Procure to Pay Process This unit focuses on the procure to pay process. The first part describes the organizational levels and master data which support the procure to pay process. In the subsequent sections, we focus on purchase requisitions, purchase orders, goods receipt and invoice verification.

Unit overview Organizational structure Master data Procure to pay process Reporting

Organizational structures that support procurement Client: highest hierarchical unit in the SAP system Company code: independent unit with own balance sheet Can define a number of company codes in a client Represented by a four-digit alpha-numeric code: ZM00 Plant: organizational unit within logistics Facility for manufacturing, distribution, storage, or rendering services Defined by a four-digit alpha-numeric key unique to client LU00 & MU00 Storage location: Location where inventory is stored Defined by a four-digit alpha-numeric key unique to plant RM00, MI00

Our context Lusaka Global Bike Group Zambikes Company Ltd. Mungwi Trading Goods Semi-finished Goods Finished Goods Miscellaneous Mungwi Raw Materials Storage locations Company codes Plants Client

Organizational structures that support procurement Purchasing organization Organizational unit accountable for procuring services and materials Selects vendors, negotiates conditions and contracts, sets pricing conditions, strategic purchasing planning Purchasing group Represents the buyer or a group of buyers that are responsible for certain purchasing activities Internally: responsible for execution of purchasing transactions Tasks: creating purchase requisitions, getting vendor quotes, creating purchase orders (POs), monitoring POs Externally: main point of contact with vendor

Master data for procurement Master data is data that is shared across systems and business processes and is used repeatedly by and may be affected by several business processes. Categorised as Material master data (details on material to be purchased) Vendor master data (details on the supplier) Purchasing info record (combines the two above) Conditions (pricing and discounts)

Vendor master data Vendor master Example of vendor master data: Contains all the necessary information needed to do business with a supplier Used and maintained primarily by the purchasing and accounting departments Every vendor MUST have a master record Example of vendor master data: General data at a client level Name & address Vendor number Preferred communication Currency Company code data Terms of payment Bank account Purchasing org. data Incoterms Salesperson’s name

Material master data Material master Contains all the information a company needs pertaining to a material Descriptions of materials procured, produced and stocked It is used by most components within the SAP system Sales and Distribution Materials Management Production Plant Maintenance Accounting/Controlling Quality Management Material master data is stored in functional segments called Views

Purchasing information record (PIR) Framework for purchase order Contains the relationship between a vendor and a material Can be created Manually Automatically – quotations Automatically – purchase orders

Purchasing information record Details on which vendors supply a particular material Details on which materials can be procured from a particular vendor Allows buyers to quickly determine Which vendors have offered or supplied specific materials Info records contain Data on pricing and conditions Last purchase order Tolerance limits for deliveries Specific lead times Availability periods Vendor evaluation data Serves as default information for purchase orders

Conditions Conditions are agreements with vendors about prices, surcharges and discounts. Conditions can be maintained when entering quotations, info records, outline agreements (contracts, scheduling agreements) and purchase orders. The following types of conditions are used in purchasing: Conditions in a contract apply to all contract release orders created with reference to this contract. Conditions in a purchasing info record apply to all purchase order items that contain the material and vendor in the purchasing info record. ‘General’ conditions: for example, if a vendor has a price reduction on all purchase orders as a two-month special offer. Enter general conditions in Purchasing under Master Data → Conditions.

An Example of a Procurement Process Vendor selection Purchase requisition Purchase order Payment to vendor Notify vendor Invoice receipt Vendor shipment Goods receipt Take note of the different procurement activities. These activities are done by employees from different departments as they interact with the Enterprise System. The arrow shows the flow of information as it move step by step, supporting business activities. Such information includes the master data discussed earlier and the departments (organizational data) mainly involved in facilitating the process will make use of this master data and transaction data that is generated through facilitating transactions.

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