1. 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.

2. Unit overview Organizational structure Master data
Procure to pay process
Reporting

3. 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

4. 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

5. 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

6. 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)

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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.

13. Questions