Procurement Cycle: 4. Purchase Order Processing (part 2)

In the previous article, I have explained SAP PO Header Data in details. In this article, I will explain SAP PO Item data in details.
Purchasing Document Item
The item of a purchasing document describes the material or service ordered. The RFQ, contract, scheduling agreement, and PO document item information are stored in the EKPO table. There are more than 200 fields in the EKPO table. Some of them are relevant to PO and some are not (such as “Target quantity” that only relevant to contract and scheduling agreement).
In standard SAP ERP, some important purchasing document item data that relevant to a PO are: Continue reading

Procurement Cycle: 4. Purchase Order Processing (part 1)

In the previous step, the buyer has selected the vendor which will provide the material/service needed in PR. Now, the buyer needs to create a Purchase Order (PO) based on the PR and the reference document (that can be an contract, an info record, or a quotation).
Purchase Order (PO) is a formal document that issued by a company to request materials/services to a vendor with certain conditions agreed, such as the materials/services specification, quantity, delivery date, price, terms of delivery, terms of payment, etc.
In SAP ERP software, PO can be created from various ways, such as:
  • From ME57 t-code.
ME57 is a t-code to Assign and Process Purchase Requisitions. With this t-code, buyer can display list of PRs that he needs to process. The buyer can select the PR items that will be processed and check whether these items have existing source of supply documents (such as contract or info record) by clicking “Assign Automatically” button.
If there is existing source of supply that can be used to order the PR items, the buyer can directly create a PO from this t-code by clicking the “Assignment” and then “Process Assignment” button. There will be a pop up window like this: Continue reading

Procurement Cycle: 3. Vendor Selection

Vendor Selection is the third step of a procurement / purchasing cycle.
If, in the previous step about source of supply determination, there are some outline agreement or info record documents that can be used as references to create a PO, the buyer can select or choose which vendor that will be appointed to provide the material/service at this time.
If there is no outline agreement or info record documents that can be used as references to create PO, the buyer will send the RFQ documents to one or some vendors. The vendors will send their quotations which include the information about the price, delivery terms, terms of payment, etc that they offered to the company. The buyer can input that information into SAP with ME47 t-code.

Procurement Cycle: 2. Source of Supply Determination

In the previous posts I have written about procurement cycle and the first step of it (the requirement determination). In that step, user’s requirement is recorded as a Purchase Requisition (PR) document in SAP ERP. This PR needs to be processed by the buyer into a Purchase Order (PO) in the case of external procurement, or a Stock Transport Order (STO) in the case of stock transfer between plants. In this post I will explain more about general process of source of supply determination for external procurement PR.
PR item with source of supply
In the PR, user can propose source of supply of his requirement. The proposal can be an outline agreement or an info record. If the buyer agrees with the proposal, he can directly create a PO from that PR referring to the source of supply proposed. If he doesn’t agree with the user’s proposal, the buyer can find other source of supply for that PR item by himself. It can be an existing outline agreement or info record. Those can be done with ME57 t-code (Assign and Process Purchase Requisition).
Outline agreement is a longer-term arrangement between a company and a vendor concerning the supply of materials or the performance of services over a certain time frame (validity period) on the basis of predefined terms and conditions (such as unit price, delivery terms, terms of payment, etc).
An example of processing PR referring to an outline agreement:

Procurement Cycle: 1. Requirement Determination (Purchase-Requisition)

In the previous post I have explained about SAP basic procurement process which consists of 8 steps of procurement cycle. In this post I will explain in details about the 1st step: The Determination of Requirement.

Introduction
The determination of requirement in SAP procurement process is about Purchase Requisition (PR) creation. Purchase Requisition (PR) is an internal purchasing document that is used to give notification to responsible department about the requirement of material/service. In SAP ERP, the creator of the PR can keep track of his requirement by monitoring the status of the PR, whether it has been processed to be an Purchase Order (PO) or not .

A PR must contain clear information about the description and quantity of the material/service, the required date, and other information. PR can be created directly in SAP MM module with ME51N t-code, or indirectly by another SAP component, such as: materials planning, maintenance order of PM module, production order of PP module, network activity of PS module, etc. We have explained this in the previous article about MM integration with other modules. 

SAP PR Document Type