Unit 3-Procurement of Stock Material

Conditions in Purchasing Request for Quotation Management / Quotation Processing Create Purchase Order with Reference Purchasing Info record Material Valuation Basics Stock Types, Valuation, GR in Warehouse Invoice Verification and Delivery Costs

Conditions in Purchasing
Conditions are agreements with vendors about prices, surcharges and discounts, and so on. Conditions can be maintained when entering quotations, info records,outline agreements (contracts, scheduling agreements) and purchase orders.

Time Dependency of Conditions :- Time-dependent conditions are valid during a particular time period. With time independent conditions, you cannot determine a validity time period. Conditions in info records, contracts and general conditions are time-dependent conditions. However, conditions in purchase orders are always time-independent conditions. You can define both time-dependent and time-independent conditions at header and item levels. Header conditions apply to all items in the document. However, item conditions apply only to the respective item. For time-dependent conditions, you can create price scales and therefore display the dependency of the price on the quantity.

Condition Type and Calculation Schema

The different price factors such as gross price, discounts, freight costs, customs and taxes are represented with condition types. An access sequence can be assigned to a condition type. The access sequence is a search strategy used to define the sequence in which condition records for a condition type are read. The calculation schema provides a framework for price determination. It determines the sequence in which the condition types are taken into account. You can define different calculation schemes, for example, for the individual purchasing organizations and vendors.

T Code for Customize: Calculation Schema: M/08 Condition type :M/06

Request for Quotation Management/ Prosessing

RFQ is the 1st step of procurement process.Here Vendor is determined at the start and for this purpose, we send request for quotation (RFQ) to differnent vendors and enter incoming quotations in system to compare the condition of the individual vendors.

T-Code:- Quote Create,Change Display: ME41,ME42,ME43 List display : ME4L (By vendor),ME4M (by material),ME4S( by collective no.) Message: ME9A ( print/transmit)

Quotation Entry and Price Comparison List

The quotation contains a vendor's prices and conditions for the materials or services specified in the RFQ. RFQ and quotation are the same document in the system. T-Code for maintenance of quotation Maintain: ME47, Display: ME 48, Comparison: ME49 Vendor list : MKVZ , Material list: MM60

Message type for print rejection letter: ABSA

Create Purchase order with ref to quote

Purchase Info record

Organizational levels relevant for purchasing info records You can define the following information in info records: 1) Current and future prices and conditions (for example, freight and discounts). 2) Delivery data (for example, planned delivery time and overdelivery and Under delivery tolerances 3) Vendor data (for example, contact person) and vendor-specific data about 4) the material (such as the vendor subrange to which the material belongs, 5) description of material at vendor) 6) Number of the last purchase order 7) Texts.

A purchasing info record can be valid at both purchasing organization level and plant level. It also includes general data that is valid cross-client for every purchasing organization or every plant.

Material Valuation
In most goods movements in Inventory Management, the stock quantity and therefore also the stock value vary. In goods receipts, the stock value increases; in goods issues, the stock value decreases. The quantity and value of the material stock and the material price (= valuation price) are updated in the material master record. You therefore also need a material master record for warehouse material. The material valuation determines and maintains the stock value of a material. The following formula is used to calculate the stock value: Stock value = stock quantity * material price Material valuation demonstrates a connection between Materials Management (MM) and Financial Accounting (FI) because material valuation accesses G/L accounts in Financial Accounting and updates them. Material valuation is adjusted to the requirements of your company using the system settings. For system configuration, the following questions are defined: On which level are materials valuated? Which types of goods movements are relevant for valuation? .Which accounts are posted to during a transaction?

 Valuation Level :The valuation area is the organizational level at which material is valuated. You can decide whether the valuation area is determined at company code or plant level. valuation area = company code The valuation data of a material is created separately for each company code. The price control and valuation price of a material are valid for each company code. The material is therefore valuated consistently in all plants of a company code.

valuation area = plant The valuation data of a material is created for each plant. The price control and valuation price of a material are valid for each plant. The same material can therefore be valuated differently in different plants. SAP recommends that you valuate material at plant level. Valuation at plant level is mandatory if you want to use either of the Production Planning or Product Cost Accounting components. Customizing Enterprise Structure Definition Logistics General Define Valuation Level ( T-Code: OX14)

In the material master record, you enter the necessary valuation data for a material in the accounting data. Depending on the valuation area, you must specify either the company code or plant when maintaining the accounting data. When entering the accounting data, you must answer the following questions: 1) In which G/L account should the stock value of this material be managed? 2) Is the stock of a material to be valuated at a constant price or should the price be adjusted to match the fluctuations of the cost price?

Note: The material type you selected when creating a material determineswhether the material is to be valuated at all. The material type controls whether the stock is to be managed on a quantity and/or value basis and whether this update can be controlled at valuation area level. In automatic account determination, the SAP system works with valuation classes. The valuation class is used to determine which stock account is to be updated during the goods movements of a material. You can use the valuation class to combine materials for assigning G/L accounts so that you do not have to manage a separate stock account for each material. You maintain the valuation class in the Accounting view of the material master record.

Valuation Class

The valuation class allowed for a material depends on the material type and can be configured in Customizing. A valuation class can also be assigned to several material types. The price control procedure set in the material master record determines the value used to valuate the goods receipt of a material. Material valuation can be carried out according to the standard price (S price) or the moving average price (V price). In case of standard price: Every good posting is valuated with stanadred price stored in material master. Any difference with order price is posted in price difference account. Note: For statistical purpose, system also calculate moving avg. price of item when price control is set as standard. Total value = standard price (per base unit of measure) * total stock In case of standard price: In valuation using the moving average price (price control .V.), the system valuates goods receipts with the purchase order price and goods issues with the current moving average price. The system automatically calculates the moving average price for every goods movement as follows: Moving average price = total stock value / total stock quantity. (Note: Any differences from the purchase order price that occur during the invoice receipt are posted directly to the stock account during stock coverage, and the system determines a new moving average price.)

Stock Types, Valuation, GR in Warehouse

When a material received in plant, it can be posted in one of the three stock type. Stock type: Unrestricted, Quality-inspection and blocked stock type. In the purchase order and material master, you can plan whether the material is to be posted to the quality inspection stock. When the goods are received, you decide the stock type to which the material is posted. You always use movement type 101 to post goods receipts for a purchase order to valuated stock.

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 Stock Overview & Stock Type:Stock Overview: You can view availability of material in your orgnization through transaction code MMBE or Menu path: Logistic-->Mat.Mag.-->Environment-->Stock--> Stock Overview (MMBE) Stock Type: You can post a goods receipt for the warehouse into three stock types: Unrestricted-use stock Quality inspection stock Blocked stock Note: Available stock in quality and Block can be move in unrestricted use through transfer posting. Documents at Goods Receipt: If the goods movement is relevant to valuation, the system creates at least one accounting document in addition to the material document. Goods movements (goods receipts, goods issues, or transfer postings) are relevant to valuation when your companys Accounting department is affected by them.

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The material document consists of a document header and at least one item. The header information includes the posting date and the name of the creator. The system records the quantity of the material that is posted to a storage location of a plant at item level.
The accounting document records the effects of material movements on the accounts. The document header contains generally applicable data, such as the document date, posting date, posting period, and document currency. The G/L account numbers and the associated amount posted are recorded at item level

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Transfer Posting : If you want to withdraw goods from blocked stock or quality inspection stock for consumption, you first have to carry out a transfer posting to unrestricted-use stock. You use the movement type to control the stock types involved in the transfer. As for all goods movements, the system also creates a material document during transfer postings to show the transaction in the system. The system generates accounting documents only if a change in valuation is involved (for example, stock transfer from plant to plant).

If the raw material is only transferred within one plant, no postings are made in Financial Accounting. A material document is generated as proof of a process that has caused a change in stock. If the goods movement is relevant to valuation, the system creates at least one accounting document in addition to the material document. The material document consists of a document header and at least one item. The header information includes the posting date and the name of the creator. The system records the quantity of the material that is posted to a storage location of a plant at item level. The accounting document records the effects of material movements on theaccounts. The document header contains generally applicable data, such as the document date, posting date, posting period, and document currency. The G/L account numbers and the associated amount posted are recorded at item level. The material and accounting documents are independent documents. You can identify the material document by the material document number and the material document year. The accounting document can be uniquely identified by the company code, the accounting document number, and the fiscal year.

Effect of good receipt:-

Invoice Verification and Delivery Costs

When you enter an invoice using Logistics Invoice Verification, a separate accounting document (FI document) is generated in addition to the invoice document (MM document). In this way, when the invoice is posted, (1) payment information is forwarded to financial accounting and (2) various accounts are updated. The system automatically determines which amounts have to be posted to which accounts. Enter an invoice with unplanned delivery costs in Logistics Invoice Verification: Planned delivery costs are agreed in advance with the vendor himself, so we mention same in order but Unplanned delivery costs are costs that are not known at the time of ordering and are therefore not entered until the incoming invoice is posted. The advantage of planned delivery costs is that they are included in the valuation of the material at the time of goods receipt but in unplanned delivry cost when price control is MAP, stock account get updated but in Standard price control, a separate account will impact.