs are only entered when the invoice is entered. No provision is made at goods receipt.

Logistics invoice verification facilitates four different activities:

Invoice The vendor invoices for the goods that have ordered from the company. Passing the same bill submitted by him.

Credit memo The vendor has invoiced too much for the last delivery, for example, less than the agreed quantity was delivered and that at the agreed total price, or returned part of a delivery to the vendor due to quality problems.

Subsequent debit Already received & posted an invoice from vendor for all the goods received. Subsequently, freight costs are to be taken into account; however, the invoice quantity remains the same.

Subsequent credit Already received a credit memo from vendor for all the goods received. Subsequently, freight costs are to be credited to company; however, the credit memo quantity remains the same.

In Logistics Invoice Verification – as in other applications – the SAP system often needs to retrieve stored data at many points, change this data where necessary, or add new information.

Depending on the type of information, the data in the SAP System is stored in different master records, such as the material master record or the vendor master record. This central data storage function avoids redundant data and ensures that the different departments use the most up-to-


date information from various departments (Material Requirements Planning, Purchasing, Inventory Management, Quality Management, Logistics Invoice Verification, and so on).

Purpose

Logistics Invoice Verification is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic.

When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.

Visibility across MM & FI module on the status of invoices is online. Material price changes are adjusted in inventory valuation at the time of invoice posting. GR based invoice verification ensures document flow & data consistency.

Master Data

Material master Vendor master Accounting data

In SUPER

All the Contracts & Purchase Orders, except import, will be created with GR based invoice verification.

Payments to the vendor will be exactly as per the pricing structure of the Purchasing document.

It will ensure multiple vendor payment for against same PO like material payment to - vendor, freight payment to another vendor, loading charges to third vendor etc.

Invoice posting can be online to ensure on time payment to vendors. Goods receipts, which are under quality inspection, will be blocked automatically by the

system for the payment. Subsequent debit & Credits can be posted to vendor with reference already paid invoices. Unplanned delivery cost can be posted to inventory to availability of stocks while making

the payment to vendor.

Business Process

Receive an invoice from the vendor referring to a purchase order and a goods receipt, for example. When first call up the application, enter the company code that work in. All further transactions are then posted in this company code. If want to switch to a different company code, can do this during processing.

Entering a vendor invoice involves:

1. Choosing the Transaction. 2. Entering Document Header Data. 3. Allocating Invoices. 4. Processing Invoice Items.


The last step is not mandatory. If there is no balance or if the variances are within the tolerance limits set, can post the invoice immediately after entering the allocation data. If the system cannot post the invoice, can check the invoice items and change them. When post without checking the invoice items, variances in individual items can cancel each other out.

The following accounts are particularly important for Invoice Verification:

Vendor AccountsThere is a separate account in the sub-ledger for each vendor that all amounts concerning this vendor are posted to. Making a posting to the vendor account is not the same as making a payment; payment is only made when the Financial Accounting department posts the vendor's payment to a bank account.

Stock AccountsIn the ECC 6.0 System, there is no separate account for each material. Instead, different materials with similar features are grouped together in a common account (for example, raw materials: acids). The account relevant for a material is defined in the material master record when a material is created.

The system only posts to the stock account when a price difference occurs for an invoice.

GR/IR Clearing AccountsThe GR/IR clearing account is an "intermediate" account between the stock account and the vendor account. At goods receipt, the net invoice amount expected is posted to the stock account. The offsetting entry is posted to the GR/IR clearing account. This posting is then cleared by an offsetting entry on the vendor account at invoice receipt.

Tax AccountsThe system makes postings to special tax accounts when invoices include tax.

Price Differences AccountsPrice differences have to be posted to a price difference s account if price differences have occurred in an invoice and when invoices are posted net and no posting can be made to the stock account.

Freight Clearing AccountThe stock account is debited with the planned delivery costs at goods receipt and the system makes the offsetting posting to a freight clearing account. This posting is then cleared by an offsetting entry to the vendor account at invoice receipt.

This process in details is covered by FI blue print.

Below is the attached document for the URS2 and FRS for the Invoice Verification.


CHANGES TO EXISTING ORGANIZATION PROCESSES

Current Practice

Proposed (New)

Practice

Change Description

Process /

Department

Affected

Change Management

StrategyImpact Analysis

Material code is not unique and its alphanumeric

Internally SAP will generate the number based on material type

Better Control & easy for analysing the reports

All the departments

Define the importance and get concurrence of all concerned

Procedural change

No Coding convention for semi finished materials

All Materials will have a internal generated code

System values the stock based on material code

All the departments


Procedural change

Manual MRP calculation

Automatic PR based on various method of MRP Planning

Change in the planning process & system generates the PR

PP & MM

Better control on Material stocks & avoiding of creation of multiple PR

Procedural change

Manual Approvals of PR & PO

Approvals of PR & PO through system

Better Management Control

All the departments


Procedural change

Manual Quotation Comparison process

System comparison based on the input values

Easy decision making

MMImprovement in Purchasing

Procedural change

Manual Vendor Evaluations

System generated Vendor Evaluations

Based on the procurement, GRN, Quality & service, system generates vendor rating

MMImprovement in Purchasing

Procedural change

Manual VAT calculations

VAT at the time of purchase order

Calculation of VAT based on the PO value

MM & FI

At the time of Procurement, user has to define tax code

Procedural change

Manual AIT calculations

AIT at the time of Advance and Invoice

Calculation of AIT based on the Net value

MM & FI

At the time of Procurement, user has to define tax code

Procedural change

Manual calculations for delivery costs of the

Based on conditions given in PO for delivery costs,

Actual value of the cost can be arrived

MM & FI Define the process and get concurrence of all concerned

Accurate pricing with related details


materialthe costs is loaded to the material

DESCRIPTION OF IMPROVEMENTS & SOLUTION IN SAP

Coding Of Material: Material number having consecutive number assigned for you by the system, depending on the method preferred by the company.

Planning of Spares & Accessories: A reorder point is set for the material, based on the weekly/day/month wise Automatic MRP will run at the plant level. If the stock is below the reorder point a purchase requisition will be generated.

Approvals of PR & PO: Work flow will be designed based on the approval authorities.

Procurement identification by Valuation type The valuation type specifies the individual characteristic of the valuation category, such as internal or external, in the case of Procurement. Within the valuation category Origin, you can define the different countries as the valuation types. You define valuation types in Customizing. You first determine all the valid valuation types for a valuation category.

Stock valuation

The materials will be valuated at Standard Price and Moving average price. For Standard Price Control indicator will be S and Moving average price control indicator will be V. The Standard / moving average price should be entered at the time of creation of the Material Master. Standard cost estimate can be carried out in SAP to arrive at the standard price and can automatically update the current standard price of the material. Also the standard price can be changed manually through the price change functionality in SAP

5 MODULE INTEGRATIONMaterials Management is integrated with all relevant modules of SAP.Please refer the below picture.


Production Planning – It is integrated in the areas like Material requirement Planning, Receipts/issues against production orders, Availability check for stocks etc. Material requirement Planning is d- based on Stocks, expected receipts, expected issues. It generates planned orders or purchase requisitions which can be converted to purchase orders/Contracts. Inventory Management is responsible for staging of the components required for production orders. The receipt of the finished products in the Warehouse is posted in Inventory Management.

Sales & Distribution – It is integrated in the areas like Delivery, Availability Check, Stock transfers requirements etc. As soon as a sales order is created, can initiate a dynamic availability check of stocks on hand. When the delivery is created, the quantity to be delivered is marked as "Scheduled for delivery". It is deducted from the total stock when the goods issue is posted. Purchase order can be directly converted to delivery for a stock transfer requirement.

Finance/Controlling – It is integrated in the area like Material Valuation, Vendor payments, Material costing etc.Whenever any inventory posting are d-, it updates the G/L accounts online in the background. Logistics invoice verification will create vendor liability in vendor account immediately on posting the document. Any advance given against the purchase order updates the Po history. For every inventory posting there is corresponding CO document to update profit center accounting reporting. Finish goods costing is link through MM & PP. Procurement of capital item cost can be directly booked against asset number.

Quality Management – It is integrated with QM for Quality inspection at Goods Receipt, In process inspection etc. In the case of a goods movement, the system determines whether the material is subject to an inspection operation. If so, a corresponding activity is initiated for the movement in the Quality Management system. Based on quality parameters vendor evaluation is done.

Plant Maintenance – The material/service requirement is mentioned in Maintenance order. This leads to generation of Purchase Requisition. This PR will be converted to Purchase Order by MM.The goods for a PO will be in warded to Maintenance by MM.The spares which were reserved for maintenance order will be issued by MM against the reservation number.


6 STANDARD INFORMATION SYSTEM

SAP as standard functionality offers various module wise reports for various analysis & help in decision making for the business organization. List of such standard reports is given below:

T Code Transaction code descriptionAC05 List Processing: Service MasterAC06 List Display: Service MasterMB03 Display Material DocumentMB24 Reservation ListMB25 Reservation ListMB51 Material Doc. ListMB52 List of Warehouse Stocks on HandMB53 Display Plant Stock AvailabilityMB5B Stocks for Posting DateMB5T Stock in transit CCME04 Changes to Source ListME05 Generate Source ListME06 Analyze Source ListME1E Quotation Price HistoryME1L Info Records Per VendorME1M Info Records per MaterialME1P Purchase Order Price HistoryME1W Info Records Per Material GroupME2B POs by Requirement Tracking NumberME2C Purchase Orders by Material GroupME2J Purchase Orders for ProjectME2K Purch. Orders by Account AssignmentME2L Purchase Orders by VendorME2M Purchase Orders by MaterialME2N Purchase Orders by PO NumberME2O SC Stock Monitoring (Vendor)ME2S Services per Purchase OrderME2W Purchase Orders for Supplying PlantME5A Purchase Requisitions: List DisplayME5J Purchase Requisitions for ProjectME5K Requisitions by Account AssignmentME80 Purchasing ReportingME81 Analysis of Order ValuesME82 Archived Purchasing DocumentsMELB Purch. Transactions by Tracking No.MI07 Process List of DifferencesMI08 Create List of Differences with Doc.MI20 Print List of DifferencesMIBC ABC Analysis for Cycle CountingMC$0 PURCHIS: PurchGrp PurchVal SelectionMC$2 PURCHIS: PurchGrp Freqs. SelectionMC$4 PURCHIS: Vendor PurchVal SelectionMC$6 PURCHIS: Vendor DelRelblty SelectionMC$8 PURCHIS: Vendor QtyRelblty SelectionMC$: PURCHIS: Vendor Freqs. Selection


MC$< PURCHIS: MatGrp PurchVal SelectionMC$> PURCHIS: MatGrp PurchQty SelectionMC$A PURCHIS: MatGrp DelRelblty SelectionMC$C PURCHIS: MatGrp QtyRelblty SelectionMC$E PURCHIS: MatGrp Freq. SelectionMC$G PURCHIS: Material PurchVal SelectionMC$I PURCHIS: Material PurchQty SelectionMC$K PURCHIS: Material DelRelib SelectionMC$M PURCHIS: Material QtyRel SelectionMC$O PURCHIS: Material Freqs. SelectionMC.1 INVCO: Plant Anal. Selection: StockMC.2 INVCO: Plant Anal. Selection, Rec/IsMC.3 INVCO: Plant Anal.Selection,TurnoveMC.4 INVCO: Plant Anal.Selection,CoveragMC.5 INVCO: SLoc Anal. Selection, StockMC.6 INVCO: SLoc Anal. Selection: Rec/IsMC.7 INVCO: SLoc Anal. Selection,TurnoveMC.8 INVCO: SLoc Anal.Selection, CoveragMC.9 INVCO: Material Anal.Selection,StocMC.A INVCO: Mat.Anal.Selection, Rec/IssMC.B INVCO: Mat.Anal.Selection, TurnoverMC.C INVCO: Mat.Anal.Selection, CoverageMC.D INVCO: MRP Cntrllr.Anal.Sel. StockMC.E INVCO: MRP Cntrllr Anal.Sel. Rec/IsMC.F INVCO: MRP Cntlr Anal.Sel. TurnoverMC.G INVCO: MRP Cntlr.Anal.Sel. CoverageMC40 INVCO: ABC Analysis of Usage ValuesMC41 INVCO: ABC Analysis of Reqmt ValuesMC42 INVCO: Range of Coverage by Usg.Val.MC43 INVCO: Range Of Coverage By ReqmtsMC44 INVCO: Analysis of Inventory TurnoverMC45 INVCO: Analysis of Usage ValuesMC46 INVCO: Analysis of Slow-Moving ItemsMC47 INVCO: Analysis of Reqmt ValuesMC48 INVCO: Anal. of Current Stock ValuesMC49 INVCO: Mean Stock ValuesMC50 INVCO: Analysis of Dead Stock

7 DEVELOPMENTS CONSIDERATIONS7.1 Data Conversion Considerations Ref.

#Description of Objects / Data

to be ConvertedData

Conversion Method (CATT,

LSMW, Development)

Reference Development Specification Number

1. Source list LSMW2 Material Master LSMW3 Vendor Master LSMW


Ref. #

Description of Objects / Data to be Converted

Data Conversion

Method (CATT, LSMW,

Development)

Reference Development Specification Number

4 Purchase Info record LSMW5 Condition Master LSMW6 Service Master LSMW

7.2 Interface ConsiderationsRef.

#Description of System / Process to be

InterfacedReference Interface

Specification Document Number

1. NA

7.3 Reporting Considerations Ref.

#Description of Report Requirements Reference Report

Development Specification

1 Tentative calculation of duty to be paid in coming week, month etc. for each port.

2 Material summary

7.4 Form ConsiderationsRef.

#Description of Forms Reference

Enhancement Specification Number

1. Purchase Order2 Blocklist Application (as & when required)3 Purchase Requisition4 Goods Receipt(Rawmaterials/Packaging

materials/ Others)5 Goods Receipt (Finished products)6 Goods Issue (Raw materials/ Packaging

materials/ Finished products/ Others)7 Delivery Challan (Finished products/ Materials/

Others)8 RFQ9 Label Printing

7.5 Enhancement ConsiderationsRef.

#Description of Enhancement Requirements Reference

Enhancement Specification Number

1. NA


8 AUTHORISATION CONSIDERATIONAs Mentioned in The URS2,Authorization will be provided as per the business Requirement.

.

9 ANNEXURES9.1 GAP Analysis

LC Monitoring and Payment process will not supported by SAP. It will be taken care at the time of creating PO with pricing conditions, where we can mention the bank charges, custom duty etc..