SAP Purchasing Group in Details

In the previous post we have explained about SAP MM enterprise structure including for purchasing function: the Purchasing Organization and its assignment to other organizational units (company code and plant).
In the purchasing function, there is another unit that can represent the structure of an enterprise purchasing department, which is Purchasing Group. Unlike the Purchasing Organization (which is an Enterprise Structure organizational unit), the Purchasing Group is not assigned to other organizational units (such as company code, plant, or Purchasing Organization).
A purchasing group is represented by a client-unique 3-digits alpha-numeric. Continue reading

Procurement Cycle: 5. Purchase Order (PO) Monitoring

After the PO has been sent to the vendor, the buyer or other responsible person must monitor the status of the PO. He must monitor whether the vendor has delivered the material/service at the right time on the right place. He can monitor whether the material/service has been received by the person responsible (such as the warehouse man) with PO history function in the PO document. If the warehouse man or anyone else has received the material/service and posted the Goods Receipt/Service acceptance document, the PO history will be updated in a real-time basis.
SAP ERP can also has a functionality to give the reminder to the buyer if the PO item has not been GR in the specified period in respect of the delivery date agreed with vendors.

The responsible person must also monitor whether the invoice for the PO item has been received or not. He can also monitor it with PO history function in the PO document. Once the invoice received from the vendor, the responsible person (usually in the accounting department) will post the invoice receipt document which will update the PO history in a real-time basis. The invoice from the vendor will trigger the payment processing.

PO History Continue reading

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.