Istanbul Kultur University Enterprise Wide Information Systems The Procurement Process

Istanbul Kultur University Objectives Rather than selling, as you studied in the Customer Order Management process, you will now be focusing on the purchasing process. You will be able to: Describe the basic business process of procuring stock materials in an ERP System. Discuss the integration points in procurement to Financial Accounting and Inventory Management. Execute the procurement process in the SAP R/3 System. Discuss the reporting and analysis tools used by R/3 in the procurement cycle.

Istanbul Kultur University Topics Organizational Elements and Master Data Business Process for Procurement Reporting and Analysis

Istanbul Kultur University Procurement The primary SAP R/3 application modules that support the Procurement process are: Materials Management  Purchasing  Goods Receipts  Invoice Verification Production Planning  Purchase Requirements Financial Accounting  Payment Processing  Materials Valuation

Istanbul Kultur University Organizational Elements The SAP R/3 Procurement business process uses the following organizational elements:

Istanbul Kultur University Master Data The following master data is used in the Procurement cycle: Material master Vendor master

Istanbul Kultur University Material Master Primary Views Basic Data Material Resource Planning Stocks in Inventory Accounting Storage Warehouse Management Purchasing Sales Work Scheduling Quality Management Forecasting Classification

Istanbul Kultur University Vendor Master The Vendor Master includes all data necessary for processing business transactions and corresponding with vendors. Information is shared between the accounting and purchasing departments. All data is grouped into three categories: General data Company code data Purchasing data

Istanbul Kultur University Topics Organizational and Master Data Business Process for Procurement Reporting and Analysis

Istanbul Kultur University Procurement Cycle The procurement cycle may consist of eight processes:

Istanbul Kultur University Business Process Flow for Procurement The main documents and transactions in the Procurement process are: Note: Payments to vendors are usually made at specified times (e.g. at the end of the month). Payment amounts are determined according to the ‘open’ invoices posted on the system.

Istanbul Kultur University Purchase Requisition Processing

Istanbul Kultur University Purchase Orders A purchase order is a formal request to a vendor to provide certain materials or services under specific conditions (quantity, price, delivery date, etc.)

Istanbul Kultur University Purchase Order Processing

Istanbul Kultur University Goods Receipt When goods are received from a purchase order, the item data is copied from the purchase order into the goods receipt document.

Istanbul Kultur University Goods Receipt for Stock Material Entering the goods receipt increases the inventory level of a material that is procured for stock. Inventory Management (MM module) controls and records all goods movement, form purchase order receipt through the plant, to consumption

Istanbul Kultur University Results of a Goods Receipt Posting Transaction documents are created both for materials management and finance. Goods Receipt Posting Accounting document Stock quantity Consumption statistics Point of consumption Cost center Order Transfer Order Purchasing data: Order item, Order history Goods receipt slip Material document G/L accounts: Consumption account GR/IR account

Istanbul Kultur University Invoice Processing This last step in the procurement process includes invoice verification and updating accounts payable in the FI module. Payment will then be made later based upon the ‘open’ invoices posted on the system

Istanbul Kultur University Invoice Verification Environment Invoice verification accesses data from purchasing, inventory management, material master, and vendor master files.

Istanbul Kultur University Vendor Payment Accounts payable reads the invoice file and pays all posted invoices due. (Payment runs can be automated to occur at specific times.)

Istanbul Kultur University Procurement Integration Purchase Order Goods Receipt Invoice Verification PP FIFI MM Purchase Order Invoice

Istanbul Kultur University Topics Organizational and Master Data Business Process for Procurement Reporting and Analysis

Istanbul Kultur University Reporting and Analysis Standard Reporting provides List Displays (pre-defined programs) by: Vendor Material Account assignment Material group Purchase order number Tracking number General Analysis Order Value Analysis Inventory Transaction Analyses

Istanbul Kultur University Logistics Information System (LIS) The Logistics Information System (LIS) contains several information systems such as: Purchasing Information System Inventory Controlling Sales Information System Shop Floor Information System LIS extracts its data from the operative applications; it offers many different views on this information.

Logistics Information System (LIS) The LIS exists for the entire logistics system in R/3 The LIS contains several information systems such as: Sales Information System Purchasing Information System The LIS extracts data from the operative applications; offering it in many different views, the depth of which is determined by the user. Inventory Controlling Shop Floor Info System Sales Information System Purchasing Information System Inventory Controlling Shop Floor Information System Maintenance Information System Quality Mgmt Information System Sales and Distribution (SD) Materials Management (MM) Production Planning (PP) Plant Maintenance (PM) Quality Management (QM) Logistics Information Library R/3 Logistics Information Systems Logistics Processing Systems

In Summary The basic procurement process includes: Purchase requisition Purchase order Procurement master data includes the vendor and material master files. At various times during the Procurement process, integration occurs between the PP, MM and FI modules. The two reporting tools used in the procurement environment are: Standard Reporting  List Displays  General Analysis  Inventory Analysis Logistics Information System  Purchasing Information System  Inventory Controlling System Goods receipt Invoice processing