Best Study Notes For Sap MM

SAP MM STUDY NOTES
1 R/3 STRUCTURE OF SAP ..................

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CLIENT – SERVER BENEFITS ............................................ .......................................... 7
BUSINESS TRANSACTION
TRANSACTION ...........................................................................................
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BUSINESS FRAMEWORK ..................................... ............................................. ............ 7
BAPI .............................................................................................................................. 8
2 ENTERPRISE STRUCTURE ..................
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CLIENT ............................................................................................................................. 9
COMPANY CODE .......................................... ............................................. ..................... 9
PLANT........................................ ............................................. .......................................... 9
STORAGE LOCATION.................................. ............................................. ..................... 9
VALUATION AREA ........................................................................................................ 9
PURCHASE ORGANIZATION ............................................. .......................................... 9
CENTRALISED
CENTRALISED PURCHASE ORGANIZATION .................................. ................... 10
PURCHASING GROUPS ............................................................................................... 10
3 BASIC PROCUREMENT PROCESS (GENERAL) .... 11
Flow ................................................................................................................................. 11
Purchasing value Key .................................................................... .................................. 11
Item Category................................................................................................................... 11
ZERO VALUE POs ......................................... ............................................. ................... 12
Changeability
Changeability of PO ......................................... ............................................. ................... 12
Invoicing Plan ............................................ ............................................. ......................... 12
Reporting.......................................................................................................................... 13
Analysis of Order Values .......................................... ............................................. .......... 13
4 MASTER DATA ..................
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VENDOR MASTER ........................................ ............................................. ................... 14
ACCOUNT GROUP of a Vendor............................................................. ................... 14
Vendor Reconciliation account ............................................ ........................................ 14
Pre-requisite
Pre-requisite for Vendor Partner roles ....................................... .................................. 14
Controls of Document type ......................................... ............................................. .... 15
Payment terms ........................................ ............................................. ......................... 15
Inco-terms .................................................................................................................... 15
Text types for central
central Texts ................................................................ ......................... 15
Text types for Purchase
Purchase Organiza
O rganization tion Texts ............................................. ................... 16
MATERIAL MASTER ............................................. ............................................. .......... 16
MATERIAL NUMBER ........................................ ............................................. .......... 16
MATERIAL TYPE ...................................... ............................................. ................... 17
Material filed selection reference........................................................
reference........................................................ ......................... 17
INDUSTRY SECTOR .......................................... ............................................. .......... 18
Unit of measure ...................................... ............................................. ......................... 18
Accounting View
View ....................................................................... .................................. 18
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Classification: Confidential
5 PROCUREMENT OF STOCK MATERIAL ...............
......... ...... 19
PURCHASING – GENERAL ......................................................................................... 19
Centralized
Centralized Purchasing ............................................................................. ................... 19
Distributed Purchasing.......................................... ............................................. .......... 19
Company specific......................................................................................................... 19
Reference Purchase Organization ........................................ ........................................ 19
Data in MM Purchasing
Purchasing ............................................ ............................................. .......... 19
Master records in Purchasing...................................... ............................................. .... 19
PURCHASE REQUISITION ......................................... ............................................. .... 20
PR changeability .......................................... ............................................. ................... 20
RFQ / QUOTATIONS ..................................... ............................................. ................... 20
Creation of RFQ ..................................... ............................................. ......................... 20
Quotation processing
processing ................................................................. .................................. 21
Conditions in Purchasing ...................................... ............................................. .......... 21
PURCHASING INFO RECORD .................................................................................... 21
Info update indicator ............................................. ............................................. .......... 22
Info update scenarios
scenarios .......................................................................... ......................... 22
Structure of Info Record
Record ............................................................ .................................. 23
TEXTS ............................................................................................................................. 24
CONDITIONS ................................................................................................................. 25
CONDITION TECHNIQUE ........................................................................................... 26
Purchase Requisition Prices ............................................ ............................................. .... 26
VENDOR CONFIRMATIONS ...................................... ............................................. .... 27
RELEASE PROCEDURE ........................................ ............................................. .......... 27
Changeability
Changeability after the start of a release procedure.................................. ................... 27
MANUFACTURER PART NUMBER ......................................... .................................. 27
VENDOR EVALUATION ............................................. ............................................. .... 28
6 PROCUREMENT OF CONSUMABLE MATERIALS 31
Stock Vs Consumable ...................................... ............................................. ................... 32
Purchase Requisition
Requisition for Consumable Material .............................................................. 32
Procedure
Procedure for SPLIT VALUATION
VA LUATION - transactional
transactional ..................................... ................... 32
BLANKET PURCHASE ORDERS ........................................ ........................................ 32
7 EXTERNAL SERVICES PROCUREMENT ...............
......... ...... 34
Service Master ................................................................................................................. 34
Master Records in Service Management ................................................ ......................... 35
Maintaining Service
Service Conditions .................................................... .................................. 35
Standard Service Catalogue ............................................ ............................................. .... 36
Model Service Specifications
Specifications ........................................................ .................................. 36
Account assignment
assignment in servicesservices ...................................... ............................................. .... 36
Global Percentage Bidding (GPB) ........................................... ........................................ 36
Pre-requisites
Pre-requisites are .......................................... ............................................. ................... 36
Process ......................................................................................................................... 37
OUTLINE AGREEMENTS ..................................... ............................................. .......... 37
CONTRACTS ............................................ ............................................. ......................... 37
SCHEDULING AGREEMENTS ............................................ ........................................ 38
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SOURCE DETERMINATION
DETERMINATION ....................................... ............................................. .... 40
Source determination at PR level......................................... ........................................ 40
SOURCE LIST ................................................................................................................ 40
QUOTA ARRANGEMENT ..................................... ............................................. .......... 41
REPORTING ................................................................................................................... 43
8 AUTOMATED PROCUREMENT PROCESSES ........ 45
9 OPTIMIZED PURCHASING ..................
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... 46
USER PARAMETER – EVO ......................................... ............................................. .... 46
ORDER ACKNOWLEDGEMENTS ...................................... ........................................ 47
EVALUATED RECEIPT SETTLEMENT
SETTLEMENT (ERS) ................................. ......................... 47
10 MATERIAL REQUIREMENT PLANNING ...............
......... ...... 48
Pre-requisites
Pre-requisites for MRP .................................................................. .................................. 48
MRP RPOCEDURES – Overview .............................................................................. .... 49
CBP Vs MRP ............................................. ............................................. ......................... 49
Consumption Based Planning (CBP) ............................................. .................................. 49
ONLY ONCE INDICATOR............................................................................................ 49
PRIORITY FUNCTION .................................. ............................................. ................... 50
MRP Types ...................................................................................................................... 50
MRP relevant data in material master............................................ .................................. 50
PLANNING RUN ...................................... ............................................. ......................... 51
MRP run types ............................................. ............................................. ................... 51
Planning sequence........................................ ............................................. ................... 51
Planning types ........................................ ............................................. ......................... 51
Planning File .......................................... ............................................. ......................... 52
CONTROL PARAMETRS OF MRP .......................................................................... .... 52
MRP area ......................................................................................................................... 53
Preparation
Preparation of MRP run with MRP areas (in CUSTOMIZING) ..................................... 53
PROCESS FLOW during PLANNING PLANNING RUN.................... .......................................... .... 54
Stock- Requirement List ( Transaction
Transaction code – MD04).......................................... .......... 55
MRP List (MD05) ...................................... ............................................. ......................... 55
Customizing for MRP ...................................... ............................................. ................... 55
MRP area ......................................................................................................................... 56
LOT SIZING PROCEDURE .......................................... ............................................. .... 56
Types ............................................. ............................................. .................................. 56
RE-ORDER POINT PLANNING & EVALUATION .................................................... 57
Procurement
Procurement Proposal or Order Proposal ............................................... ......................... 57
Re-Order Point Planning ........................................... ............................................. .......... 58
Calculation of Dead lines .......................................... ............................................. .......... 58
11 INVENTORY MANAGEMENT .................
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MOVEMENT TYPE ....................................................................................................... 59
Valuated Good
Good Receipts ................................................................ .................................. 59
Stock types ........................................ ............................................. .................................. 59
Stock Indicators are the indicators for differentiate between stock types on goods receipt
Negative Stock
Stock ........................................... ............................................. ......................... 59
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STOCKS .......................................................................................................................... 60
Stock Transfer Vs Transfer Posting ......................................... ........................................ 60
Material Document Vs Accounting Document................................................................ 61
EFFECTS OF A GOODS RECEIPT ....................................... ........................................ 61
Stock Overview .......................................... ............................................. ......................... 61
ENJOY Transaction – MIGO ......................................... ............................................. .... 62
GR of Blocked Stock (Movement type –103) ....................................................... .......... 62
Goods Receipt in to QI stock (101 +X) ......................................... .................................. 63
OTHER GOODS RECEIPTS ......................................... ............................................. .... 63
DELIVERY COMPLETED INDICATOR.................................... .................................. 63
RETURN DELIVERY..................................................................................................... 64
Difference between Reversal & Return delivery .......................................... ................... 64
Movement type –161 ....................................... ............................................. ................... 65
Quantity Distribution facility at GR .............................................. .................................. 65
Goods Receipt using Order Price Unit..................................... ........................................ 65
Entering a Freight Vendor at Goods Receipt .......................................... ......................... 65
Pre-requisites................................................................................................................ 65
Goods Receipt of Non-valuated goods ........................................................................ 65
Automatic PO generation.......................................... ............................................. .......... 65
SHELF LIFE EXPIRATION DATE (SLED) check at GR ......................................... .... 66
Dynamic availability Check ............................................ ............................................. .... 67
Activation in Customizing for Plant & Movement types are required for ...................... 67
Missing Parts Check .................................................................................................... .... 67
Multiple account assigned GRs ..................................................... .................................. 67
GR Forecast ..................................................................................................................... 67
RESRVATION ................................................................................................................ 67
Structure of Reservation Screen................................................. .................................. 68
Important points while creating/ changing a reservation ......................................... .... 68
Reservation Management Program (RMP) ......................................... ......................... 69
Customizing settings for Reservations....................................... .................................. 69
INITIAL STOCK ENTRY ....................................... ............................................. .......... 70
GOODS ISSUE .......................................... ............................................. ......................... 71
BACK FLUSH .................................. ............................................. .................................. 72
GR/ GI SLIP numbering .................................. ............................................. ................... 72
Goods Movement via Shipping ....................................................................................... 73
Pre-requisites................................................................................................................ 73
Movements............................................. ............................................. ......................... 73
Scheduling.................................................................................................................... 73
MATERIAL BLOCK (ENQUEUE) for Goods Movements....................................... .... 73
STOCK DETERMINATION ......................................... ............................................. .... 73
Returns to Vendor ...................................... ............................................. ......................... 75
STOCK MOVEMENTS-TRANSFERS ........................................ .................................. 75
Stock Transfer Vs Transfer Posting ..................................... ........................................ 75
Levels of stock Transfer.............................................. ............................................. .... 75
STOCK TRANFERS ....................................... ............................................. ................... 76
SPECIAL STOCKS ......................................... ............................................. ................... 77
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12 SPECIAL PROCUREMENT TYPES ........................... 79
CONSIGNMENT PROCESS ......................................... ............................................. .... 79
Process of Consignment Procurement & Settlement ......................................... .......... 80
Process of Physical Inventory of Consignment ........................................ ................... 80
SUBCONTRACTING PROCESS .................................. ............................................. .... 80
Process of Subcontracting Process............................................................................... 82
Purchase requisition and PO for Subcontracting ......................................................... 82
Providing components for existing Purchase Orders ......................................... .......... 83
Subcontracting in Inventory Management (Facilities) ............................. ................... 83
STOCK TRANSFER USING STOCK TRANSFER ORDER.................................... 84
GENERAL –INFORMATIONS ON STO ......................................... ......................... 87
THIRD PARTY PROCESSING .......................................... ........................................ 88
Implications of Third Party Processing in SALES .......................................................... 89
Implications of Third Party processing in PURCHASING ............................................. 89
Implications of Third Party processing in Inventory Management ................................. 89
RETURNABLE PACKING (RTP) PROCESSING ..................................... ................... 89
PIPLINE MATERIAL PROCESSING ................................... ........................................ 90
SALES ORDER STOCK.......................................... ............................................. .......... 90
PROJECT STOCK........................................................................................................... 91
13 PHYSICAL INVENTORY MANAGEMENT ............. 91
Physical Inventory process ...................................................... ........................................ 92
CYCLE COUNTING....................................................................................................... 93
INVENTORY SAMPLING ...................................... ............................................. .......... 94
14 VALUATION AND ACCOUNT DETERMINATION 95
Procedure for SPLIT VALUATION - transactional..................................... ................. 106
NON-VALUATED STOCK MATERIAL (UNBW) ................................... ................. 107
RETURNABL TRANSPORT PACKAGING MATERIALS (RTP) ............................ 107
15 INVOICE VERIFICATION ....................................... 108
BASIC INVOICE VERIFICATION PROCESS .......................................... ................. 109
INVOICING PLAN ......................................... ............................................. ................. 112
PO BASED INVOICE VERIFICATION ...................................... ................................ 112
GR BASED INVOICE VERIFICATION .................................................... ................. 112
TAXES in INVOICE VERIFICATION ........................................ ................................ 113
CASH DICOUNT in INVOICE VERIFICATION ....................................................... 113
FOREIGN CURRENCY in INVOICE VERIFICATION ..................................... ........ 114
VARIANCES AND INVOICE BLOCKING ......................................... ....................... 114
1. VENDOR SPECIFIC TOLERANCES.................................. ................................ 114
2. INVOICE BLOCK TOLERANCE LIMITS ......................................................... 115
3. PURCHASE ORGANIZATION LEVEL.............................................................. 117
4. AT GOODS RECEIPT ..................................... ............................................. ........ 117
BLOCKING VARIANCES ...................................... ............................................. ........ 118
INVOICE REDUCTION .......................................... ............................................. ........ 119
VARIANCE WITHOUT REFERENCE TO AN ITEM ............................................... 121
1. TOTAL BASED INVOICE REDUCTION .......................................... ................. 121
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2. TOTAL BASED ACCEPTANCE ......................................... ................................ 121
3. VENDOR SPECIFIC TOLERANCE LIMITS..................................... ................. 121
MANUAL ACCEPTANCE ........................................ ............................................. .. 122
INVOICE VERIFICATION OF CONSUMPTION MATERIALS .............................. 122
16 GENERAL INFORMATIONS on LIV ...................... 131
17 RELEASE PROCEDURE .......................................... 142
18 BATCH MANAGEMENT ......................................... 144
19 CLASSIFICATION .................................................... 145
Elements of Classification ............................................................................................. 145
20 PRICING PROCEDURE ............................................ 147
Time dependent conditions ............................................. ............................................. .. 147
Maintaining TD Conditions ............................................ ............................................. .. 147
CONDITION TYPES. ..................................... ............................................. ................. 148
ACCESS SEQUENCE................................................................................................... 151
EXCLUSION OF CONDITIONS .................................. ............................................. .. 151
Define Condition Exclusion........................................ ............................................. .. 151
Condition records in Condition Tables .......................................... ................................ 152
PRICING PROCEDURE (Calculation SCHEMA) ....................................................... 153
SCHEMA DETERMINATION ...................................... ............................................. .. 154
INFO RECORD and ORDER PRICE HISTORY ........................................ ................. 154
HEADER, GROUP & ITEM CONDITIONS ........................................ ....................... 154
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1 R/3 STRUCTURE OF SAP
Real time 3 tier architecture
CLIENT – SERVER BENEFITS

1. Presentation Server
2. Application Server
3. Database Server
Presentation Server Application Server Database Server
• R/3 structure system architecture allows separating application from presentation

and Database. So the load distribution is possible at 3 different levels.
• Because of R/3 structure, Scalability (No of users) increases. This scalability
provides with flexibility when choosing hardware and software.
BUSINESS TRANSACTION
Is a sequence of dialog steps that are consistent in a business context and that belong
together logically.
- Business Object - eg. Employee

- Attributes (Characteristics) – eg. Name
- Methods - eg. Change address
A business object composed of Tables that are related in a business context, including
related application programs
Attributes can be modified by the methods that belong to the business object.
Business objects are maintained at Business Object Repository (BOR)
Maximum number of sessions we can open in SAP R/3 is Six
BUSINESS FRAMEWORK
- Business framework portrays the R/3 system as a family of product made up of

separate integrated components.
Page 7 of 160
- Business Framework architecture woks using business components that are
configurable software modules and it offers the enterprise a flexible business
infrastructure.
Ie. The enterprise software can react quickly to business demands and can
be changed or enhanced simply without disturbing the flow of business.
BAPI
- Business components react with business frame work architecture via Business
Application Program Interface (BAPI)
- Business Framework architecture is the strategic product architecture of the R/3
system.
- BAPI is a well defined interface providing access to processes and data of business
application system.
- BAPI is an entry gate to R/3 system
- Functions of BAPIs are
1. Create Objects
2. Display attributes of objects
3. Change attributes of objects
- A BAPI is assigned to One and ONLY one business object
- Using Business framework technology, SAP provides its customer with a platform
to configure and connect business processes and information flows across all
components of the business frame work, also across physically separated
components.
- Benefits of Business Frame work architecture are :

1. Ability to easy changes and configure dynamically and independently
2. Easy integration with Internet.
3. Simple connection between R/3 and third party (non-SAP) software.
Page 8 of 160
2 ENTERPRISE STRUCTURE
CLIENT
Is a commercial Organizational Unit within R/3 system with its own data, Master
records and set of tables.
- It is the highest level element of all Organizational unit
- Represented by 3 digit alphanumeric key
COMPANY CODE
It is the smallest Organizational unit within R/3 system for which can have an
independent accounting department within external accounting. Legal entity
- It is having balance sheets, Profit & Loss accounting required by the law
- Represented by 4 digit alphanumeric key.
PLANT
Is an organizational logistic unit that structures the enterprise from the perspective
of production, procurement, Plant maintenance, Material Planning
- It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant.
- Represented by 4 digit alphanumeric key
STORAGE LOCATION
Is an Organizational unit that allows the differentiation of material stocks within the
Plant
- Inventory management on quantity basis is carried out at storage location level.
- Physical Inventory is also carried out at storage location level.
VALUATION AREA
Is an organizational level at which material is valuated.
- R/3 system recommends Plant level
- Valuation at Plant level is mandatory if you are using Production planning/ CO/
Retail system
- Valuation area selection is a fundamental setting in customization and very difficult
to REVERSE
PURCHASE ORGANIZATION
Is an organizational level that negotiates conditions of purchase with Vendors for 1
or more Plant.
- It is legally responsible for completing purchasing contracts
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CENTRALISED PURCHASE ORGANIZATION
Should be attached to Company Code or otherwise Plant specific (attached to Plants). We
can have cross-company code OR Cross-plant Purchase Organizations
PURCHASING GROUPS
Is the key for buyer or group of buyers responsible for certain specific purchasing
activities (eg. Mech/ Elect, etc.)
Organizational Unit – Organizational grouping of an enterprise.

Transaction – Application programs which executes business processes in R/3
system
Document – Data record generated through a transaction
Material Master – Central data object in SAP R/3 system.
• Configuring is the method of doing customizing

• CONFIGURE to CUSTOMIZE
Page 10 of 160
3 BASIC PROCUREMENT PROCESS (GENERAL)
Flow
1. Determination of requirements
2. Source determination
3. Vendor selection
4. Purchase Order processing
5. Purchase Order monitoring
6. Goods Receipt
7. Invoice Verification
8. Payment processing (FI)
Purchase Order : A formal request to Vendor to supply certain goods / services under the
stated conditions
When we enter an invoice against a PO/ GR, the system checks the price, rate, payment
terms with respect to Purchase Order and Quantity w.r.to GR
While entering the GR, system checks whether the material is as per PO or not w.r.to
Quantity, Shelf life, etc.
Several GRs can be entered for a PO item in one operation
The type of Invoice verification (PO Based / GR Based ) is to be fixed in PO , Invoice Tab
If MRP Procedure is set, PR will be generated automatically during MRP run.
Purchasing value Key

for auto-reminders and supply tolerances. It is fixed in the purchasing view of the material
master. It is managed at CLIENT LEVEL.
Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline
Agreement (Item Tab)
Item Category
Defines whether an item requires or can have
- A material number
- An account assignment
- Goods Receipt
- Invoice Receipt
Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing)
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- Standard – Blank – materials that are procured externally
- Subcontracting – L – Finished product ordered from a Vendor (maintained at
STORAGE LOCATION level)
- Consignment – K – Vendor makes the material available and manage a
consignment stock (maintained at PLANT Level)
- Stock Transfer – U –
- Third Party – S –
- Text
MANDATORY REQUIREMENTS (GENERAL)

Material Account Stock Goods Invoice
ITEM CATEGORY Number Assignment Receipt Receipt
Standard BLANK YES YES

Consignment K YES YES YES
Subcontracting L YES YES YES
Stock Transfer U YES YES YES
Third Party S YES YES
Limit/ Blanket B YES YES
ZERO VALUE POs

Generally used for samples. But generally used monitoring the delivery. FOC indicator is
set in item level. Invoice receipt is cancelled because of this tick
Variable Order unit can be specified in material master record and purchasing info record.
In PO,
Inco-terms are specified at Header level
Shipping Instructions can be at Item and header level (As a Text in header level and
Delivery tab at item level)
Delivery instructions can be at Item and header level. (In texts tab)
Changeability of PO
1. If PO is already sent to Vendor – CAN change the PO and send a copy to the
Vendor
2. If Vendor is delivered material against PO – Only LIMITED changes like texts are
possible (We can not change qty)
3. If Goods received and payment made – NO changes possible.
Invoicing Plan
• System creates invoice automatically as per Plan and release them for payment
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• For automatic settlement for periodic invoicing plan, ERS must be selected in
Vendor Master
• In partial invoicing plan, provision of down payment in the Billing or Invoicing
plan rule date
HOLD function is available for a PO while creation
Reporting
1. Creating and running reports
2. Adjusting List analysis
3. General analysis
Analysis of Order Values

1. Total Analysis
2. ABC analysis
3. Analysis using comparison periods
4. Frequency analysis
ON HOLD POs are considered as incomplete and NOT available for analysis
Role – describes a set of logically linked transactions

Activity groups (User Roles) – have to be set-up using the profile generator so that the
users of the SAP system can work with user specific or position related menus
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4 MASTER DATA
VENDOR MASTER
Vendor Master Data is maintained at
- General - CLIENT LEVEL INFORMATIONS
Addresses
- Company code level – COMPANY CODE LEVEL INFORMATIONS
Accounting related - Payment terms, payees,
- Purchasing Organization level -
Related to purchasing – Currency, Inco-terms, VSR, etc
We can BLOCK a Vendor Master Record (XK05) - Complete

If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST –
ME01
Automatic PO generation is in purchasing data.
ACCOUNT GROUP of a Vendor

Control functions of Vendor account group are –
1. Status of the Vendor ( One time Vendor or routine vendor)
2. Field selection in the Vendor Master Record
3. Partner schemas
4. Vendor Sub range
5. Type of number assignment (external or internal)
Single Master Record is maintained for one time Vendor – Account group is CPD
Other routine vendors are generally in LIEF
Vendor Reconciliation account

It’s a G/L account which maps Company’s liability towards several vendors.
Depending on account grouping selected, system assigns a number (can enter manually
also). This Vendor number is used in sub-ledger number in Financial Accounting.
When posting an invoice, system uses the reconciliation account automatically from
Vendor master record.
A vendor account code is created against Company code and Purchase Organization, so its
account is unique in all Plants under the Company code.
Pre-requisite for Vendor Partner roles

1. Vendor master record for each partner separately
2. Specified in customizing – Partner roles selected
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Controls of Document type
- Screen sequence and screen layout (Screen variant)
- Number ranges of document
Payment terms
The control functions with payment terms are:
1. Day Limit - Day of the month up until which the corresponding terms are valid.
For terms of payment which depend on whether or not the baseline date is after or
before the 15th of the month, you can define a two-part payment term under the
same terms of payment key. The terms of payment key is expanded by the day
limit entered here. Thus there are two entries in which different terms can be
specified.
Example
The following terms of payment require you to enter a day limit:
Documents with an invoice date on or before the 15th of the month are payable on
the last day of the next month
Documents with an invoice date after the 15th of the month are payable on the 15th
of the month after the next month.
2. Base line date calculation. – We can fix the base line date. The options available are
fixed day and additional months
3. Default payment block and method of payment
4. Default base line date. It can be –No default/ posting date/ document date/ entry date
5. Indicator for installment payment
Inco-terms
International Commercial terms
We can make a mandatory requirement of location entry for an inco-term
Text types for central Texts

In this step, you define the text IDs for the " general" part of vendor master records. Text
can be entered in the master records for each text ID, enabling you to store information on
the vendor in the master record.
Actions
1. Enter a text ID.
2. Enter the name of the text type.
3. Select the "Text relevant" indicator. The text is offered when a vendor master record is
maintained or displayed.
To enable a vendor text to be adopted in a purchasing document, proceed as follows:
4. Choose Text for <purchasing document> -> Define text types and copying rules for
header texts.
5. Then specify for the desired text type(s) which text is to be copied from the vendor
master record.
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Text types for Purchase Organization Texts
Define Text Types for Purchasing Organization Texts
In this step, you define text IDs for the part of vendor master records that applies to specific
purchasing organizations. You can enter a text giving information on the vendor for each
text ID when you maintain master records.
Actions
1. Enter a text ID.
3. Select the "Text relevant" indicator. The text is offered when you maintain or display
the purchasing data of a vendor master record.
header texts.
master record .
MATERIAL MASTER
Material Master is structured for various organizational levels.
Data at CLIENT / COMPANY CODE LEVEL (table – MARA)

Data Valid for the total Company. Basic data
Material No., Material group, Unit of measure, Conversion factors, Purchasing
value key, etc
Data at COMPANY CODE LEVEL
Accounting Data, Costing data if valuation is at Company code
Data at PLANT LEVEL (Table – MARC)
Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc.
Data at STORAGE LOCATION LEVEL

Storage bin, picking area, etc.
MATERIAL NUMBER
18 character alpha numeric key
- Basic data is CLIENT SPECIFIC

- Some Purchasing data are PLANT Specific – Pur group, GR processing time, etc.
- Purchasing Value key is maintained at CLIENT LEVEL
- If we are not specifying a Plant at Organizational level, only data at higher level
(Client) will be displayed
- Language selection is additional data of Material Master.
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The standard system uses a BUFFER when assigning numbers to the material master
records
The amount of numbers for the buffer is 10. Using this buffer and having the material
number assigned before saving a new number, the master can be lead to a gaps in the
number assignment. However if you reset the number level of an interval back to the initial
value, R/3 system fills these gaps when you create the new materials
MATERIAL TYPE
Materials with same characteristics are grouped together in Material types- Raw Material,
Finished Goods, etc.
Represented by 4 digit alphanumeric codes
Material type is having following CONTROL functions

1. The type of number assignment (Internal or external)
2. The permitted number ranges
3. Screen layout and screen sequence
4. User specific views
5. Procurement type (Internal / external)
6. Up-dating of Quantity and Value in master records / FI
7. Account determination on goods movements
8. Price control
Material type CANNOT be changed for materials whose Purchase Order is made.
Special Material types available in std SAP
• Additionals (VKHM) - requirements like effective presentation to Customs
Eg. – Care labels
• Advertising media (WERB) – presentation for advertising. Eg. – leaflets/ catalogues
• Apparels (MODE)
• Empties (LEER) – Type of RTP generally subject to deposit of money. Can have
several components together in BOM. Eg. – empty bottle/ empty crate, etc. (SD)
• Full Products (VOLL) – counter part of empties.
• Operating supplies (HIBE) – Procured externally and required for the manufacture
of other products.
• Packing Materials (VERP) – Transport with goods/ come with goods of FOC. It is
managed at quantity and value in Material master even though it is free of cost.
Used in HU management
Material filed selection reference

A reference control key defines which control string applies to the relevant influencing
factor
We can maintain reference key for
1. Material type
2. Plant
3. Industry sector in customizing
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Filed selection group
• Grouping of master records according to the filed option (Hide/ Display/ Optional/
reqrd. entry)
• Field selection against TRANSACTION is also to be defined for filed option
• Link rules of each transaction against the material type
• SAP defined link rules CAN NOT be changed
• Screen/ views can be customized as per Company code
INDUSTRY SECTOR
Represented by 1 digit alphanumeric key
The control functions of Industry sector are
- Screen selection and its sequence
- Industry specific fields
If we assigned a material to an Industry sector, we CANNOT change it later.
Unit of measure
- Base unit of measure
- Purchasing Unit, Sales Unit, Issue unit
- Order Price Unit (OPu)
Main fields in Purchasing View are

- Purchasing Value key
- Automatic PO Selection
- Source list requirement
- Quota Management
Accounting View
Valuation Class – determines to which stock accounts are to be updated on goods
movements
Price Control – Standard or Moving Average Price
Valuation of material depends on the price control set in Material Master.
Standard Price – All stock postings will be at standard price and in case of any
deviation posting the difference to Price difference account
Moving Average Price (MAP or v)
GR valuation will be at PO price and Goods Issue at Moving average price
MAP updates on goods movements.
In case of any difference with respect PO price, the difference amount will be
posted to the stock account (on total stock at that moment). If sufficient stock is not
available to distribute, system will post the difference to Price difference account.
Extending/ adding a View to an existing material master – MM50

Then select the required view, Select
B – Accounting
D – MRP
E – Purchasing
K – Basic Data
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C – Classification
G – Costing
A – Work Scheduling
5 PROCUREMENT OF STOCK MATERIAL
PURCHASING – GENERAL
Centralized Purchasing
With one Purchasing Orgn
1 Purchase Orgn > responsible for a number of Company codes
Distributed Purchasing
Number of Purchase Orgn for different Plants
1 Purchase Orgn responsible for 1 Plant
Company specific
1 Purchase Orgn responsible for 1 company code
Reference Purchase Organization

Pre-requisites for reference purchase organization:
1. Both the purchase organizations (reference and normal) are to be maintained in
Organization structure
2. The reference purchase Orgn can be maintained WITH or WITHOUT Company
code and Plant
3. Assign reference purchase Orgn as Reference purchase orgn in customizing
Data in MM Purchasing
Material Master – 1. Client related data 2. Plant related data 3. Storage location related data
Vendor Master – 1. General data 2. Company code related data(accounting) 3. Purchasing

related data
Master records in Purchasing

1. Purchasing Info Record
2. Source List
3. Quota Management
4. Conditions
5. Vendor Evaluation
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The linking of document type made in customizing (in purchasing) are:
Document type to allowed item categories
Allowed item categories to Link PR document type
The conditions dependencies on time (TD & TID) are fixed at document type level at
customizing.
PURCHASE REQUISITION
PR can be created – Manual, or Auto from PP/ PS/ PM/ PPC

Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in
purchasing
Purchase requisitions are processed by item-by-item
PR can be created for material with master record and without master record also. But if it
is without master record, it will be with Account assignment and Text & material group
PR changeability
Before changing PR, check
1. Already PO is issued or not – If issued, NOT changeable
2. Already released or not (release procedure) – If released limited changes possible.
Depend on changeability indicator
3. Created by MRP – NO Changes possible (Quantity can be chnaged while
processing. But the left out will shown as open against the same PR)
Flagging of PR items are “CLOSED”

• The item of a PR is regarded as closed, if the requested quantity is ordered in a PO
• If we are creating PR manually, the items will not be considered in MRP.
RFQ / QUOTATIONS
Single document for RFQ and Quotation
Can be created with respect to:
• Manual
• Via reference document
• Reference to PR
• Reference to Outline Agreement
RFQ/ Quotations are Created and maintained at purchasing Organization level.

For RFQ – NO COMPANY CODE / PLANT
Collective Number: For linking a number of RFQs. It is in the header of RFQ.
It is a 10 digit alphanumeric number.
Creation of RFQ
Initial screen – Quotation deadline, Purchase Orgn & Purchase group are fixed
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Header details – Collective number is assigned, Vendor addresses are maintained.
Item overview – Material, Qty & deadline for each item
We cannot enter an account assignment in RFQ
Quotation processing
• Vendor’s price and price conditions
• We can enter the prices and conditions of each vendor in RFQ.
• Comparison list
• We can save the quotation data in purchasing info record by giving the tick in check
box ‘Info update’
• We can set the rejection indicator for unsuccessful vendors.
• The mean value of all quotations can be saved as ‘Market Price” in the quotation
comparison list. This market price will be used as the basis for valuating the price
level of a vendor and is called up during Vendor Evaluation.
Conditions in Purchasing
Conditions can be maintained for – Contract/ Sch. Agreements/ PO level. Conditions can
be maintained in Info record. There are extended conditions also.
PURCHASING INFO RECORD
• Info records are created for

1. Standard
2. Subcontracting
3. Pipeline
4. Consignment,
Where the system copies the data in purchasing
• Certain concise information of a Vendor and material.
• If we are not maintaining Material in Info record, system will store this information
against a material group.
• Info record contains :
1. Current and future price with pricing conditions for Plant/ Purchase
organization
2. Delivery date and tolerance limits. Availability period – During which,
vendor can supply the material
3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a
regular Vendor here.
4. Texts that can be maintained for Info record, which can be called up in PO
5. Number of last Purchasing document/ PO (In Purchasing data 2)
• We can fix the PO text in Info record

1. If only info record text is to be fixed in PO, set NO M text option
2. If you are not selecting the above option, system will display both the texts
in PO
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• Info update indicator WILL NOT update the info record. It will update the
information.
• The updated details can be seen at Info list (ME1L/M/P)
• These data will be displayed as default data while creating the purchasing
documents. It can be edited at purchasing document level.
• Info record can be created
- manually
- automatically from Quotation / Outline agreements / Purchase orders, if info update
indicator is selected while creation
• If you want to maintain conditions in Info record, you have to maintain it
MANUALLY.
• Auto-updated info records will NOT BE HAVING the pricing conditions
(ONLY final price will be retained)
Info update indicator

If we are fixing this info update indicator, system will copy the data and conditions
maintained.
If we fix
A – System will update the data WITH or WITHOUT PLANT
B – System will update WITH PLANT
C – System will update WITHOUT PLANT
For Quotations/ Contracts/ Scheduling Agreements and Conventional POs

- If BLANK selected, Info record will not be updated
o A – If an info record exists at Plant level, it is updated. Otherwise, info record at
Purchase Organization will be updated
o B – If Plant conditions are allowed for the Plant, an info record at Plant got updated
o C - IF Plant conditions are not necessary, for the Plant, info record at Purchase
Organization level will be updated.
The info update Indicator can be set at PO

If we fix
BLANK – No update
TICK – System will update the info record as per the settings in
Customizing ( node –Conditions > Define condition at Plant level)
BLANK – Conditions allowed WITH or WITHOUT PLANT
+ - Only PLANT BASED Conditions will be updated
- - NO-PLANT BASED CONDITIONS are allowed.
For Enjoy transactions (PO- ME21N)
 If just one (With or without Plant) exists, record will updated.
 If NO info record exists, PLANT Level info record will be CREATED
 If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info
record will be updated
Info update scenarios
1. If Info record already exists
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1. Quotation – Time dependent conditions and other supplementary conditions are
adopted
2. Scheduling Agreement – Is set as last document. Order price history is updated
3. Contract – None
4. Purchase Order – Is set as last document. Order price history updated
2. If Info record NOT exists
1. Quotation – Time dependent conditions and other supplementary conditions are
adopted
2. Scheduling Agreement – Is set as last document. Order price history is updated
3. Contract – Time dependent conditions and their supplementary conditions are
adopted
4. Purchase Order – Is set as last document. Order price history updated
Structure of Info Record
1. General Data – Vendor data, Order unit, etc.
2. Purchasing Organization Data 1 –
Control data – Delivery time, Minimum quantity, etc
Price & Conditions – Gross price, discount, etc.
Statistics – PO History, PO statistics, etc.
Text – Texts are maintained here, can be called up in PO
3. Purchase Organization / Plant Data
Control, Price, statistics, texts
4. Purchase Organization data 2
Here you will get the reference document number on which the info record
is created/ updated. This option is available only if the record is created with
reference to a purchasing document.
In other words, if an info record is created manually, the last PO data will be
updated in Info record at purchasing data 2
• Purchasing Info Record is valid for PLANT / PURCHASE ORGANIZATION
• While creating a PO, system first search for info record with PLAN&PURCHASE
ORGANIZATION combination for price, if it is not available in the system, it will
search for data with PURCHASE ORGANIZATION only.
• Purchasing Info record is suggesting prices in 2 ways :
a. Conditions – conditions are included, if info record is prepared manually.
b. If info record does not contain conditions, then the system will select the
price of last Purchase Order .
• We can define the conditions of last PO by customizing
a. Are always copied
b. Not to be copied when prices are entered manually
c. Never copied
Info Record CANNOT be deleted by normal archiving program run. It can be deleted by
the system administrator
Data can be displayed from Info record screen through ENVIRONMENT are
 Material
 Vendor
 RFQ/ Quotation
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 QM Info record
 Last Document
 Quotation price history
 Order price history
Through EXTRAS we can display
 Administrative data
 Source List
 Taxes
 Vendor Evaluation
 Statistics
We can reach Buyers Negotiation sheet (for Vendor & Material) from Info record
We can have 4 different info record for a material & vendor – for standard/ Consignment/
Subcontracting/ Pipeline
TEXTS
Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts

Item Texts - Item Text (CAN copy from Info Record/ Material Master)
- Delivery Text
Inserting texts from material master record
3 options of linking material master record and purchase documents.

Relevant settings are to be made in each TEXT TYPE in customizing. The indicator in the
status column shows the nature of linkage.
Option 1 - The Text is copied . Indicator status in column – NONE

It is then independent of the text in Material Master. Changes in the text in Material Master
have NO INFLUENCE on the text in the document.
Option 2 - The Text is displayed only. Indicator status column – N

Text can not be adopted
Option 3 – The Text is offered for copying. Indicator in status column – X

It can be copied via Header or item
The path is Texts > Adopt text (in requisitions) Go to > Texts > Adopt text.
The changes made in material master will also be adopted in the document until such time
as you can copy the text.
The customization available for each purchasing document. PO/ PR/ Contract in following
nodes
- Define Text type for header Text
- Define copying rule for header text
- Define text type in Item text
- Define copying rule for item text
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We can copy a text from a Vendor master to any of the purchasing document.
The procedure is as follows
Text types for Purchase Organization Texts
Define Text Types for Purchasing Organization Texts
In this step, you define text IDs for the part of vendor master records that applies to specific
purchasing organizations. You can enter a text giving information on the vendor for each
text ID when you maintain master records.
Actions
1. Enter a text ID.
3. Select the "Text relevant" indicator. The text is offered when you maintain or display
the purchasing data of a vendor master record.
header texts.
master record .
CONDITIONS
Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc..
We can create conditions in

- Quotations
- Info Records
- Outline agreements
- Purchase Orders
Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT
System will ask for VALIDITY for TIME DEPENDENT conditions.
Time dependent Time Independent

Conditions Conditions
1. Info Record YES NO

2. Quotation Depends on Doc Type Depends on Doc Type
3. Sch. Agreement Depends on Doc Type Depends on Doc Type
4. Contract YES NO
5. Purchase Order NO YES
 We can specify both time dependent and Time Independent conditions at Header
level and Item level EXCEPT Info Record. The setting is at Document level
 In Info record, conditions are stored at Info record level.
 For Time Dependent conditions, we can create
1. Supplementary conditions
2. Validity Periods
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3. Scales
4. Upper and Lower Limits
If we are creating a new condition type, should be assigned to an access sequence to link
with Pricing Procedure
If the conditions are on header level of the document, then it is applicable for items in that
document, but if it is at item level, it is applicable for that particular item only.
Conditions in Purchase Order DEPEND on DOCUMENT TYPE.

Conditions are prepared in a PO are at the level of document type
Conditions can be created for a Vendor/ for a Plant/ for Purchasing.

Header conditions – Applicable for all items as per % or Value
Item conditions – applicable for specific items - % or Value
Group conditions – Applicable to all items but distributed proportionately as per the
quantity/ value
CONDITION TECHNIQUE
Up to 3.1H version, Time independent conditions are referred as Document conditions and
Time dependent conditions are referred as Master conditions.
Condition Type and condition category - Example
Condition category Assigned to condition type (Std system)
H- Base Value PB00 (this must exist in all pricing procedure

except stock transfer)
B- Delivery Cost FRA1
N –Non de-ductable input tax NAVS
E – Cash Discount SKTO
G – Moving average Price P101
Condition types used in standard system (examples)

PB00 -Price - Gross Price (With access sequence-0002)
RB00 - Discount/ Surcharge - Absolute discount
ZB00 - Discount/ Surcharge – Absolute Surcharge
FRB1 - Discount/ Surcharge – Absolute Freight
ZOA1 - Discount/ Surcharge - % Duty amount Customs
SKTO - Discount/ Surcharge – Cash discount
NAVS -Taxes - Non de-ductable input taxes
Standard pricing procedure in SAP is RM000 used for Purchasing

Purchase Requisition Prices
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• If the material is WITH material master record, the price will be displayed for
Purchase requisition from the material master, even if we are maintaining a separate
price in Info record. But the vendor will be populated from the Info record.
• If the material is WITHOUT material master record, we have to maintain the price
manually during the creation of PR, if required.
• While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can
be referred for other plants also.
VENDOR CONFIRMATIONS
Vendor confirmations can be of
• Order acknowledgements
• Loading or Transport confirmations
• Shipping Notifications
ASN – Advanced Shipping Note
If the order conformation types are customized, and it is MRP relevant, it appears in Stock
Requirement List.
• We can post Goods Receipt against acknowledgement, if permitted entries are
assigned in Customization – Confirmation Control
• We can enter a confirmation in PO or SA
• We can have an EDI arrangement with Vendor, against EDI acknowledgements are
checked for Quantity, Date and Price
• Partial acknowledgement through EDI updates the PO/ SA possible
• We can do dunning procedure through confirmation control key and we can fix the
mandatory days for confirmations .
• Pre-requisite – Conformation Control KEY
RELEASE PROCEDURE
Release procedure can be WITH & WITHOUT Classification

Release procedure WITHOUT Classification is available ONLY for PR
Class & Characteristics

Maximum 8 release codes are allowed in a Release procedure
Changeability after the start of a release procedure

Case 1 – Insignificant changes – NOT required a fresh release (below the value limit)
Case 2 -Significant change with % limit – No fresh release, if correct the PO
Case3 – Significant changes – New Fresh release required
MANUFACTURER PART NUMBER

Pre-requisites
1. Settings in Customizing
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2. Creation of Material Master record with material type HERS
3. Define Manufacturer part profile
4. Create master record for manufacturers/ Plants
5. PO should be with MPN material
6. Info record
7. Texts in PO can be maintained
VENDOR EVALUATION
• Vendor Evaluation is done at Purchase Organization level
• It uses the master data of
1. Material Master
2. Vendor Master
3. Purchasing Info Record
Main Criteria & Sub-criteria
Main Criteria
Price, Quantity, Services are generally used main criteria
Over all Score of Vendor
Main criteria
1 3
2
Manual
Semi-auto
Auto
1 3
2
Sub criteria a b c a
(At Info Record Level) b c
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Scoring range is defined in customizing
Weighting keys – 2 Types – Equal weighting & Distributed weighting
Sub-criteria in NOT having any weighting keys
Calculation type – Manual/ Semi auto/ Automatic – for sub-criteria

In automatic calculation, we have to define sub-criteria for each main criteria otherwise
system can not calculate the overall score.
In Manual scoring score for sub-criteria are entered manually and calculates the score of
main criteria accordingly (maintain Vendor evaluation transaction – ME61)
In semi automatic scoring, user enters the scores of sub-criteria via info record and the
system calculates the scores of sub-criteria as per the setting and populates the score of
main criteria. Transaction Code – ME63
In fully automatic scoring, scores of the sub-criteria will taken from Info record(no manual
entry) and that will populate to sub-criteria and finally to main criteria. Transaction Code –
ME63
Procedure
We can maintain a maximum of 99 Main criteria and 20 Sub-criteria for a Vendor
Evaluation resulting to a combination of 1980 combinations for vendor evaluation
IMG Settings & Transactions
IMG Settings
SAP Customizing Implementation Guide/ Materials Management / Purchasing/ Vendor
Evaluation
Step1: Define Weighing keys- Different Weighing keys are required if we want to consider
different weighing (%) for a set of criteria to be evaluated while maintaining vendor
evaluation for different kind of vendors. Like Service vendors, RM vendors etc. Here we
create weighing keys as per our requirement.
Standard are 01-Equal weighing; 02-Unequal weighing
Step2: Define Criteria: Define the criteria by which the system computes scores for
vendors. 99 criteria allowed. SAP recommends a maximum of 8
Then go to sub criteria of particular criteria and define the sub criteria applicable for that.
Specify the scoring methods whether they are manually, semi-automatically, or
automatically. There are particular scoring methods defined in standard system for standard
sub criteria. By these scoring methods only the system will be able to calculate the scores
for the specified period. The maximum no. of sub criteria allowed for main criteria is 20.
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Step 3: Define scope list: scope lists are defined for usage in generation of ranking lists for
vendors. System will consider the sequence list of main criteria mentioned for a scope list.
ie. Weightages are considered in that sequence while ranking.
Step 4: Define purchasing organization data for Vendor Evaluation
Include your purchase organization in the list, and then go to details. Mention the best score
(100 possibly) and Applicability period (the past period which should be considered for
vendor evaluation by the system). If any factory calendar is there attach here.
Step 5: Go to main criteria of your organization. Here you have to mention what are the
main criteria you are considering for your P Org from the list of total main criteria.
Ticking the manual Maintenance enables to enter the score manually for the main criteria
while maintenance of vendor evaluation for a particular vendor (if required)
Step 6: Go to Sub criteria of a main criteria. Here you divide the % of total weightage for a
criteria among sub criteria according to your choice (if it 1.1.2 then it is 25%, 25%, 50%).
Tick manual maintenance to provide option for a manual maintenance while maintaining
Vendor Evaluation.
Step 7: Weighing for your purchase organization.

Here you mention how the weightage is given to particular main criteria for a given
weighing key (for all the weighing keys created by you.)
According to this only the total weightage(say 100) is distributed among various main
criteria for particular weighing key.
Step 8: Point scores for the main criteria

Here points are allocated according to variances for automatic sub criteria. System will
give points to sub criteria according to this, during processing the data for evaluation.
System defined will be there.
Easy Access:
Mater Data should be maintained through the below path to start the vendor Evaluation
process for the particular Vendor.
Logistics/Materials Management/Purchasing/Master Data/Vendor Evaluation
1. Maintain – ME61: Here we enter the Vendor code and Purchasing Organization
2. Then enter the corresponding weighing key and press enter ,you will see the
weightings allocated for main criteria
3. Now go to Edit on the screen and click the auto new revaluation. The system
calculates the scores and gives the overall score. Save the same.
4. You will have the option of changing the scores manually for criteria and sub
criteria if you have set the same while configuration. Once you have changed
manually and press enter the scores will get updated then save the same.
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5. ME 63 – Automatic New evaluation: Here you can do automatic evaluation without
going to ME61.But you cannot do any manual corrections in this case.
6 PROCUREMENT OF CONSUMABLE MATERIALS
Account assignment category determines which category of accounts is to be debited in

G/L accounting.
Categories are:
A – Asset
K – Cost centre
P – Project
F – Production Order
C – Sales Order
U – Unknown
• Consumable materials that are procured directly for consumption against an account
assignment object
• It is NOT managed in value based in Inventory management
• System updates the consumption in material master, if master data is available.
• Examples are NLAG/ UNBW/ DIEN
NALG – Non Stock Material
UNBW – Non-valuated stock material
DIEN – Services procured externally
• If we select consumable material as material type in Material Master, it controls
- Procurement type (Internal / External)
- Account postings
- Requirement in Inventory Management
Consumption is directly posted to consumption account
Inventory Management is NOT based on Value basis
Page 31 of 160
Stock Vs Consumable
Stock Consumable
1. Entry of Material Number Required Possible but not required
2. Account assignment not required Mandatory
3. Account postings to Stock account Consumption account
4. Mat. Master up-dation Qty, Value& Qty & Consumption
Consumption are updated
5. MAP Adjusted Not applicable
Purchase Requisition for Consumable Material

• Can be by manual or though automatic- through MRP run/ PM order/ Sales order
• Can use account assignment U (Unknown) in PR. But to be confirmed in PO
• If material master is available, system will take the price from it otherwise we have
to enter manually.
• Multiple account assignment is possible in PR
BLANK – No multiple account assignment
1 – Distribution on Quantity basis
2 – Distribution on Value basis.
• Goods Receipts are NON-VALUATED for consumable goods .
Procedure for SPLIT VALUATION - transactional
1. While creating the material master select valuation category and save it.
2. Again go to Material master, while entering system will ask for Valuation type in
accounting view. Enter the valuation class, price and save.
nd
3. Again go to material master and repeat the procedure for 2 valuation type.
4. The valuation type for each valuation category is fixed in customizing
BLANKET PURCHASE ORDERS
• Used for procuring consumables and services

• Validity is a must. Generally for longer periods. Fixed at Header level
• Limits at item level
• Purchase Order document type FO (Framework Order) is used for this.
• Invoice receipt is periodic and settled for each invoice
• NO Goods Receipt or Service Entry Sheet
• Account assignment is NOT Mandatory while creating PO- U (Unknown) can be
used in PO
• Item Category – B is used
• Multiple account assignment is permitted while Invoice verification
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• Validity periods are checked by the system during Invoice verification
• Can be linked with Budget control
• PO History is updated ONLY after Invoice verification
• If the limit of a PO is increased during the invoice verification, system allows the
postings BUT blocked for payment on “variance” reason
Page 33 of 160
7 EXTERNAL SERVICES PROCUREMENT
Procurement cycle – Flow

1. Determination of requirements
2. Creation of service specification
3. Source Determination
4. Vendor selection
5. RFQ (Bid evaluation)
6. Comparison of Quotations
7. Creation of service Order
8. Purchase Order monitoring
9. Service Entry
10. Service acceptance
11. Invoice verification
12. Release of Payments
Service Master
• Master record creation- description of service, UoM, etc.

• Can attach price through conditions
• Conditions can be maintained at
- At Service level (Market price/ Estimate)
- At Service and Vendor level
- At service, Vendor and Plant level
• Service is procured for direct consumption.

• Account assignment ‘U’ (Unknown) is accepted at PR level, not in PO
• Materials are procured at Item Level, but Service is procured BELOW item level .
• Item category ‘D’ is used for Service POs
• Provision of unplanned expenses and total limit at item level
• Release procedure is possible for Service Entry Sheet
• Service Entry Sheet is made with respect to PO
• Invoice verification also done with respect to PO
• PO History is updated after Invoice verification
• Service Entry sheet updates FI/ CO.
• Complex service specification can format through outline levels
• Can assign any number of service lines to each item level
• AC03 – Creation of Services, ML 81N – Service Entry Sheet
2 ways of specifying services

1. As a Planned Service – With description/ Qty/ and Price
2. Unplanned service – With Value & limits
Page 34 of 160
Master Records in Service Management
1. Service Master Record
2. Master Conditions for Services
3. Standard Service Catalogue (SSC)
4. Model Service Specification (MSS)
• In Service Master Record, we fix the information like – Service No., Service
category, Description, Basic UoM, Material group, Valuation class, etc
• In master conditions of services, Terms of Payment, Validity period, Scales,

Supplementary conditions.
It can be maintained in Master records/ contracts & in purchasing documents
Header conditions CAN NOT be maintained in RFQs and SES
• In contracts we are allowed to maintain header conditions for the FIRST outline
level. These are copied to all outline levels and CANNOT be changed
• In case of PR/ PO, conditions are UPDATED for a SERVICE.
• But for Quotation and PO, the service Master conditions are updated for a Vendor
WITH or WITHOUT PLANT
In customizing (Source determination & default values), we can set the following
indicators for the Client & purchase Organization level.
1. For CLIENT
• Service condition update indicator –
- as default in PR
- as default in Quotations
- as default in POs
2. For PURCHASE ORGANIZATION
 Set service condition update indicator – Quotations
 Default in POs
Maintaining Service Conditions

1. In Service Master
2. In purchasing documents
3. Updating conditions in Master record through conditions in purchasing documents.
 Condition Update indicator for Purchasing document is set in
customizing
Page 35 of 160
Standard Service Catalogue
Details to Service type, service type to SSC

We can transfer external SSC to R/3 system which is having same Unit of Measure.
Model Service Specifications
For PRs to purchase organization, Fixed Vendor, Contract through configuration
External Service Procurement is also can have:

1. Release procedure
2. Value limits for unplanned services
3. Vendor evaluation
4. ERS
Service specifications can be created for

1. Purchasing documents
2. SES
3. MSS
4. Maintenance Service Plan
5. WBS element / Project plan
6. Sales Order
WE CAN NOT MAINTAIN LIMITS IN RFQ/ QUOTATION/ CONTRACTS
The difference between MSS and SSC is

We can copy services from both to service orders, but if we copy from SSC, we can
not edit it, but in case of MSS we can select and edit it
Account assignment in services
Specifying the account assignment for the services at the time of their initial procurement is
optional. Account assignment category is at document item level.
-‘U’ (Unknown is accepted
- Multiple account assignment is accepted
- Distribution is also possible
Invoice verification of services (SES)
In Vendor master we have to specify, GR based IV/ ERS/ Service based IV
Global Percentage Bidding (GPB)
It is a procedure of bidding used in procurement of external services ONLY.

Pre-requisites are
1. Document type AB in RFQ
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2. Calculation schema – MS0002 (with condition types –KR01 –
header discount & KZ01 – Header Surcharges
Process
1. Create RFQ with document type –AB.
Maintain price per service and send to Vendors
2. Vendors will not quote any price for each service, But they will indicate a %
addition or Deletion with respect to the price shown in RFQ.
This % can be at Per Outline level or for the uppermost outline level (total)
- INVOICING PLAN and BLANKET POs are possible with Services
OUTLINE AGREEMENTS
It’s a long term purchasing agreement with a Vendor concerning the supply of materials
or the performance of services according to the pre-determined conditions.
These are valid for a certain period of time and cover a pre-defined total purchase
QUANTITY and VALUE
Outline Agreements - 1. Contracts

a. Value (WK)
b. Quantity (MK)
c. Centrally agreed Contracts
d. Distributed Contracts
2. Scheduling Agreements
a. LA
b. LPA
c. LU
• Contracts are with Release Orders and Scheduling agreements are with Delivery
schedule
• Release Order is a Purchase Order reference to a Contract
CONTRACTS
• NO DATES
• PR > RFQ > Contracts (manual)
• VALIDITY PERIOD is to be indicated in the Header
• In Quantity contract, the target quantity and purchasing conditions are to be
maintained for EACH item
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• Item category M & W are permitted in Contracts (M- Material Unknown & W-
Material group)
• Item category M – Similar materials with SAME PRICE, but different material
numbers. Material numbers are to be specified in release order.
• Item Category W – Material belonging to the same material group, but with
DIFFERENT PRICE.
• W can be used in VALUE CONTRACTS ONLY
• M & W are NOT ALLOWED in Release Orders
• Account assignment –U (unknown) is permitted in contracts but NOT in release
orders
• Release order documentation contains the statistics for an item. It is updated
automatically and used for monitoring the contract
• Single and multiple account assignments are allowed in contracts
Centrally agreed contracts – For many Plants in a purchase organization. In this case DO
NOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise
against the contract. Partner functions are also possible.
Using Plant conditions, we can specify separates prices and conditions for each receiving
Plants.
Distributed Contracts (DK) – Contracts at different Plants operating on different (ERP)

systems which are accessible through ALE
SCHEDULING AGREEMENTS
Long term agreement with a vendor to supply material as per pre-defined condition.
• Pre-defined PERIOD and QUANTIRY (NO VALUE)
• PR > RFQ > Scheduling Agreement.
• Centrally agreed S.As can be prepared.
• M, W and U are not allowed in Scheduling Agreements
• Details of delivery date and quantity are maintained through Delivery schedules
• Schedule line can be created automatically through MRP run, but for this
1. Define Scheduling agreement as a Source of supply for the material.
2. Auto schedule line selection source list Select option 2 in MRP Column (in
Me01)
3. Auto schedule line must be allowed in MRP system
Types of Scheduling Agreements:

1. Type LA – Document type - LP
Agreement + Delivery Schedule
2. Type LPA – Document type – LPA
a) Agreement + Delivery Schedule + Forecast Schedule + Release
documentation
b) Agreement + Delivery schedule + Forecast schedule + Release
documentation + JIT Schedule + Release documentation
3. Type – LU – Stock transfer scheduling agreement
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FRC (forecasting) Schedule gives a medium term overview of requirements
JIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/
Hourly basis.
• Release documentation requirement is SET by fixing release documentation
indicator in Customizing
• For JIT scheduling, JIT is Indicator to be set in Material Master record
• We can post a Goods receipt against a scheduling agreement directly in MIGO
Creation Profile
1. Optional data from Vendor master record
2. Release creation profile is for each scheduling item
3. It is customized on a Plant specific basis
4. It determines the periodicity of SA release and aggregation of schedule line
quantities
5. Tolerance limits are in release creation profile (RCP) and set it during
customizing
Aggregation schedule – Total scenario in a specific time period

Firm, Trade off & Planning Zones –
1. FIRM ZONE – Immediate – Vendor can go ahead with manufacturing. The
Purchaser is liable for total quantity
2. TRADE OFF ZONE – Near future requirements. Vendor can go ahead with
mobilization of requirements. But the liability is limited to the purchased raw
materials/ semi finished goods
3. PLANNING ZONE – No liability by the Purchaser
Firm and trade off zones details are forwarded to the Vendor along with FRC and JIT
Schedules for getting more clarity of Scheduling Agreement.
The procedure is
A. At IMG level –Maintain release creation profile against your Plant. Here you are going
to maintain
1. General Parameters like Creation strategy for JIT & FRC Schedules
2. Aggregation Horizon – Daily or monthly aggregation in Days for both JIT & FRC
3. Creation periodicity – Daily/ Weekly/ Monthly for JIT & FRC
4. Tolerance profile, etc
B. Transaction level
1) Create Scheduling Agreement – ME31L. Attach the creation profile in the Scheduling
Agreement at Item > More functions > Additional data
Please see that the Material Master is having tick for JIT Schedule &
2) Maintain Delivery schedule – ME 38
3) Create the release documentation – ME84. Select FRC & JIT Schedule and process and
see that FRC and JIT Schedules are created
4) If you want to see the schedules, go to ME9E
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SOURCE DETERMINATION
Source can be a Vendor or an Outline agreement.

By Source list, we are defining preferred or allowed sources for a material.
By Quota, we are specifying the share of total requirement over a specified PERIOD from
each SOURCE.
Source determination at PR level

• If the material is with master record, during creation of PR, Prices will be taken
from the material Master, EVEN IF, we maintain a different price in Info record.
But the vendor will be selected from Info record
• Case. Source list is maintained for Vendor A & Info record is for Vendor B
While creation of PR, system will select A as the source , if the source list selection
is opted in the material Master , otherwise, B will be selected.
• For fixing a Vendor in a source list, the info record for that Vendor is TO BE
maintained.
• If we have maintained a source list for a material we have to select that Vendor for
placement of PO. So check the requirement display before maintaining a Source list
for a material.
• INFO RECORD is a MUST for automatic source determination at PR level.
• Source determination function is available ONLY for PR
SOURCE LIST
• Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for

a PERIOD (Validity)
• MRP Indicator in Source list considered while material Planning
• If source list requirement is defined at Plant level, then system will not allow
creating a purchasing document without Source list.
• Source list can be for a Material (at Material Master) or Plant (at customizing)
• Source List analysis – List out materials which are NOT having source list in the
Plant
• ONLY ONE FIXED Source is allowed fro a material within a Validity period
• Source list can be maintained –Manually/ From Outline Agreement / From
Purchasing Info Record/ Automatic generation.
• Source list can be made referral (of another material)
• If the selection of source list is auto, we can have single or collective procedure.
Can be from Out line agreement/ Info record
• We can create a Source list for a MATERIAL GROUP (for contract – W)
• EXCLUSION INDICATOR – Set for excluding a source in the source list
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QUOTA ARRANGEMENT
The Quota indicates the % age of total requirement that are to be procured from each of the
various sources over a CERTAIN PERIOD OF TIME.
• Validity period is mandatory for Quota arrangement
• Quota can be provided for various procurement types
• Quota arrangement indicator is to be fixed in Material Master and is defined in
customizing to update quota allocated quantity progressively
• Quota arrangement is NOT suggested, if the quota allocated quantity>= maximum
quantity
• Quota rating = (Quota – allocated quantity + Quota base quantity)/ Quota
• Qr = (Q-Qa +Qb)/ Q
• The source with lowest quota rating represents the effective source (even ZERO)
• If more than one sources having quota rating zero (or equal), the one with highest
quota is the effective source.
• Quota base quantity is used for regulate the new entry of a Vendor in Quota
arrangement (Give him a higher quota base quantity on entry to quota)
Quota Splitting (ONLY through Planning Run)
• If a PR is created manually is subjected to quota arrangement, the requirement
WILL NOT split.
• Splitting among different sources is carried out, if a Lot size procedure for which
the splitting quota indicator has been set is assigned to the requested material in
Material master. This will be achieved through the Lot size procedure. For all lot
size procedures, quota will not split. Set at customizing. The quota splitting
indicator is set for each lot size procedure as per the requirement in Customizing.
• The order dictated by Quota can be OVERRIDE by PRIORITY INDICATOR
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• Priority Indicator prioritizes among the quota
• The prioritization is fixed in Quota screen
• Splitting of Quota is through planning run ONLY and for lot sizing procedures,
which is having quota splitting
• If the quota allocated quantity and quota rating have NO SIGNIFICANCE if the
quota is SPLITTING.
• Lot sizes are calculated on the basis of quotas. We can view Quota arrangement
from MRP list (MD04)
• Minimum splitting quantity- The residual quantity above which only quota splits.
The quantity below this quantity, system will assigns a single source
• Maximum quantity – Quantity that can be allocated to a source. If the allocation
reaches this quantity, system will not consider this as a source.
• If the requirement crosses the maximum lot size, system proposes several lots with
maximum lot size.
• The minimum and maximum lot size maintained in Quota arrangement item,
OVERRIDES the entries in the material Master record on preference and are valid
solely for the assigned source.
• The minimum and maximum lot size maintained in Material Master applicable to
ALL SOURCES
The PRIORITY in Source determination
1. Quota Arrangement (First which is having priority in Quota)
2. Source List
3. Scheduling Agreement/ Contracts
4. Info record
• System carries out source determination during Planning run

• PR items that have been assigned a source of supply can be converted to PO with
function of “automatic generation”, provided selection of Automatic PO in Material
Master and Vendor Master.
• If a material is NOT having master record, the MATERIAL GROUP is considered
for source determination
• We can block a Source at Vendor Master (XK05)
• If we want to block some materials/ services of that Vendor, we have to block these
items at Source list (ME01)
• For suggesting source during the creation of PR/ PO/ OA, The Source List + Info
Record to be maintained
• In SPRO we can fix quota arrangement usage indicator depending on our
requirements on purchasing documents (PR/ PO/ OA/ Prodn Order/ MRP or its
combinations)
• QUOTA is NOT relevant, if we are using MRP
Regular Vendor - Supplier/ Source at corporate level – CLIENT LEVEL

Fixed Vendor can be specified in Source List – PLANT LEVEL
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Regular vendor is set in General data of Info record, so we can not fix another vendor as a
regular vendor in Source List or Quota Arrangement
The quota arrangement indicator defines the quota usage combinations in the
functionalities in
1. In Purchase Orders
2. In Scheduling agreement delivery schedules
3. In Planned orders
4. In Purchase requisitions &
REPORTING
o Analysis of master data and documents

o SCOPE OF LIST parameters determine which data is for a Document (eg. BEST
for PO)
o Scope of list parameters are set in Customizing
o We can fix variants for frequently used parameters
Logistics Information System (LIS)

SAP logistics offers a range of application oriented information system with standard
interface. All LIS have same type of data retention.
Examples – SIS (sales), PURCHIS (Purchasing)
OLAP
Data Warehouse
OLTP
OLAP – On Line Analytical Processing (Business Intelligence)

Data Warehouse – Structure
OLTP – On Line Transaction Processing (LIS updating)
In OLTP information can be from any system
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In OLTP – Analysis and report level
Reporting in LIS
- Standard analysis – ABC analysis/ classification
- Advanced analysis technique
- EWS (Early Warning System)
- Flexible Analysis
Reporting – Types
1. Standard Reports – In-built in SAP R/3 system
2. Reporting via info systems – LIS/ FIS, etc
3. Reporting via info systems with separate data base and toll – EIS/ BIW
The physical Tables in SAP Information system are information structures. They have a
typical structure. The object is to be analysed in real business scenario, go to info structures
as evaluation groups in the form of characteristics.
In statistical information, one characteristic, such as Vendor / customer/ material is
segregated. Organizational elements such as valuation area/ Plant/ Pur group/ storage
location are also used as characteristics in info structures. Time base is an important option
in aggregation. The system updates the logistics key figures for each characteristic
combination and periodicity.
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8 AUTOMATED PROCUREMENT PROCESSES
Purchase Purchase Goods Invoice

Requisition Order Receipt Receipt
Material Automated Shipping ERS

Planning PO Notification
- Material Master Auto PO indicator Order ackn. ERS Indicator in

- Source List in Indicator in Vendor master
- Sch. Agreements V. Master PO (GR based IV)
M. Master
Info record
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9 OPTIMIZED PURCHASING
No RFQ/ QTN/ Comparison
PURCHASE ORDER
MRP Purchase Requisition
Material Vendor
User Depts. Quantity
PRICE
SOURCE
Source List
Quota INFO RECORD
Sources from source list, Price from Info record.

Available functions of optimized purchasing are:
1. Ordering of assigned requisitions
2. Automatic PO generation
3. Assignment & processing requisitions
4. Ordering with source determination.
• The transaction ME25 (PO for Vendor Unknown) is used for optimized
purchasing. We can generate automatic PO through this transaction
Pre-requisite for automatic PO generation for optimized purchasing are – Selection of

Automatic PO in Vendor Master record & Material master record.
If you want to have storage location data to be defaulted from Material Master, in MRP2
view, enter a storage location in the filed “ storage location for EP” (EP-External
Procurement). This will be defaulted in PO. But we cannot default a storage location
against a document type.
USER PARAMETER – EVO
• Allows to specify default values for certain fields and functions for each user
• It is done at customizing using parameter ID. (ID EVO)
USER PARAMETER (EFB)
• Allows defining authorizations for certain functions during purchasing.
• Done at customizing. Parameter ID – IDFEB
• It can control complex purchase functions and allows the delegation.
a) Parameter NDR = X (upper case letter!) has the effect that the Print indicator is always
set when you enter a goods receipt.
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b) Using parameter ND9, define the individual user groups for printer determination by
plant/storage location/user group.
c) Output device in the fixed values (for print parameter S)
ORDER ACKNOWLEDGEMENTS
• Vendor acknowledgements – Allows more precise planning.

• Can set conformation Control key in the PO at item level.
• We can configure type of acknowledgements
• If it is specified a certain order acknowledgement, Goods receipt CAN NOT be
posted with out confirming it in PO
• We can post GR with respect to these order acknowledgement selected in the PO.
EVALUATED RECEIPT SETTLEMENT (ERS)
• If vendor is not submitting the invoice/ invoice is not available, we can create
invoice within the system by ERS and we can settle the invoice
• It is created against a Good receipt. Invoice and message to the vendor is created by
the system
• We CAN NOT process PLANNED DELIVERY COSTS with ERS
Pre-requisites for processing ERS are
1. Selection in Vendor Master
2. Info record selection
3. GR based IV
4. Tax code of PO and Info record should be the same
5. Customizing – Selection of ERS for the company code
Procedure
Create PO with the material and Vendor
Enter GR
Go to MRRL for ERS
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10 MATERIAL REQUIREMENT PLANNING
Production Reservations Depts. requirements

Order
S&D Processing
Independent
Requirements
Demand Mgt.
Material Planning
Planned Order
Direct
Conversion
Purchase Requisition
Purchase Order/
Agreement
MPS – Master Production Scheduling
Pre-requisites for MRP

1. MRP should be activated for that Plant (In customizing)
2. Set-up Planning file (In customization)
3. Maintain MRP data in Material Master (Valid MRP types & Valid material status)
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MRP RPOCEDURES – Overview
MRP MRP
Procedures
Consumption based
Planning
Re-order point Forecast based Time based

Planning Planning Planning
Manual Automatic
CBP Vs MRP
- In CBP, Sales orders, planned independent requirements, etc are not considered
- In MRP, Sales orders, planned independent requirements are direct requirements
Consumption Based Planning (CBP)
• Used in areas WITHOUT in house production/ Manufacturing ( external

procurements only).
• Is based on historical data and uses material forecasts & statistical procedure to
determine future requirements
• DO NOT refer any production plan
• Smooth and update inventory management is required for effective results
• NO dependent requirements are created for materials planning using any of the
CBP procedure (NO BOM)
The master data used in CBP are
a. PPC Planning calendar
b. Quota Arrangement Type – Allocation / Splitting
In CBP, Total Planning and Single item planning are executed on Single level
ONLY ONCE INDICATOR

It is fixed in the Quota arrangement
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To avoid a situation, where more than 1 order proposal is created per requirement for a
source of supply, with max. Lot size, you can set only once Indicator
PRIORITY FUNCTION
It is fixed while creation of quota arrangement
It defines the sequence of source of supply, irrespective of quota rating.
Priority indicator overrides quota
While source determination, system starts with SMALLEST number in the priority filed.
Once the priority sources are completed, then it will work as normal quota arrangement for
non-priority sources
Material Requirement Planning (MRP)
• It is especially useful for finished goods (Internal procurement)

• An MRP type indicator controls whether external requirements (Sales order or
manual reservations) are to be included
• NO past/ historical data considered
MRP Types
- It is the key which controls the MRP procedure to be used for planning run
- It controls the planning parameters must/ can be entered when maintaining the MRP
data in Material Master.
- MRP types are AP – External Planning
PD – MRP/ ND – No Planning
VV – forecast based
VB – Manual re-order point
RP – auto replenishment
MPS – Master production scheduling/ Time based planning, etc
MRP relevant data in material master
1. Basic data – Material/ UoM/ description

2. MRP data – MRP type/ delivery time/ lot size indicator/ MRP controller/
Scheduling margin key
3. Purchasing data – Purchase group/ GR processing time
4. Accounting data – Valuation class/ Valuation procedure/ valuation price
5. Plant storage data – MRP indicator for storage location / special procurement type
storage location
6. Forecast data – Consumption data
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MRP Controller – Person or Depts. Responsible for materials planning
- Procurement type – Internal/ external/ both

- MRP type – How the material is planned
- Lot size – Calculate the quantity to be produced/ procured
MRP Profile – A key in which we can store MRP parameters that do not depend on the
material master record or defaulting the frequently used MRP data to avoid data entry.
PLANNING RUN
MRP run types

1. Planning run for 1 Plant – On line (Total Planning)
2. Planning run for 1 Plant – Background (Total planning)
3. Planning run for 1 material – On line (Single item planning)
- Planning run can be for single plant or several plants

- Planning run can be for Single material (Single level) or BOM level (multi-
level)
Planning sequence
Low level code
- Low level code – The lowest level at which the material appears in a BOM
- A Material low level code is always greater than the low level code of all its
predecessors in all BOM
- Low level code controls the sequence of planning run (0,1,2..)
- We can DISPLAY the low level code in the material master from MRP1(Any view)
view by choosing the icon “Info on material”
Extent of planning run
Planning types
1. Planning all materials in a plant
Processing key for planning run – Planning of planning file – NEUPL
This case is used when we are running the planning run FIRST time
2. Material which undergoes changes (relevant to planning run)

Processing key for planning run – Net change planning – NETCH
Or Net change planning in Planning Horizon
This is the case for subsequent runs (after NEUPL/ NETPL)
- Planning horizon is set in customizing
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- The planning horizon should at least span the time period in which sales orders are
received and contain delivery and total lead time of the material.
- Once the planning run is completed, the respective entry in Planning file resets
Planning File
It controls the planning run and scope
- Contains all materials relevant to MRP for each plant for the planning run
- Planning file entries includes the information like
1. Low level coding
2. NETCH or NEUPL
3. Whether the BOM is re-exploded or deleted
- Respective entries in planning file are made automatically by the business
application of the system
- When material master is created with MRP data, and a valid MRP type, the material
is then automatically included in the Planning file
- System checks for the following in Planning file
1. The scope of Planning – NETCH/ NETPL
2. Calculate the low level codes
3. BOM re-explosion requirement
4. Planning mode – Deletion of existing proposals (Not firmed proposals)
5. MRP date
6. Is the material is a Master Scheduled Item
• We CANNOT display individual customer planning file entries

• Setting up Planning file is carried out in background
• We can create an planning file entry manually also.
Net change planning ONLY plans that material that have been subject to a change, relevant
to MRP lead to a planning file entry being created specific to the Plant & Material
Carry out planning run on regular intervals and check the requirement in planning horizon
Creation Indicator controls the creation of PR/ PO/ Scheduled lines and MRP Lists
CONTROL PARAMETRS OF MRP

MRP run for
Material
MRP area
Plant
Parameters are
1. Processing key – NETCH(N) or
- NETPL (P) or
- NEUPL (G)
2. Creation Indicator for PR –
1. Purchase Requisition
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2. PR in opening period
3. Planned Orders
3. Delivery Schedules -
1. No Scheduled lines
2. Scheduled line in opening period
3. Schedule line
4. Create MRP List -
1. MRP List
2. Depending on exemption message
3. No MRP List
5. Planning Mode -
1. Normal
2. Re-explode BOM & routing
3. Delete & re-create planning data
6. Scheduling -
1. Basic dates will be determined for Planned Orders
2. Lead time scheduling and capacity planning
7. Planning Date -
We can simulate / display the planning run before actual planning by selecting the check
box
MRP area
• MRP area can be Plant or Sloc or Sub contractor stock
• A storage location/ subcontracting stock area should be assigned for one Plant for
carrying out MRP
• Material requirement planning with MRP areas CANNOT be REVERSED
• A subcontractor should be assigned to only one MRP area for carrying out MRP
• MRP areas of Sloc and Subcontractor area are only suitable for STOCK
• In customizing we have to assign additional (than Plant) MRP areas like Sloc and
subcontractor area.
• MRP areas can be entered in Material Master
If we are not specifying the MRP area, system will take PLANT as MRP area as default.
Preparation of MRP run with MRP areas (in CUSTOMIZING)

a. Convert Planning file entries for MRP areas
b. Activate MRP – MRP for MRP areas
c. Create MRP areas – Number (5 digit), Type & receiving storage location
Assign storage location or subcontractors to the MRP areas
Type –01 for Plant, Type –02 for Storage Location, Type –03 for Subcontractor
d. Assign MRP areas to Material (in Material Master)
e. Check storage location. The same storage location for the MRP area is assigned in
Material master or not.
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We can assign a material to ONE or MORE MRP areas by creating a segment for each
MRP area.
PROCESS FLOW during PLANNING RUN
1. System CHECKS PLANNING FILE ENTRIES – Is the material is relevant to

MRP or not
2. System carries out NET REQUIREMENT CALCULATION – Whether the
requirement is covered by available stock or not. If NOT, system generates
procurement proposal.
Net requirement check at PLANT level, after the planning file check. This is
applicable for Re-order point planning and MRP
The system process it like
a. Check the Plant Stock
b. Consider GRs and GIs (Reservations also)
c. Calculate the quantity to be procured
Safety stock is IGNORED, while calculating the shortage quantity
3. System CARRIES OUT LOT SIZE CALCULATION – As per the lot size
procedure set in Material Master.
1. System compares the shortage quantity and lot size

2. Calculates the procurement quantity
4. System CARRIES OUT SCHEDULING – Calculates the start and finish time of
procurement proposal
For scheduling, the pre-requisites are – Processing time, planned delivery time and
GR processing time.
In FORECAST BASED Planning – BACKWARD Scheduling
In RE ORDER POINT PLANNING – FORWARD Scheduling
5. System DETERMINES THE TYPE OF PROCUREMENT PROPOSAL – PR/ PO/

Schedule lines as per the settings made and Quota is also checked
In Procurement proposal creation the system

1. Creates planned orders for in-house production
2. Creates PR for external procurement
It depends on the procurement type/ Quota/ Source List/ Shipping Notifications
6. System Re-ORGANIZE THE CRITICAL SITUATION - Generates Exemption

messages and carries out re-scheduling check
Exemption messages are for Individual MRP element. Maximum of 2 exemption

messages per MRP element is possible.
Stock transfer option also can be utilized as per the Creation Indicator setting
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7. System CALCULATES THE ACTUAL DAY’s SUPPLY AND THE RECEIPT
DAY’s supply
• If we do not save any MRP list, the procurement proposals generated by the system
are stored in database. Then we can process it through Stock/ requirement list,
instead of MRP list
• Evaluations of Planning run results in CBP are – MRP List & S/R List.
• MRP List can be a S/R list at the time of last planning run
• MRP Lists are stored in the system till it deleted manually OR replaced by a new
list of next planning run
• S/R List is not saved in a fixed state in the system (but subject to change). It is
available in WORKING MEMORY ONLY
• We CANNOT set a processing indicator for a S/R List
Stock- Requirement List (Transaction code – MD04)

Header variables – Material info, Consumption values
MRP Elements – Date, exemption message, Receipt/ requirement quantity, Available
quantity
Contents – Planned orders, PRs, Production orders, POs, Plant stock, Storage location
stock, Forecast requirements, Sales orders, reservations, etc
’X’ marked PR in S/R list is confirmed ones, created against manually (Firmed tick in PR),
not created by MRP run
Stock-Requirement list is a DYNAMIC List
MRP List (MD05)

List generated by planning run
It describes the status of a material at the time of planning run
It looks similar to S/R List
MRP List is a STATIC List
Customizing for MRP

Levels are – Material Master
- MRP area/ group Hierarchy
- Plant parameters
MRP Group – is an organizational object with which we can assign special planning
control parameters to a group of material
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MRP area
Area where the MRP run is planned.
We can assign different MRP parameters to a material for each MRP area.
We can select subcontractor area also as MRP area
Requirements is a MUST to run MRP (like reservation)
MRP results are monitored with the help of exemption messages.

System can display maximum 2 exemption messages per MRP element
LOT SIZING PROCEDURE
Types
a. Static – Lot for lot/ fixed lot size/ Replenishment up to max. stock level, etc
b. Periodic – Daily/ weekly/ monthly. Flexible period according to Planning calendar
c. Optimum – Part period/ Least unit cost/ Groff recorder procedure/ Dynamic lot size, etc
Lot size is set in Material Master. Additional restrictions like minimum lot size, maximum
lot size, rounding profile, etc can also be fixed.
a. Static – System DOES NOT take future shortages in to account

- Lot for Lot – Exact shortages qty as Order qty
- Fixed lot – Fixed qty as lot size and order qty
- Replenishment up to max. Stock – Qty required reaching max. stock in Material
master as Order qty
b. Periodic – Qty required in that time interval as the lot for order qty
c. Optimum – System will take care of following points to arrive in optimum lot size
- Many deliveries or Higher Order cost
- Minimum stock keeping or Minimum storage cost
- Few deliveries or Low order cost
- More stock or High storage cost
For this we have to enter the ordering costs in Material master.
System determines the storage cost using the storage cost indicator in material master
Storage cost interest rate is in Customizing
Storage cost = Requirement x Price x Storage cost Indicator rate x time in storage x 1/100
x 1/365
We can influence the grouping of requirements to form a lot by entering additional
restrictions in material master record like min. and max. Stock level
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RE-ORDER POINT PLANNING & EVALUATION
If requirement of a material is planned automatically and MRP is active in the Plant, the
system automatically carries out planning file entries upon transactions relevant to MRP.
We can plan manually also.
MRP can create PR directly or MRP to Planned orders and then to PR
Creation Indicator – set in entry screen of planning run

- It controls the creation of planned orders/ PRs/ Scheduled lines in MRP List
- It also controls whether the system should always create an MRP list for all planned
lines or only to certain items depending on exemption message.
- In total planning the creation indicator in the entry screen is used for planning, if no
other Plant or MRP group parameters have been maintained for the material.
Procurement Proposal or Order Proposal
- This is created becoz of MRP run

- When the system creates an order proposal, it check to see whether the receipt is to
be made via in house production or external procurement. This is defined per
material per procurement type.
- Procurement type is preset by the material type in Customizing
- Net requirement calculations is carried out by the system for a specific plant during
planning run as a part of MRP
- In Scheduling system calculates the start and finish dates of the procurement
elements for procurement
Material – Material type to Procurement type

- In house production > Planned order > Production order
OR - External Procurement > Planned Order > PR > PO
Material & Plant – Special procurements

- Standard Procurement
- Stock Transfer
- Subcontracting
- Consignment
The system checks whether the forecast requirements can be covered by the available stock
and planned receipts
If the material shortage occurs, system calculates the shortage qty and creates the order
proposal
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Re-Order Point Planning
Max. Stock level

Stock
Re-Order Level
Safety Stock
Re-order point Delivery Time Time
Replenishing lead time
- Re-order point planning procedure is based on a comparison between the Stocks

and re-order point.
- Safety stock, prior consumption, future requirements and replenishment lead time
are to be considered while defining re-order point
- Present stock, Firm planned orders, Firm PRs, POs are also define the net
requirement
Calculation of Dead lines
Creation of PR PO Date Delivery date Stock available at SLoc
Purchasing processing Planned delivery GR processing Time

Time Time Time
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11 INVENTORY MANAGEMENT
MOVEMENT TYPE
- A 3 digit key used to differentiate between goods movements in R/3 system.
- It is having several control functions in Inventory Management
1. Plays a central role in automatic account determination
2. Determine which stock or consumption accounts are to be updated in FI.
3. Determines the format of the screen where we enter documents and how the
quantity fields are updated.
100 series – Good receipts types

200 series – Goods Issue types
300 series – Stock transfer types
400 series – Transfer types
500 series – GR + GI + Others
600 series – GI + TF + TR +
700 series – Physical Inventory
800 series – GR with Tax + RTP
900 series - Warehouse
Valuated Good Receipts
Auto creation of storage location- If it is set in customizing for Plant & Movement type, the
storage data is created automatically during the first goods movement.
Auto creation of storage location happens if the given quantity is to be posted in to normal
storage location.
Auto storage location will NOT be created for goods movements in SPECIAL
STOCKS
Stock types
1. Unrestricted – Available for MRP & Available for withdrawal
2. Quality Inspection – Available for MRP but NOT available for withdrawals
3. Blocked – NOT available for MRP & Withdrawal
4. Restricted stock. -As per the batch requirement in Batch Master
Stock Indicators are the indicators for differentiate between stock types on goods receipt
1 – Unrestricted stock
2 – Quality Inspection stock
4 – Blocked stock
Negative Stock
• Negative stocks are allowed for special stocks if you have activated negative stock
in the Valuation area and for the special stock concerned in that Plant and storage
location
• Negative stock can be fixed in the material master for a material( In Plant/ storage
view1)
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• If it is activated in customizing for a stock type and Plant, then there is no need of
activating negative stock for each and every material in the material master.
• Negative stocks allowed on following special stocks –
Vendor consignment (K), Stock of material from Vendor (O), Consignment stock at
Customer (W), Sakes Order stock (E), Project Stock (Q), Packaging at Customer
(V), RTP of Vendor ®
• We can manage Negative stock for materials with MAP and special stocks
• Ensure that you DONOT have negative stocks on the BALANCE SHEET KEY
DATE.
• Blocked stock also can be negative
• Settings of negative stock possible for
1. Valuation area
2. Plant & special stock types
3. Storage location
4. Material master level
STOCKS
• During goods receipt, a material and accounting documents are generated and it updates
the Purchase order history
• After GR is posted against a particular movement type, the Quantity, Material,
Movement type and Organizational level CAN NOT BE CHNAGED. If any errors,
reverse or cancel the document
• We can post withdrawals & Consumption ONLY from UNRESTRICTED Stock.
• If we want to withdraw material from QI/ blocked, we have to first transfer post it to
Unrestricted and then withdraw it.
• Plant stock & Storage location stocks views will appear automatically in material
master after booking material movements.
Stock Transfer Vs Transfer Posting
• Stock Transfer involves physical movement of goods but transfer posting need not be
• In transfer posting ONLY Material document is generated (NO Accounting
document)
• Movement type is the key control factor in both the cases.
Quality
Inspection 322
350
349 321
Blocked 343 UN Restricted
344
• Document principle applies to Inventory management.
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• A document is the proof of that transaction involving stock changes has taken place.
Documents are stored in the system
Material Document Vs Accounting Document

• A material document consists of Header (Posting date, created by, etc..) and item
level details like quantity, material, storage location, etc
• Accounting document consists of Header (General data like posting date, posting
period, currency, etc.) and item level details like G/L account number, amount, etc.
• Material document and accounting documents are INDEPENDENT documents
• We can identify the material document by the material document number and
document year . The Accounting documents are identified by the accounting
document number, company code and a Fiscal year.
• In Accounting document, the number ranges are assigned to a Document type.
But for material document, the number ranges are assigned to a
TRANSACTION / EVENT TYPE
• Goods Movement Transaction/Even type Document type
GR for PO WE WE or WN
GR for others WF WE
GI/ TP/ Others WA WA
GI for deliveries WL WL
• We cannot change a document once it is posted. Some additional information like
texts can be added. So we use reversal for correction
EFFECTS OF A GOODS RECEIPT
1. Stock Value updated in the Material Master

2. Material and Accounting documents are generated
3. Creation of an Inspection lot, if the material is Quality activated
4. Stock and consumption accounts are updated
5. Transfer request is created, if Warehouse Management is activated
6. Purchase Order and PO History is updated. RFQ, PR also updated
Stock Overview
• For each organizational level, Client/ Co code/ Plant/ Storage location / Batch/
Special stocks
• It’s a STATIC display of stocks. Planned data are not available
VALUATION CLASS
It is the grouping of materials to determine which stock accounts are to be updated
upon goods movements
• For automatic account determination, R/3 system works with Valuation Class.
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• It is fixed at Accounting view of material master
• Material Valuation is depends on Price Control (Standard or MAP) and goods
movements (GR/GI/TP)
• GR/ IR clearing account depends on the PO price
Changing of the price control from standard to MAP is always possible.
Delivery costs – Planned and unplanned

Unplanned delivery costs are directly booked through MIRO, so the valuation done at GR
is NOT Correct if the transaction is having an unplanned delivery cost
Goods receipt can be for with reference to

1. Purchase Order
2. Order
3. Others
The stock display will be as follows
GR from Stock detail as per system
Purchase Order Open PO quantity
Order Open order quantity
Reservation Planned receipts
ENJOY Transaction – MIGO

MIGO transaction is combining following 7 transactions in single code
1. MB01 - GR for known PO
2. MB0A – GR for Unknown PO
3. MBRL – Return Delivery
4. MBSF – Release of blocked stock
5. MBNL – Subsequent delivery
6. MBST – Cancel Material document for GR
7. MB02/ 03– Change & Display Material document
GR of Blocked Stock (Movement type –103)

It is the conditional acceptance of goods. While we post the material into GR blocked
stock-
1. Quantity is posted to Stock
2. Material is NOT VALUATED
3. The transaction will be available in PO History
4. The material is NOT available for MRP
GR STOCK Unrestricted use (101)

Quality Inspection (101+X)
Valuated Blocked (101+S)
GR Blocked stock (103)
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When GR blocked stock is released (MBSF), then it is valuated automatically. It will have
the same effects of an ordinary GR.
• While accepting the GR blocked stock to Plant unrestricted stock(105), you
can refer the material document of earlier GR or Purchase Order
Goods Receipt in to QI stock (101 +X)

Pre-requisites
1. Quality inspection indicator in material master
2. QI indicator in Additional data in PO (Header). It will automatically copied from
material master
3. Set QI indicator in GR at item level
Possible movements for QI stocks
1. Transfer to Unrestricted stock and its reversal

2. Transfer to GR blocked stock & its reversal
3. Transfer to Blocked stock and its reversal
4. Transfer to Sampling and its reversal
5. Return delivery to Vendor and its re-receipt
OTHER GOODS RECEIPTS

1. Initial entry of stock balances – Movement type – 561/ 563/ 565
2. External Good receipts without PO (Movement type –501)
3. Internal Goods receipts without production order (Movement type –521)
4. Good receipts for By-products (Movement type – 544/542)
5. Good receipt for Free of Charge (FOC)- Movement type -511
6. Returns from customers (Movement type – 451)
DELIVERY COMPLETED INDICATOR
• The delivery completed indicators are fixed in PO & GR.

• After setting the delivery completed indicator at GR, the open order quantity
becomes ZERO. But still we can post new GRs against it. But the open order
quantity WILL NOT CHANGE.
• If we change the quantity of a delivery after posting the GR, the system DOES
NOT CANCEL the delivery completed indicator automatically. But it issues a
warning message.
• If an order quantity/ return delivery quantity reduces the delivered quantity below
the tolerance limit, the system cancels the delivery completed indicator. But issues a
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message “ Delivery completed indicator has been reset ”. Thereafter we have to
manage it manually.
• Standard R/3 system does not accept Over deliveries
• For accept over deliveries, you have to select unlimited delivery in PO or properly
set the over delivery tolerance
GRs valuated on the basis of the incoming quantities in the Order price unit
Invoice verification is also based on the GR qty in the order price unit.
• If you want to restrict a GR upto a certain date, enter that date in Latest GR date in
“Delivery” tab of item
RETURN DELIVERY
Return delivery can be created with reference to a material document or Purchase Order
Receipt by Return Substitute

Delivery by Delivery
101 122 123
103 124 125
105 122 123
If you receive a substitute delivery, after you have returned the goods to a Vendor, it is
ADVISABLE to reference the associated return delivery by using a reverse posting when
you post a new receipt
122- Return delivery from Warehouse

It results into 1. Material document created
2. Stock accounts updated
3. Purchase Order update
124 – Return delivery from GR Blocked stock
It results ONLY in creation of a material document as a proof of return
Return delivery in GR based Invoice verification
Uses the material document to reverse
If invoices are settled and then you are returning, please ensure that
Invoices should be cancelled
In customizing, for each MOVEMENT TYPE, you can specify Reversal and return
delivery movement type and transactions in case of GR based IV
Difference between Reversal & Return delivery

• Reason for movement is optional in the case of reversal, but mandatory in return
delivery.
• Return delivery slip is not required for reversal but mandatory for return delivery.
• Both operates on different movement types.
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Movement type –161
It is used to assign in a PO so that while posting the GR, the qty in the GR will be
automatically removed from the stock. It is generally used for exchange of materials.
Quantity Distribution facility at GR
We can distribute the incoming quantity in GR to
1. To several storage locations
2. To several Movement types
3. To several stock types
4. To several Batches
Note – Batch selection list DOES NOT work with SPECIAL STOCKS
Goods Receipt using Order Price Unit

If the Purchase order contains an Order price unit that differs from the order unit, enter both
units at Goods receipt because,
1. Goods receipt is valuated on the basis of the goods receipt quantity in the Order
price unit
2. Invoice verification is on the basis of the GR quantity in the order price unit
So the system immediately detects the variance, if any
Order price quantity tolerances are fixed in customizing for error/ warning messages
Entering a Freight Vendor at Goods Receipt
Pre-requisites
1. You can enter a freight vendor, if the condition type for delivery costs allows you to
do so. It is customizing setting for a condition type. The Vendor at GR is to be
selected for that condition type in customizing . You can attach a vendor for freight
while creating the PO by attaching a proper condition type in the pricing procedure
and attach in PO itself.
2. The condition type should be included in the pricing procedure (Should be available
in Conditions tab of item in PO)
Goods Receipt of Non-valuated goods

The receipt of goods to unrestricted stock. We can directly issue it for consumption
Automatic PO generation at GR
• We can configure the system in such a way that system creates PO in background
during the receipt of Goods which is not having any PO. We can do the invoice
verification afterwards.
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• In Customizing for organizational structure , the plant must be assigned a
purchasing organization in the step Standard purchasing organization - assign
plant so that the system can determine the purchasing info records.
• Automatic POs are allowed only for movement type 101 & 161 in standard system.
The customization for these movement types are to be there for automatic PO
creation
• System valuates the GR with the price defined in purchasing info record.
• MIGO transaction is supporting automatic PO. It is available in MB01
• In Vendor Master the purchase group default data for material to be maintained
• Automatic PO is only possible for valuated goods
• Pre-requisites for automatic PO are;
1. Selection in Material Master
2. Selection in Vendor master
3. Info record should be available
4. Valuated good receipt
5. Automatic PO selection for Plant & Movement types (101& 161)
• If a PO is generated in the background for the return item (movement type –161).
This PO is required if you want to carry out invoice verification for the credit
memos, issued by the Vendor for this return
SHELF LIFE EXPIRATION DATE (SLED) check at GR

Pre-requisites for SLED checking are:
1. Minimum remaining shelf life has to be maintained in Material master or PO
2. Minimum remaining shelf life value is in number of days that a material has to be
useful in order that system will accept GR
3. SLED check should be active in Plant (Customizing)
4. SLED check should be active for the movement type (Customizing)
• If SLED is active, we have to enter the expiration date or production date during GR
• At the time of GR, system checks the SLED and issues warning messages as per the
setting
• After GR is posted, the SLED data will be stored in material document
• Latest acceptable GR date can be entered in PO, so that system can check the date
during GR
• Early good receipts – System can issue warning message on early GRs depending on
customizing. And can post GR to GR blocked stock, if required.
• If NO Unit of measure indicated in material master, the system uses the UoM
1. Order unit for goods receipt with respect to PO
2. Production unit fro GR for Order
3. Units of issue for other movements and reservations
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Dynamic availability Check
depends on
1. Movement type
2. Transaction code
• Availability check prevents the book inventory balance of various physical stocks
from becoming NEGATIVE
• Availability checking can be done at Plant/ Storage Location / Special stock level
for the month or even previous month
• Checking by movement type
• System checks for the MOVABLE QUANTITY
• In goods issue screen select an item, go to More functions > Movable quantity
Activation in Customizing for Plant & Movement types are required for
1. Automatic storage location creation
2. Automatic PO at GR
3. SELD checking
Missing Parts Check
• Make it active in Plant in Customizing (inventory management)
• By missing parts check system will issue a message to MRP controller (background
processing)
Multiple account assigned GRs

• Goods receipt are NOT VALUATED for MULTIPLE ACCOUNT
ASSIGNMENTS (If the multiple account assignment for a SINGLE item). For this
GRs can be made but accounting documents WILL NOT be generated
• In Invoice verification of this, accountings will be generated by Vendor- credited
and cost center –debited
• For multiple account assignment, there WILL NOT have FI documents at GR
level.
GR Forecast
Number of anticipated deliveries for Planning purpose.
Inbound deliveries against notifications are NOT taken in to consideration because this
would have a detrimental influence on system performances
RESRVATION
Request to warehouse to have materials ready for issue at a later date for a special purpose.
It ensures the availability of material when it needed. It also can be used to plan inward
goods movements.
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We can create a reservation ONLY for ONE purpose. Ie. ONE MOVEMENT TYPE
or ONE ACCOUNT ASSIGNMENT OBJECT
Reservation can be at Plant/ storage location/ Batch LEVEL
We can create a reservation

1. Manual
2. Auto
a) For Orders/ Networks/ WBS element
b) For stock transfer reservation
We CAN NOT change a reservation made by auto for that you have to change the
Order/ Network/ WBS element
Effects of reservation
1. It creates a reservation document
2. reserved stock increase
3. In MRP, available stock reduces. (In S/R List)
Structure of Reservation Screen

Header data
• Account assignment
• Basic Date
• Check calendar
Item Details
• Material
• Plant / Storage location / Batch
• Requirement Date
• Movements allowed or not
Reservation can be created WITH or WITHOUT a reference.
Important points while creating/ changing a reservation

1. Allow movement
2. Set deletion Indicator
3. Change base date
While changing reservation following are NOT POSSIBLE
1. Account assignment data
2. Material Number
3. Plant
If you want to change these, create a new reservation
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Reservation Management Program (RMP)
30 days Allow movements (10Days)

Delete reservation
Requirement of reservation
Baseline date
• The management program for reservations can both re-organize the reservation file
and make mass changes to reservations
• The management program ONLY includes reservations that have been manually
created.
• Calculation of deletion date of OLD or completed reservations - Predefined No of
days. SAP recommends 30 DAYS from baseline date
• Calculating movement allowed period –Baseline date + Predefined days – SAP
recommends 10 Days
Customizing settings for Reservations

• Number range with interval
• Default values for movement allowed indicator
• Copy rules
• Dynamic availability check
• Filed selection
• Create storage location automatically
Reservation can be done for a planned item for

1. Consumption (reservation for available/ stock item)
2. Receipts (reservation on incoming item)
3. Transfer posting
And reversal of these above transactions
• Issue against reservation with planned item (Cost Centre) reduces the Warehouse
stock
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• Issue against reservation WITHOUT planned item (GI) are done by taking them to
unrestricted stock and then issue.
• In case of reservation in Transfer posting, the sending plant will reserve the
item and receiving plant will reserve the material in “Receipt reservation”.
After entering the transfer posting, the account will be cleared.
• MB21/ 22/ 23 – Create/ change/ display reservation
• MB 25 – Reservation List
• Reservations that have been deleted/ reversed CAN NOT be DEACTIVATED
INITIAL STOCK ENTRY

1. If the material has a standard price, the valuation of initially entered will be based
on this standard price. If you have entered a different price, other than the standard
price in material master, the difference will be posted to a Price difference account.
2. If the material has a moving average price, the initial inventory data is valuated as
1. If you entered a value for the initial inventory data, this value used to used
to valuate the quantity to be transferred. If the quotient of initial inventory
value and initial inventory quantity differs from MAP, the MAP will be
changed through the initial entry of inventory data
2. If you have NOT entered a value for the initial entry of inventory data, the
quantity to be transferred is valuated according to the MAP and IT DOES
NOT CHANGE
The movement type used for initial stock entry is 561/ 563/ 565 (UR/ QI/ Blocked) and the
valuation of inventory data transferred will depend on 1) Price control & Price in material
master 2) The value and quantity of material transferred.
The procedure for Initial stock entry should be:

1. Upload the material master with ZERO Price (MM01)
2. Upload the Intial Stock Entry thru MB1C transaction. (It will NOT have
any accounting document because the price is Zero)
3. Upload the Material Quantity and Value through MR22 (Debit or Credit a
Material)
This is because:
If we are maintaining material master with price and uploading quantity with MB1C, the
system will calculate the stock value as per the Materail Master price which is LIMITED to
TWO DIGITS:
Example :
Material Master Price – 10.236, system will accept either 10.23 or 10.24
The legecy Value of the material is 10236
Quantity-1000
System will calculate the value as –1000x10.23=10230 or 10240 (difference of –6 or +4)
If you do Materail Master price = 0

Quantity =1000
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If we are uploading Qty 1000 and Value 10236, system will upload Value as 10236
eventhough the Material Master price will be updated as 10.23 or 24 after the uplaod, But
the value loaded will be exactly as per the Legecy system
NOTE : The price of material should be the price of Stock keeping unit
GOODS ISSUE
TO
FROM
Ware House To Cost Center
Consignment GOODS ISSUE
GOODS ISSUE To Asset
Pipe Line To Sales
To Order
To Sampling
To scrapping
• Sampling Materials are treated as scrapped . But the value of sampling material
posted from the material stock account to the Quality Inspection stock account .
• But while scrapping material, the material will be posted to Scrap account and it
debits to the cost center.
• Issue to sampling and scrapping are different.
• We can change the movement type while goods issue.
• Goods can be issued to reservation and BOM
• While goods issue, we can have collective entry with different account assignment
also.
• System WILL NOT update the consumption statistics in Material Master, if you
post goods movements using special stock types – Sales Order Stock and Project
Stock
• We can set final issue indicator while issuing against a reservation
• Stock determination is a function that can be used on a cross-application basis.
• We CAN issue goods from Quality inspection and Blocked stock ONLY for
SCRAPPING or SAMPLING
• Reversing a planned goods issue
Can be reversed with reference to a Material Document OR to a reservation
A Material document (Reversal) will be created
An accounting document will be created
Stock will be updated (increased)
Consumption will be reduced
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• While issuing a material for scrapping,
- Relevant stock reduced
- Value posted from stock account to scrap account
- Price is taken from material master
o Movement type Consumption for

201 Cost center
221 Project
231 Sales Order
241 Assets
251 Sales
261 Production order
281 Network
291 All account assignments
BACK FLUSH
It’s a type of goods issue
This type of withdrawal means that the components are already available at the production
sites (can be a production storage location). They are physically consumed during
production processes. However the quantity consumed is NOT reported until it is known
how much has been actually consumed, that is not available till production order
confirmation. For these components you need NOT to enter a goods movement in
Inventory management system. While confirming the production order, system
automatically creates a goods issue and remove from the stock
Setting at material master.
Example – Charging of reactor with various materials
GR/ GI SLIP numbering

• We can have GR/GI slip number in addition to the Material and accounting
document numbers
• It is a statutory requirement for some countries like Italy
• It can be assigned Internally/ externally by each Plant or Storage Location or
Movement type
• Options – 1) Include the filed for the GR/GI slip number in the SAP script form
2) Call up form –MB-XAB using transaction MBXA
Then customize it “Print report” SAPLMBXA in print control
• Serial numbers should be active for the Plant
• In stock transfer (Plant to Plant) of material with serial number is only possible if
the same profile is assigned to the material in both the Plants
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Goods Movement via Shipping
Pre-requisites
• Plant data, Sales Organization, Distribution channel, shipping point and division
• Sales & Distribution data should available in material master
• The customer field in Vendor master as the vendor for shipping ia also the customer
Movements
• Goods issue for a delivery
• Stock transfer using STO
• Returns from customer
• Return deliveries to Vendor
• Returns to STO
Scheduling
• Material availability date
• Transportation planning date
• Loading date
• Goods Issue date
All depends on the Factory calendar
MATERIAL BLOCK (ENQUEUE) for Goods Movements

• To PREVENT more than 1 goods movement being posted at a time for the same
material and there by preventing inconsistencies between the stock quantity and
Value
• It is set at CLIENT LEVEL
• There are 2 types :
1. Exclusive Material Block
Plant data and accounting data will be locked SIMULTANEOUSLY up to
the end of the goods movement posting.
The disadvantage of this is Long locking period
2. Late Material Block
a) The materials are no longer blocked exclusively, but ONLY at the
TIME of actual data SAVED
b) The material is blocked exclusively at the latest time possible
The advantage is several users can work simultaneously
The disadvantage is System will read material master record several times
and in case of outward movements, lock entries of other users in ATP
server. It will leads to reduction in performance.
• It is available in Customizing – Material Management > General settings >
Material Block
• In our system it is selected for – Lock exclusively – Waiting system – 10 seconds
STOCK DETERMINATION
• Enter stock determination group in material master at PLANT level
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• Stock determination Rule is assigned by the application in which it is called
(transaction)
• Stock determination group and rule forms a unique key for the stock determination
strategy
• Stock determination strategy defines which stock can be considered for a
transaction. (Special stock indicator/ storage location) and preferences are to be
included (in sorting option)
• As per the SD strategy you predefine, the system makes decisions on material
withdrawal depending on the material, Plant and business process.
• Stock determination can be used for UR stock/ Vendor consignment/ Pipeline stock/
Sales order stock/ Project stock
• Scenarios
1. The back flushing of material in repetitive manufacturing or a production
order should be carried out for a company’s own stock first and then vendor
consignment stock (Most reasonable vendor first)
2. Material from preferred vendor first. If more vendors, use split valuation for
price and quantity.
3. First issue from central buffer stock and then from storage location for
staging material
4. If stock is not sufficient, go to pipeline
Pre-requisite settings for Stock Determination
1. Define a cross-application strategy for stock determination according to which
stock should be reduced in Inventory management. It is at PLANT level based on
stock determination group and stock determination Rule
2. Assign SD group to material in Material Master record (Plant/Storage location 2
view)
3. Assign SD rule to the business transaction/ event (Movement type)
SD Types
1. Auto in back ground
2. Online during SD process
SD Strategy- It depends on
1. Plant
2. SD group
3. SD rule
Define SD Strategy
1. which stocks can be used for the transaction/ event type (UR/K/P/E/Q)
2. From which stocks are to be withdrawn
3. Processing method (Background/ online)
4. Priorities (Batches, etc)
5. Valuation type/ Split valuation
How to use SD
1. While transaction (GI/ TP), put a “*” in storage location field
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2. Choose to continue – If SD is activated, the system displays a dialog box indicating
the stocks it has been determined for this withdrawal as per your customizing
settings
3. Select/ change the proposal as required
4. Post the document
NOTE – MIGO is NOT supporting Stock Determination functionality
Returns to Vendor
Movement type Functionality
102 Reversal of GR due to any clerical mistake
122 Returns to Vendor – due to any reason like damage
124 Returns to Vendor – from GR blocked stock
161 Returns to vendor – For the exchange of another material
STOCK MOVEMENTS-TRANSFERS
Stock Transfer Vs Transfer Posting
• Stock Transfer involves physical movement of goods but transfer posting need not be
• In transfer posting ONLY Material document is generated (NO Accounting
document)
• Movement type is the key control factor in both the cases.
• Stock transfer can be WITH or WITHOUT Purchase Order (With & Without SD and
between Company codes also)
• Transfer posting can be between locations, stock types and even material to material
Levels of stock Transfer

1. Storage location to storage location
2. Plant to Plant
3. Material to material
4. Company code to company code
1. Storage location to storage location
• It can be one step or 2 step
• If it is 1 step, the movement type is 311 and if it is 2 step the movement types are
313 & 315
• It is used for transferring the stock within 1 Plant, the transfer is NOT
VALUATED and there will not be any accounting document
2. Plant to Plant
• It also can be in 1 step or 2 step procedure.

a) 1 Step
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• 1 step is being used where the Plants are located nearby and there will not be much
time to transfer the stock. In other wards the stocks can be seen in the system
immediately (no stock-in-transit)
• The movement type is 301.
• Goods issue from sending Plant and Good receipt on receiving Plants will happen
simultaneously. Both the stocks will be in Un-restricted use.
b) 2 Step
• When the Plants are distant and there will be a time gap for transferring the stock.
Stock-in Transit data is available in the system
• The movement types are 303 & 305.
• Goods Issue in sending Plant
• Goods receipt at receiving plants are to be carried out
• Can monitor the stocks in stock-in-transit
3. Material to Material
• It is possible ONLY if both the materials are managed in SAME UNIT OF
MEASURE.
• This functionality is used for transferring the material when its characteristics
changes in due course of time and it resembles with an existing material.
• It is mostly used in Pharma & Chemicals
STOCK TRANFERS
We can move the stock between Plants in following scenarios :

1. 1 Step
2. 2 Step
3. Through a stock transport order (2 step)
4. Stock transfer with Delivery
5. Stock Transfer with delivery & billing
1 & 2. 1step and 2 step transfers

• Movement type 301 for 1 step and 303 & 305 for 2 step.
• Material price for TRANSACTION will be calculated at SENDING PLANT’s
PRICE
st
• ACCOUNTING document is generated at 1 step itself, in 2 step procedure
nd
and there WILL NOT be any accounting document in 2 step
• Material is booked in receiving plant as “STOCK in TRANSFER” if we check the
stock overview after 1 st step.
Note: If any damage occurred for a material while it is in stock-in-transit :
2 ways to treat it
1. Reverse the goods issue from the sending plant and post the goods to scrapping
2. Make a goods receipt in receiving plant and then issue it to scrapping
3. STOCK TRANSPORT ORDER

• Stock transport order document type – UB and item category-U in STO
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• Movement types are 351 & 101
• After creating PO, the material quantity in stock overview will show as “Open
Order quantity” in receiving Plant and there will not be any change for the stock in
sending plant.
• After posting stock transfer,
1. Material Price will be as per the sending plant’s price
2. Quantity will reduce from sending Plant
3. Quantity will NOT be increased in receiving plant. But it will shown as
stock-in-transit
4. Accounting document will be generated along with this transaction
• After receiving goods at receiving plant
i. NO accounting document will be generated
generated
ii. Stock in receiving plant WILL increase
• While transferring the stock, the price of the sending plant will be taken into
consideration for calculating the stock value.
• But the material price will be re-calculated by the system at both the plants as per
the price control set in material master.
• The documents are created as per the price control
NOTE : To carryout stock transfer from Plant to Plant for a material that is subject
to SPLIT VALUATION, you HAVE TO USE 1STEP or STO
SPECIAL STOCKS
Special stocks that are managed separately becoz they are not belonging to your company .
The special stocks and special procurement types are of 2 types

1. Company owned special stocks
2. Externally owned special stocks.
1. Company owned special stocks
The special stocks that are owned by the Company stored with Vendor or customer.
1. Stock material provided to Vendor/ subcontractor
2. Consignment stock at Customer
3. Returnable packaging at Customer
These Materials are managed at PLANT LEVEL. LEVEL. NOT at Storage location level. Only 2
types of stocks are possible. Unrestricted / Quality Inspection
2. Externally owned special stocks

Stocks owned by Vendor/ Customer and stocked at your place.
1. Vendor Consignment
2. RTP (returnable Transport Packaging
3. Sales Order Stock
4. Project Stock
These materials are managed at STORAGE LOCATION LEVEL
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All the 3 stock types, UR/ Blocked/ QI are allowed
Page 78 of 160
12 SPECIAL PROCUREMENT TYPES
1. Consignment (K)
2. Sub Contracting (L)
3. Stock Transfer using Stock Transport Order (U)
4. Third Party Processing (S)
5. RTP (R)
6. Pipeline Handling (P)
CONSIGNMENT PROCESS
When buying goods as a Consignment, the ordered goods still belonging to Vendor, even
after delivery. The goods become your property ONLY after they are consumed. The
quantity consumed are periodically settled.
• The Ownership of the material is with Vendor but storing at client’s premises
• The stocks are NOT VALUATED, but available for MRP
• The ownership of the material transfers to the client ONLY after issuing/
transferring it from the consignment stock
• Consignment liabilities are settled periodically (thru MRKO) based on the
consumption statement by the vendor
• The prices of consignment stocks are defined in Info record and maintained
periodically
• We can use the conditions in Purchasing
• CAN maintain ANY unit of measure with proper definition of conversion factor
in material master
• Physical Inventory of Consignment stock is possible
• Consignment stocks are managed at STORAGE LOCATION level
• There will NOT be ANY VALUE in consignment purchase orders
• In PO, No Price, No conditions, No Invoice receipt requirement but GR
requirement
• Stock movements are possible.
• Consignment stocks can be displayed by Tcode – MB54
• We can issue the consignment material from Consignment stock using movement
type – 201+K
• Item category ‘K’ is used for consignments
• We can post GRs for consignment WITH or WITHOUT reference of a PO. But
the consignment prices are to be maintained before GR
• Consignment stocks can be managed at Unrestricted/ QI/ blocked and we can do
the transfer posting between them.
• But we can withdraw the consignment from UNRESTRICTED ONLY
• Goods Issue from consignment unrestricted stock results in a liability to the
consignment vendor
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• We can enter the invoice for consignment WITHOUT reference to a PO. Debits
are posted to the “Liabilities from consignment stores” G/L account to which the
credits were posted upon “Goods issue from consignment” G/L account
• Consignment info record- The info record of consignment with different Plants
(different prices at each plant) is having a SINGLE INFO RECORD number
• Info record should be created BEFORE creating a PO/ GR.
Process of Consignment Procurement & Settlement
1. Creation of Info record – ME11
2. Create Purchase Order – ME 21N
Standard procedure.
Item category –K
GR to consignment store
Invoice Receipt is NOT required
No Price in PO
3. Goods Receipt – MIGO – Receipt of Material to consignment store
The movement type – 101+K
Please note that the GR can be with or without GR. Item will be in special stock
while posting the GR
3. Transfer Posting – MB1B. Transferring the material to own stock
The movement type – 411K (the step is Not Mandatory)
4. Goods Issue – MIGO
Goods Issue from consignment store to movement types – 201/231/ 241/ 251/ 261
Note – We can directly issue the material from consignment stock using movement type
201+K, without transferring to company’s stock.
Process of Physical Inventory of Consignment

1. Creation of Physical Inventory document – In the create screen enter ‘K’ in special
stock field
2. Enter Physical Inventory document
3. Post the differences – If you want to include QI/ blocked stock, enter a new material
number and enter the relevant stock type in the filed of “STY” and post the
difference as per your settings
SUBCONTRACTING PROCESS
The vendor receives the components from which he produces the finished product
mentioned in the PO. The components are listed in the PO and can also be determined by
the system via BOM
• You order an end product from a vendor and specify in the PO with components,
you will send to vendor to manufacture the end product
• Issue of components to the vendor and good receipt of finished product with
consumption detail of components
• Vendor invoice is posted against the purchase order
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• A subsequent adjustment for excess/ under consumed components can be made.
• Item category ’L’ is used in the PO, and several components can be attached to the
Po
• We can enter the components by manual or thru BOM explosion
• System automatically creates reservation for the MRP relevant components
• The purchase order price will be the price of subcontracting services
• Conditions of subcontracting can be stored in Purchasing info record for
subcontracting
• We can link services specification with subcontracting items
• The components with subcontractor (after issuing it) are managed as a special stock
to the vendor. This stock is VALUATED and AVAILABLE for MRP as the
components are your property. It is not allocated to a specific storage location becoz
its still your property
• We can monitor subcontracting stock by evaluations
• Goods issues are made, 1. with respect to a Subcontracting PO 2. From the list of all
the material of a subcontracting vendor
• We can do the process of subcontracting thru SD. Through delivery and shipping
• Good receipts are posted with respect to Subcontracting order item
• Consumption of components posted at GR and subsequent settlement is possible
with respect to PO
• Invoice verification is same that of standard process.
• The account postings at subcontracting at GR & invoice verification are;
SUBCONTRACTING SCENARIO
Order - SF Material
Component - Raw Material
A. At Goods Receipt
1. Stock account of SF Product - Debited @ (Order price + Valuation price of SF product)
2. Cost of Goods Manufactured - Credited @ (Order price + Valuation price of SF product)
3. Stock account of Raw Material - Credited @ Valuation price of Raw material
4. Consumption Account - Debited @ Valuation Price of Raw Material
5. GR/ IR Clearing Account - Credited @ Order Price
6. External Labor Account - Debited @ Order price
B. At Invoice Receipt
1) If there is NO deviation Price in Vendor invoice
Invoice Value = Order price
1. GR/ IR Clearing Account - Debited @ Order Price
2. Vendor account - Credited @ Invoice Price (Order price)
2) Invoice Value = Order price + deviation price from PO
1. Stock account of SF Product - Debited @ deviation amount in invoice
2. Cost of Goods Manufactured - Credited @ deviation amount in invoice
3. GR/ IR Clearing Account - Debited @ Order Price
4. External Labor Account - Debited @ deviation amount in invoice
5. Vendor account - Credited @ Invoice Price (Order price + deviation amount from PO)
Page 81 of 160
i. Stock account fro Finished goods -
ii. Stock account of raw material
iii. GR/ IR clearing account
iv. Vendor account
v. Cost of goods manufactured
vi. Consumption account (for components)
vii. External labor account
• We can enter the material that is to be produced as a subcontract item in the
scheduling agreement
• By the issue of components (thru transfer posting), the stock of components WILL
NOT reduce from your stock. The stock will be produced at the time of receipt of
Goods receipt of finished product
• CS01 is used for creating BOM/ components
1. The order of the end product in PO. The components are attached to the item n PO
2. In Inventory management, components are posted to the stock of material provided to
the vendor
3. Vendor supplies the end product with consumption details of components and it will
posted to the system while GR’
4. Any balance (+ or -) of components are done at subsequent adjustment transaction
5. Vendor submit his invoice for the services rendered and invoice will be posted in MIRO
Process of Subcontracting Process

1. Creation of Info Record – ME11. Service with price of service
2. Creation of Purchase Order – ME21N – Creation of PO with Item category ‘L’.
Attach components to the item in PO
3. Transfer Posting – MB1B – Transfer the components from your store to the
subcontractor using the movement type – 541
4. Goods Receipt – MIGO – receive the end product (and components) to Stock by
using the movement type – 101 for main material and 543 for components
5. Subsequent Settlement – MB04 – Subsequent adjustment of components, if any
(other than the entry happened during GR). Movement type 544 for components
and 545 for by product
6. Invoice verification – MIRO – Normal process for invoice verification of vendor
services
• The Master record of end product and components are to be made available before the
creation of PO
• The components with subcontractor / Subcontractor stock is your stock. It is available
for MRP and it is valuated, it is managed at PLANT LEVEL.
• BLOCKED STOCKS are not allowed for subcontracting (Components). But we can
transfer the stocks between these 2 (UR&QI) stocks
Purchase requisition and PO for Subcontracting
• Item Category ‘L’
• No need of entering the date required for components, system will calculate it
automatically as per the planned delivery time fixed in the master.
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• If you don’t want to change the quantities of components, you can fix it by selecting
the Fix check box. The check box is available at components overview (While you
are attaching the components-in PO &PR)
• We can check the availability of components in PR at Environment > Availability
or Edit > availability check in PO
NOTE
• If you change the quantity of material, the system will change the quantity of
component automatically as per the proportion fixed in the component
overview, if the item is NOT FIXED
• If you change the delivery date, the system only re-calculates the date of
requirement, the components are NOT AUTOMATICALLY
REDETERMINED in the BOM. In this case we have to do a new BOM
explosion
• The stock position of subcontracting stock at MBLB
It shows the current stock status, Planned issues & Planned receipts
Providing components for existing Purchase Orders
There are 3 ways for providing it
1. From the “Subcontracting stock monitoring for Vendor List” as a Goods Issue via
Inventory management
a) Choose Menu- PO > Reporting > SC stocks per vendor. (T Code – ME2O)
The list of components that belong to this PO will be displayed
b) Select the component you wish to provide to this Vendor and Choose Edit > Post
goods Issue. A dialog box appears, in which you can enter the data required to
post the goods issue
c) Choose to continue.
The system posts the Goods Issue in background and give the message and you
can cross-check the material via MBLB, select the material and go to
Environment > Material movements and see the material document posted
against the above step (movement type selected is 541)
2. Issue the material from subcontracting stock as a delivery vis shipping (through SD)
3. From Inventory Management Menu
Create a transfer posting through Transaction code –MB1B with respect to a PO
(Subcontracting PO). Here also the movement type is 541
Note – Maximum of 4 Purchase orders can be selected for referring in Transfer
posting
Subcontracting in Inventory Management (Facilities)

1. Provision of components
2. Goods receipt of final product with consumption details of components. We can
adjust the components at Goods receipt
3. Subsequent adjustment of components
4. Allowed transfer postings
a) Plant to Plant – 1step (301)
b) Material to Material (309)
c) Between Unrestricted and QI ( 321 & 322)
Page 83 of 160
Provision of components
•Posting from Unrestricted stock – Can be with respect to a PO or Without PO
•The components can be delivered by another vendor
Issue PO to a Vendor for supplying the components, the delivery address
should be the address of subcontracting vendor. Enter the check box provision
at PO. When you are getting the information that the Vendor is supplied the
components to your Subcontracting vendor. Make a Goods receipt
(STATISTICAL GOODS RECEIPT) in the system so that the stock
position will be updated
The Goods receipt for a Subcontracting Order is VALUATE the material at
Subcontracting Price PLUS the value of the components consumed
Subsequent adjustment
In this transaction the consumption account is already posted is available / displayed
as a second line for each item
Use + or - sign to adjust the components. The movement type is 544.
Subsequent adjustment is possible ONLY for subcontracting orders (L)
Receipt of a BY PRODUCT generated during subcontracting
• The by products are entered in the subcontracting Purchase Order as components
with NEGATIVE quantity
• While receiving the good at GR, system automatically posts the receipt of
byproducts
1. In the material document you can identify the by product by the
movement type –545
2. By products are posted to the ‘Stock of material provided to the Vendor”
• Due to the receipt of byproduct, the value of end product will be REDUCED.
• To transfer the byproduct quantities from the “Stock of material provided to
Vendor” to Unrestricted stock, make a transfer posting using the movement type
–542
Subcontracting for Sales Order stock and Project stock
• An account will be assigned to a sales order or a WBS element

STOCK TRANSFER USING STOCK TRANSFER ORDER
Advantages of stock transfer with STO w.r.to transfer posting

1. Good receipt can be planned in receiving plant
2. Can include an additional vendors (freight, etc) in Stock Transport Order
3. Delivery costs can be entered in STO
4. It’s a part of MRP – PR created via MRP can be converted to STO
5. Goods Issue can be done through Shipping delivery
6. GR can be posted directly to consumption
7. Total process can be monitored through PO history
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PLANT to PLANT STOCK TRANSPORT ORDER
1 Step 2 Step Without SD With SD With Billing
ORDER TYPE
Area - MM-PUR UB UB UB
MOVEMENT TYPE301 (Transfer 643 & 101
Area -MM-IM Posting) 303 & 305 351 & 101 641 & 101 645 for 1 step
DELIVERY TYPE
Area - SD NL NLCC
BILLING TYPE
Area - SD IV
DOCUMENT TYPE
Area - MM-IV RE
PRICE Valuation Price Valuation Price Valuation Price Valuation Price Pricing in SD & MM
PLANNING Via Reservation Purchase Order Purchase Order Purchase Order
Stock in Stock-in-Transit
STOCK after GI Transfer Stock-in-Transit Stock-in-Transit Company code
DELIVERY COSTS Possible Possible Possible
Company code Revenue account &
CROSS-Company Company code Company code Company code clearing GR/IR Clearing
Code Via clearing account clearing account clearing account account account
STOCK TRANSFER – PLANT to PLANT – 1 Step

Carried out ONLY in Inventory Management
•
Entered as a transfer posting – MB1B

•
Can be planned by reservation

•
The quantity of unrestricted stock entering in sending plant posts IMMEDIATELY

•
to unrestricted stock of receiving Plant

Postings are valuated at the price of sending plant
•
If it is between 2 company codes, it will create 2 accounting documents at the time

•
of goods issue
STOCK TRANSFER – PLANT to PLANT – 2 Step

Carried out ONLY in inventory management
•
Transfer posting CAN NOT be planned through a reservation

•
Goods issue sending plant > Stock-in-transit of receiving Plant > Goods Receipt of
•
receiving Plant.
Transfer posting (Goods issue-1step) is valuated at the price of sending plant
•
If it is between 2 company codes, it will create 2 accounting documents at the time

•
of goods issue. If any offset, will post to Company code clearing account
We can request and monitor stock transfer in purchasing through a PR, STO &
•
Scheduling Agreement
For stock transfer scheduling agreement use document type –LU and item category
•
-U
Page 85 of 160
STOCK TRANPORT ORDER WITHOUT SD DELIVERY
•Goods Issue Sending Plant > Stock-in-transit of receiving plant > Goods receipt of
receiving Plant
•Delivery costs CAN BE entered in ST Order
•Transfer posting (Goods issue-1step) is valuated at the price of sending plant
•If it is between 2 company codes, it will create 2 accounting documents at the time
of goods issue. If any offset, will post to Company code clearing account
•Process Flow
1. Creation of ST order in receiving Plant for sending plant with a
document type UB in ME21N
2. Posting a goods issue through transfer posting –MB1B at sending plant
with a movement type –351
3. Posting a goods receipt – MIGO at receiving plant with movement type
–101
4. Invoice verification at receiving plant – Normal MIRO
STOCK TRANSPORT ORDER WITH DELIVERY

• Carried out in Purchasing (entering the STO), Shipping (delivery at sending Plant)
and Inventory management (GR at receiving Plant)
• Other characteristics are same as that of STO without delivery
• Process Flow
i. Creation of STO at sending Plant
ii. Post goods issue through delivery (VL 10B or 10F) at sending plant with
movement type 641
iii. Goods receipt (MIGO) at receiving plant with movement type -101
STOCK TRANSPORT ORDER WITH DELIVERY & BILLING
• The transfer posting in NOT VALUATED at the valuation price of the material of
sending Plant. But defined in both the sending and receiving plant using conditions
• Possible ONLY between plants at DIFFERENT COMPANY CODES
• The areas are – Purchasing (STO), Shipping (sending Plant delivery and goods
issue), Billing Plant (Creation of Invoice at sending Plant), Inventory management
(Receiving Plant goods receipt) and Invoice verification (MIRO at receiving plant)
• Goods Issue through Delivery > Stock-in-transit Company code at receiving Plant >
Goods receipt at receiving plant
• Prices in purchasing as per the conditions maintained in Info record and inter
company pricing procedure
• Goods movements are valuated as per the accounting documents generated.
• 4 Accounting documents are generated
a. Goods Issue at sending Plant
b. Goods receipt at receiving Plant
c. Billing at sending Plant
d. Invoice verification at receiving plant
• Process Flow
a. Creation of STO in receiving Plant for sending Plant. Document type –UB
and item category -U
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b. Post delivery in sending Plant (Movement type –643)
c. Creation of billing document in sending plant
d. Post GR at receiving Plant
e. Post invoice at receiving Plant
GENERAL –INFORMATIONS ON STO
Pre-requisites for Goods Issue in Shipping
b. In customizing in Purchasing, a delivery type (NL for STO with delivery and
NLCC for delivery & billing) must be assigned to the PURCHASING
DOCUMENT TYPE (UB)
c. Customer number for receiving plant to be created and that MUST be maintained in
customizing in STO
d. In SD customizing, shipping point determination MUST be maintained
e. In material master, shipping data MUST be maintained
• To display the stock-in-transit, we can use MMBE and MB53

• Posting of GR for STO to a blocked stock is NOT POSSIBLE because the stock-in-
transit is already valuated
• No accounting document will be generated for a GR of STO
CROSS COMPANY STOCK TRANFER

We can do a cross company stock transfer in 3 ways
a. Stock transfer between 2 plants by 1 step or 2 step
b. An STO without delivery via shipping
c. STO with delivery via shipping (possible for plants in different company codes)
In all cases the value of transportation is posted to a company code clearing account in both
the plants. The stock transfer is valuated at the valuation price of the material in sending
plant
Valuation of stock transport with billing- INTERCOMAPNY – EXAMPLE
Plant P1 orders 10Kg of material from Plant P2

Value of the material at P1 – 10
Price for inter company billing at P1 – 12
STO order price – 11
Plant Transaction Value Account Remarks

P1 Goods Issue 100(-) - Stock Account (at price of P1)
100(+) – Change inventory stocks (at price of P1)
P1 Billing 120(-) – Sales revenue (Price –Inter Co billing)
120(+) – Customer clearing (Price –Inter Co billing)
P2 Goods Receipt 110(-) – GR/IR clearing ( P2 -STO Price)
110(+) –Stock account ( P2 -STO Price)
P2 Invoice verify. 120(-) - Vendor account (Billing Price)
110(+) – GR/IR clearing (STO Price)
10(+) – PDA or Stock A/c (Difference)
Page 87 of 160
THIRD PARTY PROCESSING
Company
Order Pur. Order

Billing Invoice
Customer Vendor
Material
• Customer places an order on your company

• You are placing/ passing the same order to a Vendor
• Vendor supplies the material to customer directly
• Vendor submits his invoice to you
• You are submitting your invoice to the customer
Process Flow (with SD component)
1. Entering a Sales Order

While entering a sales order with Item category S and account assignment ‘X’,
system will automatically creates a PR for each item in the third party sales order.
2. Entering a Purchase Order
Process the PR generated above, assign a Vendor and convert it to a Purchase Order
The delivery address in the Purchase Order will be as that of the customer
3. Delivering goods to Customer
Vendor supplies the material directly to the Customer
Can create a STATISTICAL GOODS RECEIPT in the system, but NOT
mandatory.
4. Enter the Invoice of Vendor
Invoice verification of the Vendor invoice. This CAN be a mandatory requirement
as per the customized settings (If customized for creation of billing document after
the posting of Vendor invoice)
5. Creating Billing document for the Customer
Billing document is created in SD.
Depending on the BILLING RELEVANT INDICATOR set for this item category
in SD
• The path in customizing for this is – SPRO > SD > Sales > Sales Documents
> Sales Document Item > Define Item Category > Check the details of TAS.
• Billing Document cab be Quantity based on Order OR Quantity specified in
Vendor Invoice
Page 88 of 160
• If the customer is billed on the basis of quantity, we CAN create billing
document, IMMEDIATELY after the sales order is entered
• If it is based on Vendor invoice, we CAN NOT create the billing document
TILL the vendor invoice is entered/ posted in the system
Implications of Third Party Processing in SALES

• By creating a Sales order for Third party, the resulting activities in Purchasing are
1. A Purchase Requisition will be created with one or more delivery schedule
2. Purchase Requisition numbers are updated in the sales order (Item details)
3. Item is scheduled automatically after considering the delivery time and
purchasing processing time from material master
Implications of Third Party processing in PURCHASING

• A PR is created automatically. We can do LIMITED changes in this automatically
created PR, like purchasing group
• Order quantity / Scheduled Delivery date CAN NOT be changed manually. It can
be changed through sales order ONLY.
• We can create a PR for third party processing manually using Item category –S &
account assignment –X
• We can create the PO with respect to PR or manually
• GR Indicator- For account assignment category –X, GR can be posted as per the
customizing.
• If the Purchase Order is with respect to a Purchase Requisition, the VENDOR
ADDRESS CAN NOT be changed.
• If the delivery address is same for all items, the delivery address will be printed on
Header, other-wise it will be item-wise
Implications of Third Party processing in Inventory Management

• We can enter the Goods receipt, if the GR indicator is set in PO
• Goods receipt for third party processing will be similar that of a GR for a PO with
account assignment
RETURNABLE PACKING (RTP) – VENDOR PROCESSING
• It’s a multi-trip packaging medium

• Property of your Vendor came along with material, stored at your place
• It is NOT VALUATED
• It is managed as a SPECIAL STOCK . So special stock data is required in addition
to material master data.
• Special stock Indicator is ‘M’
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• The special stock data is defined for EVERY vendor at storage location level. It is
created automatically 1 st receipt is posted to RTP stock.
• This RTP stock can not be maintained manually, but updated automatically upon
goods movements.
• RTP is an UNRESTRICTED STOCK ALWAYS
• Allows a Negative stock
• We CAN NOT transfer RTP stock to your own stock
• At Goods receipt, the movement type for RTP ‘501+M’ is selected automatically by
the system. For returns, ‘502+M’. Can use Goods Issue –Others for returning to
Vendor with 502+M
• If we want to transfer these RTP material between storage locations, system selects
the movement type –311+M
• RTP stocks are available in stock displays – MMBE / MB53
PIPLINE MATERIAL PROCESSING
• Material is ALWAYS available. It can be withdrawn any quantity at any time

• These PIPE materials are NEITHER PRODUCED/ PROCURED Nor STORED
• Pipeline movements are mandatory in all Valuation areas
• For each material type, you can specify in the valuation area whether pipeline
movements are Mandatory/ Allowed.
• Info record is mandatory for movements
• Pipeline withdrawals are to be for a Order/ Cost center
• Considered as a special stock
• The special stock indicator is “P”
• Withdrawals are valuated at Info record price. Withdrawals leads to a payment
liability to the Vendor and it’s Consumption history is updated.
• In standard system, the same account is assigned for consignment and pipeline. But
it can be separated by settings in customizing
• Process Flow
1. Creation of PIPE material. Maintain purchasing and accounting views. Price
control can be S or V
2. Creation of Info record
3. Maintain the source list (Not mandatory)
4. Posting of Goods Issue – Movement type can be – 201+P, 261+P, 281+P/
291+P
5. Settlement of Pipeline Liabilities (MRKO)
SALES ORDER STOCK
• Stocks maintained for sales order

• Special stock Indicator “E”
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• It can be Valuated / non valuated
• If it is NOT valuated, it is managed via a Cost Center
• Can be transferred to own stock using movement type – 411+E
PROJECT STOCK
• The stocks stored for a Project till the completion of the project
• It can be valuated / non valuated
• It is allocated to a WBS element (Work Breakdown Structure)
• Components from this stock can be issued for a WBS element
• The stock is available for MRP
• Managed with a special stock Indicator ‘Q’
• It can be transferred to own stock using the movement type – 411 +Q
13 PHYSICAL INVENTORY MANAGEMENT

• Physical Inventory is carried out for Company own stock and special stocks
• Carried out at storage location level
• A separate PI document is created for each storage location, even if the stock at that
storage location is ZERO
• Physical Inventory is connected to Logistics Information system
Types of Physical Inventory PROCEDURES are;

i. Periodic (like once in a year)- Carried out on Balance sheet key date. Every material
must be counted. Entire warehouse will be blocked for material movements
ii. Continuous – It will be continuous process in the entire fiscal year. Ensure that each
and every material MUST be counted at least once in a year
iii. Sampling – Random selected stocks are carried out on a balance sheet key date.
iv. Cycle counting (by cycle counting the indicator of Cycle counting in material
master will reset) – By a cycle
Stock type included in Physical Inventory methods are

i. Unrestricted
ii. Quality Inspection
iii. Blocked
Constraints of time in Physical Inventory
1. The posting period is automatically set during counting. So the differences are to be
posted in SAME posting period
2. The fiscal Year is set. All subsequent postings are to be posted in the same fiscal
year.
Page 91 of 160
Physical Inventory process
i. Preparation
Create a physical inventory document, print and distribute it
Block the materials for postings
ii. Physical Inventory Counting
Stocks are counted and count results are entered in the count list by using ‘enter PI
count’ transaction
iii. Physical Inventory Check
List out the quantity difference with respect to the quantity in the book
If required, re-counting can be initiated
If the differences are acceptable, we can post and stocks are corrected accordingly
• Physical Inventory number (PI No) – Number for a group of Physical inventory
documents
• We can assign PI No to a PI document for extra selection criteria for PI reports like
PI doc for Storage locations/ Vendor/ Customer, etc.
Before starting the Physical Inventory count, please see that:

i. Free the book inventory balance
ii. Set zero count automatically
iii. Tolerance for posting of inventory differences
While entering the count result for zero counts, don’t leave the space as it will be
considered as it is NOT COUNTED. If the count is zero, specifically fix zero count (ZC)
• If the Physical Inventory document is created immediately before the count, block
the relevant materials while creation of Document itself
• If the PI document is NOT created immediately before the count, block relevant
material later by CHNAGING the PI document at that time.
• Blocking will automatically will be CANCELLED when you post the counting
results for the PI document
• Posting of physical Inventory difference WILL create a MATERIAL
DOCUMENT and ACCOUNTING DOCUMENT
• PI documents can be single document or sessions
• In customizing we have to specify whether the FREEZING of book inventory
balances in storage locations are allowed or not.
• From easy menu, you can freeze the movements in the document itself.
• If you have initiated recount for an item, then we CAN NOT change the count
afterwards.
• Recounted items are deactivated in the original document and no longer processed
by entire document.
• In Customizing we can set the TOLERENCE LIMT for Physical Inventory
differences
1. Maximum amount per Physical Inventory DOCUMENT
Page 92 of 160
2. Maximum amount per Physical Inventory ITEM
• After posting the Physical Inventory differences, system will issues a message “
Difference for Inventory document “NN” posted with Material document “MM”
• Physical Inventory of COMPANY OWNED STOCK – while posting the

difference, the material Master record (NOT Material Price) is adjusted
automatically for the value (For this adjustment, either GR or GI is required)
Case1 – If the counted quantity < actual book stock

The offsetting entry WILL post as “Expenses from Physical Inventory” with
a movement type –7
Case2 - If the counted quantity > actual book stock
The offsetting entry will post as “Income from Physical Inventory” with a
movement type -7
In both the cases, the amount posted is on the basis of Price control (S or V) set in
material Master. The Physical Inventory difference posting WILL NOT lead to
a PRICE CHANGE in Material Master
• Physical Inventory of a CONSIGNMENT STOCK -

In Consignment also, by posting a Physical Inventory difference, the material
master record price will not change.
Since the material is not managed by VALUE, from the accounting point of view,
there is No Posting. But still accounting document WILL be created
Case1 – If the counted quantity < actual book stock – The system assumes that the
difference was withdrawn from the stock.
While posting the difference, account movements are similar to that of a Transfer
posting from consignment to Own UR stock. But he amount will be posted to
“Expenditure from Inventory differences”.
Case2 - If the counted quantity > actual book stock – The system assumes that more
issues are posted. So inventory difference is posted as a reversal of Goods Issue, but
the amount will be posted to “Payable from Consignment Stock”
CYCLE COUNTING
• Cycle counting indicator is set for each of the material in material master(Manual)
• It defines the counting of physical inventory intervals in a fiscal year
• Cycle counting indicator can be set automatically by ABC analysis of stock
Transaction Code – MIBC)
• In ABC analysis, the cycle counting indicator is updated as per definition of A,B&C
and periods
• ABC analysis can be done through transaction code – MC40- User based ABC
analysis and MC-41 –Requirement based ABC analysis
Page 93 of 160
• Program RMCBIN00 allows you to carry out an ABC analysis to classify the
materials according to either by consumption or by requirements
• The cycle counting indicator in material master can be updated automatically during
cycle counting analysis.
• The interval between inventories for each cycle counting indicator is set in
customizing
• Cycle counting Indicator can be fixed . If it is fixed, the status (present status A or B
or C) will not change due to the program run.
• Program RM071CN1 creates Physical Inventory documents for cycle counting. It
checks all cycle counting materials to determine whether Physical Inventory is DUE
or not (Transaction Code –MICN)
INVENTORY SAMPLING
• It is based on statistical procedure
• Procedure – A sample is randomly selected from the stock management units for
which a PI is to be carried out and then counted. The sample size depends on the
probable degree of confidence you require when using the data obtained from the
sample to make inferences about this entire stock management unit. The data posted
for the sample stock is extrapolated, and then applied to all the stock management
units included in the PI procedure . If the deviation between extrapolated value and
book value is very small (order of 2%) , then this procedure is considered to be
successful.
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14 VALUATION AND ACCOUNT DETERMINATION
General Postings in MM
At Goods Receipt
Stock Account - Debited (+)
GR/IR clearing - Credited (-)
At Invoice Verification
GR/IR clearing - Debited (+)
Vendor - Credited (-)
At Payment
Vendor - Debited (+)
Bank cash - Credited (-)
At Goods Issue
Consumption - Debited(+)
Stock Account - Credited (-)
• Valuation Area – Can be at Company code level or Plant level. SAP recommends
the valuation at Plant Level.
• Valuation at Plant level is MANDATORY if we want to use Production Planning
(PP) or Product costing accounting components or retail system .
• Once the valuation area is defined In the customizing, it is very DIFFICULT to
reverse it.
• If you want to have a storage location for storing materials non-valuated, you can
have it through another Plant(Valuation area) where only quantity updation will
take place
• The transactions in inventory management that affects accounting are Goods
Receipt, Goods Issue and Transfer Posting
• These transactions can change the valuation price of the material depending on the
price control of the material
• The posting of invoice verification (MIRO) also can affect the material valuation
• Material Valuation during :
1. RECEIPTS – are valuated at current material price in the material master
2. a) GR for PO – GR before IR –Materials are valuated at PO Price
b) GR for PO – GR after IR – Materials are valuated at Invoice price
3. GOODS ISSUE – Goods Issues are valuated at the current price of the
material in material Master.
4. Free Delivery – Zero Value
• Materials that are to be valuated should have accounting data with valuation Class
• Material Price Control
1. In standard pricing (S),
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•Material is valuated at material master price and in case any
difference, will be posted to Price Difference Account (PDA)
•Exact value available for cost accounting/ Controlling purposes
•In accounting view, the difference can be displayed.
•The changing of this standard price in material master is possible
2. In moving average pricing (V),
•GR at PO price and GI at material master price. Receipts are valuated
at actual price (PO or IV)
•In case of any difference, the difference is posted to Stock account, if
sufficient stock available (in such case, the MAP will be changed)or it
will be posted to a PDA.
•System modifies the price in material master according to the
delivered price
•If the data is used for cost accounting, will have fluctuations
• If the material is managed at Standard price, the moving average price will be
recorded in the material master by the system
• Changing of Material master price (MR21) from Standard to Moving average price
is ALWAYS possible
• Changing of Material master price from Moving average price to Standard is NOT
POSSIBLE in 2 cases
1. If the material is valuated in SPLIT VALUATION
2. If the standard price is coming from COSTING and is NOT equal to the
moving average price
3. Changing fro S to V & V to S are Possible, if POs are Not created or Stocks
are not existing
• Periodic Unit Price (PUP) – Price that changes periodically as a result of goods
movements and invoice postings
• PUP = Value of material / Quantity of material
• PUP is used in single level or multi level price determina
d etermination
tion to valuate the material
for closing period.
• PUP can carryout in 3 currencies and 3 valuation areas
• The valuation in current period, system uses standard pricing.
VALUATION AND ACCOUNT ASSIGNMENT

•For automatic account determination
•The system will automatically determine the relevant G/L accounts for each
transaction in MM.
•There are several accounting transactions are linking to a single MM Transaction
•We can configure the automatic account determination facility to occur within the
areas of Inventory management, Invoice verification and material valuation
•Valuation area to be set before creating a material
•Company code chart is assigned in FI module
•Levels of valuation in automatic account determination
1. Chart of Accounts/ Company Code
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2. Valuation area
3. Material Type/ Valuation class
4. Transactions (Movement type)
1. Chart of Accounts – Influencing Factors
• Chart of account is assigned to company code
• Used as a key factor for account determination to enable a differentiation for
the purpose of G/L account assignment
• Configure separately for automatic account determination
• Financial accounting, Cost & Revenue accounting uses the optional chart of
accounting
2. Valuation Area- Valuation Grouping code – Influencing factors
• Key for account determination that enables a differentiation for G/L account
assignment WITHIN Chart of accounts
• By Valuation grouping code, dependency of accounts on Valuation area
• If a valuation grouping code is there assign a code for each valuation area
• Valuation Area is the level at which the materials are valuated
• If the valuation is at company code, G/L account CAN NOT be assigned
according to Plant
• We can assign a totally different G/L accounts to Plant if it is having a
separate Valuation grouping code
CHART OF ACCOUNTS
COMPANY CODE
PLANT
VALUATION
GROUPING CODE
3. Material Type – Material – Influencing Factors

• It’s a key in account determination that enables a differentiation for G/L
Account assignment depends on Material
• Material is assigned to a Valuation class, which depends on a Material type
• More than 1 material type is allowed for a valuation class
MATERIAL TYPE A/C ASSIGNMENT VALUATION CLASS
CATEGORY
Raw Material –ROH 3000
Finished Goods – FERT 0001 3001
Oper.Supplies –HIBE 3002
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4. Transaction – Influencing Factors
• It’s a key for account determination that symbolizes the transaction
• Posting transactions will define the relevant accounting
• Posting records are assigned to each Movement type to each invoice
verification
a. Account grouping
Depending on Movement type and special stock indicators, we can assign an
account grouping for individual transactions.
We can use the rules to define its configuration of automatic postings for a posting
transaction depends on
1. Valuation Grouping code
2. Account grouping
3. Valuation class
COMPANY CODE Chart of Accounts
Valuation Area Valuation Grouping Code
Material Material Type
General
Account Category Ledger
Reference ACCOUNT
3
Valuation Class 4 5
Business Value
Transaction String Transaction
(Movement Type) Event Key
Account Modifier
Page 98 of 160
Account determination Overview
ACCOUNT GROUPING TABLE
Movement Value Account

Type String Modifier
201 WA01 VBR
GOODS ISSUE TO
COST CENTER
Movement Type 201 MATERIAL MASTER VALUE STRING - WA01
Valuation
Plant 1000 area 1000 ACCOUNT MODIFIER (KEYS)
Valuation
Material M class 3000 BSX GBB PRD
Price control V
VALUATION GROUPING TABLE

Valuation
Valuation area grouping code
1000 0001 ACCOUNT DETERMINATION TABLE
KEY of Valuation
Account grouping Account Valuation
modifier code Modifier Class G/L Account
GBB 0001 VBR 3000XXXX
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Influencing factors – Summary
Organization Structure Company Code Chart of accounts

Plant/ Valuation area Valuation grouping code
Material Accounting data Valuation Class

Material Type
Value string
Transaction Event key
Business Transaction Goods movements/ Account grouping
Invoice verification
Value String (Key)
Movement type Account

Grouping Code
Account Modifier
Default accounting – The system proposes an account depend on the account assignment.
The system uses the Account grouping for an account assignment category to determine
this account
• Changing of Valuation level (Co code to Plant or reverse) is NOT possible in a

production system because we have to convert material accounting data and
documents which are time consuming
• The ACCOUNT DETERMINATION is always NOT DONE at Plant specific basis
because
- The valuation level is the Plant
- The valuation grouping code is activated
- Valuation grouping code is assigned to each Plant
• We can assign Only one chart of account to a company code
• The valuation grouping code is used for valuation area – Specific differentiation
between account determination. At the same time it allows you to arrange and
group together valuation areas for a clear-cut account assignment
• We can use the valuation classes differently for material types belonging to other
material types.
• We CANNOT assign several account category references to one material
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• We can assign several material type to One account assignment category
• Valuation class enables assignments to account on the basis of specific to material
type and material
• The account category reference is used to SIMPLIFY the assignment of permitted
valuation classes to the material type
• For the transaction - offsetting entry for inventory posting, the account are assigned
depending on the account grouping
• We can assign account grouping itself to the movement type.
• Changing the material valuation price (MR21) DOES NOT involve changing the
material master because it is an accounting transaction in which the total stock for a
plant is revaluated
• If the PRICE CARRY OVER INDICATOR is NOT set, the system changes the
material valuation price for the previous period or year and the current period
price is UNCHANGED. This case it will generate 2 accounting documents
ACCOUNT DETERMINATION – Specific Information

Account determination is required if the system is to fulfil its integration promise and post
financial transactions at the same time as the relevant operational transaction.
Accounts are determined differently, depending on which functional area you are using:
MM: The process of account determination varies depending on whether
the transaction involved has a movement type such as inventory management
or whether there is no movement type such as invoice verification and valuation .
Account determination in SD uses the condition technique.
This chapter looks at the account determination of MM transactions w. and w/o movement
type only.
You can do most of the settings relevant for the account assignments for MM transactions
either in the configuration menu for "valuation/account assignment" (settings for MM
transactions w. movement type) or in the configuration menu for "invoice verification"
(settings for MM transactions w/o movement type). You will get to the same tables but
there are different simulation functions.
It is also possible to access these tables via the configuration menu for accounting.
The valuation area is the level at which material valuations are carried out. In the MM
application transactions, the valuation area is hidden. In customizing, you can choose
whether the valuation area equals the company code or the plant. This setting must be
carried out before creating materials and before entering transactions in MM inventory
management. If PP is active the valuation area must be on plant level !
Grouping of organizational entities

The allocation of a company code to a chart of accounts is carried out in the FI
customizing. The chart of accounts to be used is determined for each company code.
The valuation grouping code facilitates the allocation of G/L accounts with as little effort
as possible. Valuation areas to be treated equally in terms of account assignment must be
defined with the same valuation grouping code. Valuation grouping codes either serve as a
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means of fine differentiation within a chart of accounts or they correspond to a chart of
accounts.
When making the basic settings for valuation, you can specify whether the valuation
grouping code is active.
Grouping of material master entities

Account category reference is the grouping term for account determination depending on
the material type.
Several valuation classes can be allocated to one account category reference.
Each material type is allocated to one account category reference. When maintaining the
accounting data of a material of this material type, you can select one of the valuation
classes that are defined for the corresponding account category reference.
The G/L account determination for a material is carried out according to the settings for
this valuation class.
Via the Account category reference

You can define the same G/L account determination for all materials of one or even several
material types.
But you can also specify that different G/L accounts are determined for different materials
of a material type.
ACCOUNT DETERMINATION PROCEDURE
Procedure Part1 – Value String Processing Keys

The G/L accounts affected by a particular transaction are specified in a posting record. The
debit postings are always specified first.
In the SAP System, it is pre-defined which MM transactions have accounting significance
(i.e. affect the FI module). As individual SAP users have different charts of accounts,
generalized posting records are allocated to each transaction (these are called value
strings). Value strings contain processing keys (also called transaction or
transaction/event keys) for the relevant posting transaction. You can (but it is not
recommended) change the processing keys contained within a value string but you cannot
change the processing keys themselves (nor can you create/delete them). You can
determine which G/L accounts are assigned to the processing keys.
Therefore:
The value string is a set of processing keys (see table T156W) required to fulfil the
account postings for a certain movement type/material type or transaction type/material
type combination.
A processing key is used to determine the accounts and posting keys for line items which
are created automatically by the system.
The main difference between movement type-based/non-movement type -based MM
transactions in terms of customizing is the allocation procedure for the value string
and processing keys.
Procedure Part 2- Processing Keys - Rules
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Each processing key in the value string determines the following information for its posting
the FI posting key to be used for debit and credit
the rules (see next page) and whether account modifications are to be taken into account
together with the rule and the chart of account the G/L account
"The account modification is a key which has a different meaning depending on the
procedure which is used to differentiate the account determination. The meaning is
predefined in the system and cannot be changed." [SAP Help on the field]
It is possible to include a extra key (account modification key) for a processing key within
a particular value string / movement type combination (see Customizing "new movement
types"). If an account modification key is added to a processing key it is only active within
that particular value string and "type of movement" (different settings for one movement
type e.g. 101: GR w. reference to a purchase order and GR with reference to a production
order, see "new movement types", view posting control).
Example: In the MM all offsetting entries for inventory postings are grouped under the
processing key GBB. In fact there are (or may be) different offsetting entries e.g. for GR
from production (MType 101) or GI for cost center (MType 201). In that case the account
modification is used to determine the relevant account number using the account
modification AUF and VBR .
The account modification key itself seems to be a hard coded processing key (e.g. AUF).
Procedure part 3 – Account allocation

Account allocation depends on the chart of accounts and on the transaction (processing
key).
You can set further account determination keys in the rule definition.
The rules specify
whether there can be different G/L accounts for credit and debit postings and
whether the valuation class and/or the valuation grouping code and/or account modification
should be used when determining the G/L account.
If account modification is active, a new processing key is found and used to determine the
relevant rules. In the MM Rel. 2.2 only the processing key GBB (offsetting entry for
inventory postings) uses account modifications e.g. for the order settlement (processing key
AUF).
Account determination Procedure – Overview

Step 1: Determination of the value string for movement type-based MM transactions can
be viewed via the menu option: Tools -> Customizing -> Configuration -> Logistics ->
Material Management -> Inventory Management -> Transactions -> Movement types ->
New movement types (Transaction code OMBQ) Choose view "Posting Control".
Step 2: Determination of the value string for non movement type-based MM transactions
can be viewed via the tables: T169 and T169W.
Step 3: Determination of the processing keys:
a.) Movement type-based MM transactions: Table T156W
b.) Non movement type-based MM transactions: Table T169A
Step 4: The G/L account to be used in a given circumstance (Rules) is set up via one of the
following menu options (different simulation functionality !):
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Tools -> Customizing -> Configuration -> Logistics -> Material Management ->
Valuation / acct assg. -> Configuration -> Acct determination -> Automatic posting.
Tools -> Customizing -> Configuration -> Logistics -> Material Management -> Invoice
verification -> Master data -> Automatic posting
When customizing the account determination process, a valuation grouping code is first
selected (this also implies a chart of accounts). After this, a posting transaction is selected
for the configuration of the G/L accounts. This determines the processing (or transaction)
key and the account modifications relevant for this transaction. After this, the relevant G/L
account can be allocated for the individual valuation classes.
A simulation function supports the checking of the settings made.
Page 104 of 160

Account Determination Procedure: Overview
Type of Material
Transaction Plant
Master
Movement Non-move-
"Type of
type based ment type based
Transaction Transaction
Material"
Material
Step 1 or 2
Type
Value Qty.
Posting String Posting String
Account
Company Code
Categ. Reference
Step 3
Rules
Processing
Key (GBB) Account Valuation Val. Grouping
modification Class Code
Processing
Key (AUF)
Chart of
Step 4
Account
Legend
Information derived from Transaction type G/L Account
Information derived from Material Master
Information derived from the organiz. Structure
Main Customizing area
SPECIFIC INVENTROY MANAGEMNT FEATURES
1. SPLIT VALUATION
o It is one of the specific inventory management features of SAP R/3 (Others are
Non-valuated materials and RTP)
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o Valuation Category – indicates whether the material is valuated as one unit or in
parts (Set in Material Master)
o Valuation Category is the key that indicates the criteria for defining partial stock
and it determines which valuation type is allowed
o Valuation Type – is the key that identifies split valuated stock of material and
indicates the characteristic of partial stock (Enter in the BATCH FILED of goods
movements)
o Example for valuation categories are – Procurement type, Origin, Quality
o Examples for Valuation types are Internal & external, Italy & France, A,B,C
o Rev. 4.5A onwards, we can enter valuation type directly in the item table within
stock determination enabling you to move conveniently determining stocks for
withdrawal of material with Split Valuation
o Stocks and stock values of split-valuated material are cumulated at Valuation area
level. Moving average price control is same for total area.
o System creates a valuation record containing specific valuation data for each
valuation category used.
Settings of Split valuation
1. Define Global Types – It can be procurement type (Internal / External) OR account
category reference
2. Define global categories – It can be Type to be used in Internal or external
procurement OR indicator “creation valuation type” automatically
3. Define Local definitions – Assignment of categories created to original units.
(change type/ categories locally. Define account category reference for a valuation
type. While creating material master, choose valuation class for this account
category reference)
Procedure for SPLIT VALUATION - transactional
1. While creating the material master select valuation category and save it.
2. Again go to Material master, while entering system will ask for Valuation type in
accounting view. Enter the valuation class, price and save.
nd
3. Again go to material master and repeat the procedure for 2 valuation type.
4. The valuation type for each valuation category is fixed in customizing
To select split valuation, proceed as follows:

1. Determine the valuation categories and valuation types that are allowed for all
valuation areas:
global valuation categories via menu "Goto --> Global Categories"
global valuation types via menu "Goto --> Global Types"
2. Allocate the valuation types to the valuation categories.
a) Select "Goto --> Global Categories".
b) Position the cursor on a valuation category and select "Goto --> Global Categories --
> Allocations --> Types->Category".
c) Activate the valuation types you want.
3. Determine the local valuation categories for each valuation area.
a) Select "Goto --> Local definitions".
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b) Position the cursor on a valuation area and select "Goto --> Local Definitions -->
Allocate Categoires->Org.units". You obtain a list of the global valuation categories.
c) Activate the categories to be used in this valuation area.
The system creates the local valuation types based on the allocations under point 2.
Only now can you create a master record with split valuation.
NON-VALUATED STOCK MATERIAL (UNBW)
• For maintaining, stock only (Generally LOW VALUE items) materials material
type Non-valuated stock material – UNBW is used
• This material type will not have any Accounting view in material master because it
is not maintained with any Value
• We CANNOT post a GR for a UNBW material directly for consumption
• The storage of material will be to Warehouse and then issued for consumption. It is
not having any value, only Quantity
• No accounting document will be generated during transactions
• UNBW materials Vs Raw Materials
UNBW Material Raw Material
Purchase Order With A/c Assignment Can be with or without
GR Quantity To Warehouse Can be to warehouse or

Consumption
GR Value To consumption A/c Can be to stock OR

consumption A/c
• Stock withdrawals from UNBW material type are NOT valuated.

• We can get update reports on stock levels at any time for UNBW materials
(Quantity)
RETURNABL TRANSPORT PACKAGING MATERIALS (RTP)

• It’s a multi-trip packaging medium
• Property of your Vendor came along with material, stored at your place
• It is NOT VALUATED
• It is managed as a SPECIAL STOCK. So special stock data is required in addition
to material master data.
• Special stock Indicator is ‘M’
• The special stock data is defined for EVERY vendor at storage location level. It is
st
created automatically 1 receipt is posted to RTP stock.
• This RTP stock can not be maintained manually, but updated automatically upon
goods movements.
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• RTP is an UNRESTRICTED STOCK ALWAYS
• Allows a Negative stock
• We CAN NOT transfer RTP stock to your own stock
• At Goods receipt, the movement type for RTP ‘501+M’ is selected automatically by
the system. For returns, ‘502+M’
• If we want to transfer these RTP material between storage locations, system selects
the movement type –311+M
• RTP stocks are available in stock displays – MMBE / MB53
Process flow of RTP
1. Create Master record for RTP by selecting the material type “returnable transport
Packaging” – LEIH
2. Create the PO for the base material (Not include any RTP at PO Level)
3. Do goods receipt
After entering the base material, click on the icon, “Transport equipment”, which is
below the item overview. Check for the movement type selected by b y the system as
501+M in “where” tab. Go to the material tab and enter the RTP material created
and enter the storage location (where the RTP is to be maintained)
Post the GR and see the accounting document by display. There WILL NOT be any
accounting document created for RTP
4. If you
you want to send back the RTP material
Select Goods issue MIGO or mb1c (others) and select the movement type –502+M,
enter the data and save
INVOICE VERIFICATION
Invoice verification process the invoice in FI. By posting an invoice the data in MM & FI
are updated.
UPDATION IN UPDATION IN
MATERIALS MGT. ACCOUNTING
1. PO Update 1. G/L accounts update

2. PO History update 2. Assets update
3. Delivery cost update 3. Cost center update
4. Mat Master update 4. Projects update
5. Vendor master update 5. Orders update
• Invoice verification works in conjunction with Purchasing and Inventory management

• We can post an Invoice with respect to
1. A Purchase Order
2. A Service Order
3. A Goods Receipt
• While posting an Invoice in the system, system will
1. Vendor account and GR/IR clearing accounts are updated
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2. MAP and Value will be updated in Material Master
3. PO History updated with GR, Down payment, Invoice
• GR/IR clearing account is debited and Vendor is credited
• In MAP price control, if the PO Price and Invoice prices are varying from the
material master price, then the difference is distributed to the stock (If sufficient stock
available or it will post to price difference account).
account). So the price in material master is
fluctuating with respect to invoice posting
• In Standard price control, the difference is booked in price difference account and the
material master price is CONSTANT.
• GR based Invoice verification is set at – PO, - Vendor master record
• Conventional Invoice Verification
Verificati on Logistics Invoice verification
verificati on
1. Material is directly posted to 1. It’s a distributed system
material & G/L account
2. ONLY FI document is created 2. Unlimited multiple selection
3. Unplanned delivery cost postings 3. Option of IV in background
is NOT possible 4. Invoice reduction facility
5. FI & MM Documents on posting
BASIC INVOICE VERIFICATION PROCESS
Structure of Invoice verification screen

1. Transaction Area – Defines the entry for Invoice/ Credit memo
2. Header Area
3. Allocation area – Assign reference (PO or delivery note, etc. )
4. Invoice Items
5. Vendor data
6. Balance area
7. PO Structure area
Basic Invoice structure

1. While referring the PO number, the following information are copied by the system from
the PO
- Vendor detail
- Payment
- Currency
- Bank information
- Invoice items, etc.
2. from PO History, the following information are derived
- Quantity
- Amount
3. System proposes -RATE OF TAX –as per the settings
4. We have to ENTER
- Document date
- Purchase order number
- Invoice amount
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- Tax amount
- Terms of payment (default)
- The terms of payment can be changed at MIRO level
A. Selection of Invoice for
B. Payment Block for
C. Posting type selection for
D. Allocation -Invoice posted against
E. Reference F. Display Variant selection
A. Invoice selection for - OPTIONS

1. Invoice
2. Credit Memo
3. Subsequent credit
4. Subsequent Debit
B. Payment Block for (In Payment tab of Header)

1. Blocked for payment
2. FREE for payment
3. Invoice verification
4. Payment clearing
C. Posting Type selection for (Details tab in Header)

1. Asset posting
2. Accounting document posting
3. Net asset posting
posting
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4. Customer Invoice/ Payment
5. G/L account posting
6. Vendor account document/ Invoice/ Payment
7. Vendor credit memo
8. Subsequent credit settlement
9. Gross Invoice receipt
10. Net Invoice receipt
D. Allocation – Invoice can be against a

1. Purchase Order/ Scheduling agreement
2. Delivery Note
3. Bill of lading (Delivery costs)
4. Service Entry Sheet (SES)
5. Vendor
6. Transportation/ Service Agent
E. Reference of
1. Goods/ Service items
2. Planned delivery costs
3. Goods/ Service items + Planned delivery costs
F. Display variant selection

1. Accounting assignment ( Cost center/ Asset/ Order)
2. All information
3. Invoice reduction
4. Purchase Order - Order price quantity
5. Purchase Order History
6. Purchase Order delivery note
7. Purchase Order entry sheet
8. Purchase order – Juridiction code
9. Services
10. Shipments
11. Aggregation
- Configurable material
- Delivery note
- Material
- Plant
- Purchase Order
• Unplanned delivery cost will be posted as DEBIT MEMO in invoice entry sheet, if
the invoice is separately for unplanned delivery cost
• In the payment block option in ‘Payment’ tab of the header data, we can block the
invoice MANUALLY
• If we want to post an invoice of ‘Free for payment’, use the option free for payment
• We can define new display variant in customizing
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• Payment terms are defined in PO. While entering an invoice, the system displays the
terms as per PO, but can be changed
INVOICING PLAN
• We can define installment conditions in Customizing.

• If we enter an installment condition in Invoice verification, system creates a separate
vendor line in accounting document for each transaction at the time of posting
• For Invoicing Plan – At Purchaser Order FO and NB document types are not
acceptable.
• Invoicing Plan NOT possible for Valuated Good receipts . So Non-valuated GR tick is
a MUST in delivery tab of item detail
• GR based IV is NOT possible. Only PO based IV
• Account assignment should be ‘K’. ie ONLY for consumable materials
• Validity data to be entered in PO at additional data tab in header
PO BASED INVOICE VERIFICATION
• Invoices are verified with respect to a Purchase Order

• The system will suggest the quantity (Invoiced qty/ delivered quantity)
• If we are posting against a delivery note number, the system will check it’s PO and
then give the detail
• Disadvantage
1. If there are several GRs and invoices for a single PO, the PO HISTORY will
not give detail like “which invoice came from which Vendor”
2. The pre-requisite selection is fixed at PO itself (No tick for GR based IV)
• Advantage – Posting of an invoice before its GR as per the scenario(Example –
Clearing of an invoice against LC)
GR BASED INVOICE VERIFICATION
• Advantage – Invoices along with Vendor details against a GR

• Disadvantage – Posting of an Invoice before GR
- Invoice quantity should not be greater than the delivered quantity in GR. But we
can post a larger amount
- We can hold an invoice using ‘HOLD’ function available in MIRO
Page 112 of 160

TAXES in INVOICE VERIFICATION
• Tax codes are defined for each tax rate in customizing in FI (FTXP)
• The tax codes are attached in PO
CASH DICOUNT in INVOICE VERIFICATION
• We can enter the cash discount in 2 ways

1. GROSS Posting – If the invoice posting is Gross, the system IGNORES Cash
discount amount.
Posts the cash discount to cash discount account at the time of posting. So cash
discount account is NOT credited to Stock/ Cost account.
2. NET Posting – If posting is Net, system posts the cash discount amount to the
stock/ cost account. Cash discount clearing account at the time of payment. So
select NET posting for cash discount.
• Posting of Invoice Net or Gross depends on the document type selected

• Document type is defined in customizing in such a way that the postings will be on
gross or net.
• Even during the invoice entry, we can change the document type in ‘Details’ Tab in
header
• In case of gross invoice posting, cash discount will be credited to “Non operating
result’ at the time of payment.
• In case of net posting, cash discount is debited to ‘Cash discount clearing account”
at the time of invoice verification and credited to “Cash discount clearing account”
at the time of payment
• If the material price control is “V”, the cash discount will be credited to Stock
account. If it is ‘S”, then it will be to Price difference account
NET GROSS
Cash Discount Cash Discount
(During LIV)
Stock/ Cost Account
(During Payment)
Cash Discount clearing account Cash Discount clearing account
Page 113 of 160

FOREIGN CURRENCY in INVOICE VERIFICATION
• If the PO is in foreign currency, we can use “FIXED” exchange rate. Then the
system uses this exchange rate to convert the foreign currency to the local currency
at the time of GR and IV
• If it is “NOT FIXED” in PO, then the system uses the current exchange rate to
convert the foreign currency to local currency at the time of GR. In IV also system
suggests the same exchange rate, BUT WE CAN CHANGE it
• If the exchange rate is NOT FIXED in PO, the exchange rate differences can occur
as the use of different exchange rate. Its just like as a price difference. It will be
posted to “Exchange rate difference account ” as per the customizing. (To a separate
account or add to the existing)
VARIANCES AND INVOICE BLOCKING
We can set tolerance limit for each type of variance in customizing. There are 4 types of
tolerances.
1. Vendor specific
2. Invoice block
3. At Purchasing level (Order price)
4. At Goods receipt (Quantity)
1. VENDOR SPECIFIC TOLERANCES
The path is LIV > Incoming Invoice > Vendor specific tolerances
These tolerances are COMPANY CODE LEVEL & ON TOTAL INVOICE
1. Automatic acceptance of Negative differences

a. Absolute Lower limit
i. Check Limit (Check box)
ii. Negative acceptance lower limit – Value
b. Percentage LOWER limit
ii. % lower limit – (%)
c. Negative small differences
ii. Small difference – Value
2. Automatic acceptance of Positive differences

a. Absolute Lower limit
ii. Positive acceptance lower limit – Value
b. Percentage UPPER limit
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ii. % Upper limit – (%)
c. Negative small differences
ii. Small difference – Value
3. Automatic Invoice reduction

a. Absolute Upper limit
ii. Invoice reduction tolerance amount – Value
b. Percentage UPPER limit
ii. % Invoice reduction tolerance – (%)
2. INVOICE BLOCK TOLERANCE LIMITS
Path – LIV > Invoice block > Set tolerance limits

These tolerance limits are at COMPANY CODE LEVEL and ITEM-WISE INVOICE
VALUE
Most popular types of invoice blocks are:

1. Amount of item WITHOUT Order reference (AN)
Upper Limit
- Absolute – Do not check (Radio button)
- Check Limit (radio button) – Value -------
2. Amount of Item WITH order reference (AP)
Upper Limit
3. From small difference automatically (BD)
Upper Limit
4. Percentage Order price unit variance (IR before GR) - BR
Upper Limit
- Check Limit (radio button) – Tolerance limit ------%
Lower Limit
5. Percentage Order price unit variance (GR before IR) - BW
Upper Limit
Lower Limit
Page 115 of 160

6. Exceed amount quantity variance (DQ)
Upper Limit
- Absolute
– Do not check (Radio button)
- Check Limit (radio button) – Value ------
- Percentage
- Check Limit (radio button) – Percentage ------%
Lower Limit
- Absolute
- Percentage
7. Variation from Condition Value (KW)
Upper Limit
- Absolute
- Percentage
Lower Limit
- Absolute
- Percentage
8. Price Variance (PP)
Upper Limit
- Absolute
- Percentage
Lower Limit
- Absolute
Page 116 of 160

- Percentage
9. Price variance – ESTIMATED PRICE (PS)
Upper Limit
- Absolute
- Percentage
Lower Limit
- Absolute
- Percentage
10. Date Variance – Value x days (ST)
Upper Limit
- Do not check (Radio button)
- Check Limit –Value -----
11. Moving Average Price Variances (VP)

Upper Limit
Lower Limit
3. PURCHASE ORGANIZATION LEVEL
1. PE
2. SE
4. AT GOODS RECEIPT
• If the variances are within the tolerance limit, the system displays message as per
the customizing
• If the payment is automatically blocked due to the (settings) exceeded the units,
payment block is filled in the Vendor line item of the FI document
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• Payment block is filled in MM document when an invoice is blocked MANUALLY
(at header level of MIRO)- Not in item level
• Manual block of an invoice done at tab “Payment” in header ( “Payment block” ) of
MIRO screen. In this case in Vendor line item (after posting the invoice) the reason
for block will be displayed as “A” (payment Block)
• In other cases, payment block due to variance by system and manual block made in
item level (during MIRO), the reason for block (after the invoice posting) in the
vendor line item is “R” (Invoice verification)
• If once the invoice is blocked, we have to clear it separately
• Header Manual Block – A – In MM & FI
• Other blocks – R – In FI only
BLOCKING VARIANCES
1. Quantity
2. Price
3. PO Price Quantity
4. Date
5. Stochastic
6. Quality
7. manual
1. Quantity Variances (Q)

If the Invoice qty > GR quantity, the difference posted to GR/IR clearing account. Total
payment will be released to the Vendor.
System expects another GR. At that time this additional amount in GR/IR clearing account
will be cleared.
2. Price Variance (P)

In this case the account movements depends on the Price control (S or MAP) set in material
master.
a) If IR is after GR
If the price control is ‘S’ – The difference will be posted to Price difference
Account
If Price control is “V” – The difference will be posted to the stock account, if
sufficient stock available(it will lead to the change in price of the material),
otherwise to Price difference account
b) IR before GR
System posts the variance to GR/IR clearing account.
The segregation of this amount depending on “S” or “V”, will be done at the time of
GR posting
3. PO price quantity
4. Date (D)
5. Stochastical Blocking
Page 118 of 160

It is at COMPANY CODE Level
Invoices do not contain a blocking reason, can be blocked stochastically (at random)
It will be as per the customizing done for the threshold value.
An invoice blocked stochastically, system sets a payment block in vendor line item in the
FI document. Individual item WILL NOT contain a blocking reason.
6. Blocking due to QUALITY

• Material is subject to Quality Management fixed in Material Master.
• While posting GR, system will create an inspection lot
• System will block in this case, if there in NO user decision on inspection lot/
rejected in Inspection. (To be entered in the system)
7. Manual Blocking
a) Manual blocking can be made at HEADER Level. In payments tab in MIRO screen
b) At ITEM LEVEL – In column “Ma” put the tick
• If the invoice is blocked at Header level, the blocking is for total items in the
invoice
• If the block is at item level, it is applicable for only that item
• If the manual blocking is at Header level, the reason of the invoice blocking
will appear as “A” in MM and FI document after posting the invoice
• If the blocking is at Item level OR automatic blocking by the system on any
reason, the reason of blocking will appear as “R” and will appear only in FI
document
INVOICE REDUCTION
It is an option available at MIRO to reduce the invoice and accept it.
For example,
At PO – 100Nos x Price 10 (1000)
At GR – 70Nos x Price 10 (700)
At IV – 100Nos x Price 10 (1000) and if we are opting Invoice reduction,
System will generate 2 accounting documents
1. 100Nos x Price 10 – Invoice (as per the invoice)
2. 30Nos x Price 10 – A CREDIT MEMO (for the difference value)
• The invoice reduction option is available at Display variant option in MIRO

screen
Page 119 of 160

• The payment to Vendor will be the difference of Invoice and the credit memo
created
• While posting the invoice, system will issue a message and the same can be
used to generate a letter of complaint to the Vendor
Procedure of Invoice reduction

- Select the option “Invoice reduction” in MIRO screen
- The fields in Item detail
- In “Correction ID” column, select the reason for invoice reduction like
Vendor error/ reduce invoice, etc.
- In Invoice quantity at Item detail, enter the Invoice quantity as per the
Vendor.
- In Invoice amount at Item level, enter the value as per the Vendor
- In Header, in amount filed, enter the amount to be paid to the vendor after
reducing.
In simulation, we can see the credit memo detail and Vendor payment detail
(reduced amount)
Account Movements
Purchase Order - 100Nos x Price 10

Goods Receipt - 70 Nos
Invoice receipt - 100Nos x Price 12 + 10% Tax = 1200 + 120 =1320
At Goods Receipt At Invoice Verification Credit memo

Stock Account +700 +140
GR/IR clearing Account -700 +700
Vendor Account -1320 +396
Input Tax +120 -36
Clearing account for Invoice reduction +360 -360
At Invoice verification,
Vendor account – 1320, GR/IR clearing – 700, the difference = 1320-700 =620
Out of 620,
Clearing account = 30Nos x 12 = 360
Input tax = 10% of 1200 = 120
So the amount will go to stock account = 620 – (360+120) = 140
• As the invoice is accepted, the GR/IR clearing account will be cleared and the
balance amount (140) will go to Stock account
Page 120 of 160

• After posting the invoice reduction, we CAN NOT see the higher amount invoiced
by the Vendor in PO History. It will show the actual amount paid to the Vendor
after the invoice reduction
• 2 accounting documents are generated One for Invoice and the other for Credit
memo
VARIANCE WITHOUT REFERENCE TO AN ITEM

The options are
1. Total based Invoice reduction
2. Total based acceptance
3. Vendor specific tolerances
1. TOTAL BASED INVOICE REDUCTION
In this type of invoice verification, 2 accounting documents are generated

1. Suggested Quantity and Value
2. Credit memo for difference quantity and Value (Offsetting entry)
It is not reducing the invoice, but posting a credit memo for the difference
In customizing, we can allocate each Vendor to a tolerance group of LIV. For each
tolerance group, set the limits up to which invoices can be automatically reduced without
reference to a particular item. All these settings are at company code level.
(Vendor specific tolerance – Automatic invoice reduction – case 3 explained earlier)
2. TOTAL BASED ACCEPTANCE
In this case, system accept a difference (positive or Negative) between the item total it
expects and it posts the difference to a ”Non operating expense or revenue” account.
In customizing, we can set this tolerance limits at Company code level.

(Vendor specific tolerance limits – Automatic acceptance of Negative differences,
Automatic acceptance of Positive differences- explained in case 1 & 2 explained earlier)
3. VENDOR SPECIFIC TOLERANCE LIMITS
EXPECTED INVOICE VALUE
Page 121 of 160

SETTINGS FOR
SMALL DIFFERENCES
INVOICE INVOICE
CANNOT BE CANNOT BE
POSTED POSTED
SETTING FOR SETTING FOR

NEGATIVE POSITIVE
TOLERANCE TOLERANCES
(-) (+)
SETTING FOR INVOICE

REDUCTION
MANUAL ACCEPTANCE
• We can accept the differences manually only, if the invoice is verified in the
background and containing errors
• Accept the difference on header data and reprocess the invoice
• While posting these invoices system will post the difference amount to the same
account.
INVOICE VERIFICATION OF CONSUMPTION MATERIALS
• These invoices will not have any GR/IR clearing account as there is not any GR
Page 122 of 160

INVOICES of PO WITH ACCOUNT ASSIGNMENT
The topics are
1. Enter invoice for Pos with account assignment
2. Posting Logic for invoices for Pos with Account assignment
3. Invoice posting for Blanket Pos
1. Invoices for Pos with Account Assignment

• While posting the invoice, system proposes the individual current account
assignment as per the PO
• In case of multiple account assignment, and partial invoice, the system will
distribute
- on a progressive fill-up basis
- Proportionately
• Account assignment categories are – Asset (A), Cost Centre (K), Sales Order (C),
Order (F), etc.
• Account assignment category is fixed in PO per item which is having the control of
a) you can post a GR b) you can post an invoice. The controls are fixed in
Customizing
• The account assignment fixed in PO can be changed in cases (a) Defined (changes)
in customizing (b) Non-valuated GRs are defined in PO
• The account assignment categories are available in SPRO at Purchasing > Account
assignment > Maintain account assignment category
• The detailed settings for each account assignment categories are
i. Changeability of account assignment
ii. IR changeable
iii. Define account assignment
iv. Delivery cost separate
v. Goods receipt
vi. GR non-valuated
vii. Invoice receipt
viii. GR indicator biding
ix. GR non-valuated biding
x. IR indicator biding
Page 123 of 160

Account movements for Pos with account assignment
PO - 100Nos x Price 10
GR - 50Nos
IR - 50Nos x Price 11
CASE -1 - VALUATED GR
At GR At IV
Consumption Account +500 +50
GR/IR clearing Account -500 +500
Vendor Account -550
CASE -2 - NON-VALUATED GR
At GR At IV
Consumption Account +550
GR/IR clearing Account
Vendor Account -550
If the valuated GR defined in PO, the price difference is posted to the Consumption
account
Page 124 of 160

INVOICE VERIFICATION OF BLANKET PURCHASE ORDERS
• It will directly post the invoice for the material / service

• System will check the Value & Quantity along with the Validity period at the time
of Invoice verification
• If it crosses the limits, system will block the invoice
• We can enter an invoice for Blanket PO with many account assignments and
relevant amounts
DELIVRY COSTS
• Planned and unplanned delivery costs

• Planned delivery costs are entered at item level of the PO
• Unplanned delivery costs are entered during Invoice verification
o Planned delivery Costs
Freight Customs
Fixed amount % of Value

Quantity dependent
• In account movements, Freight clearing account and Customs clearing account at

GR. At Invoice verification, these clearing accounts are cleared
• If there is any difference in these planned delivery costs at Invoice verification,
system will treat it as a normal price/ quantity variance and postings will be
accordingly.
• Unplanned delivery costs
• As per the settings in Customizing, the unplanned delivery costs can be (1)
Distributed to invoice items (2) Posting to a separate G/L account
• If it is distributed to items, it WILL NOT list them separately in PO History,
will be included in the invoice amount
• If it is posted to a separate G/L account, they also WILL NOT appear in PO
History
• Unplanned delivery costs are posted to item in PROPORTION to the total
value in the current invoice
• We can post an invoice of unplanned delivery costs alone for an invoice already
posted. It will be treated as a Debit memo.
Page 125 of 160

• If the unplanned delivery costs are distributed among PO items, the offsetting entry
(in case of Price difference) is post to the respective stock account or a price
difference account as per the price control for that material
• The setting made at customizing for unplanned delivery costs are at COMPANY
CODE level
• We CAN NOT have an unplanned delivery cost option for a Planned delivery cost
with distribute the value among the items in MIRO transaction.
• To tackle the situation of unplanned delivery cost of a planned delivery cost in
MIRO, got to the item level populated value, edit there itself and put the total at
header level. Another option is to activate direct posating to G/L accounts. So it is
suggested to enter the planned delivery cost accurately to the extent possible way.
SUBSEQUENT DEBITS/ CREDITS
• This option is used for the changes due to TOTAL invoice value (NOT
QUANTITY)
• These postings are done AFTER a posting of an invoice
• When you enter to subsequent debit/ credit system suggests full quantity, but
NO value
• Subsequent debit/ Credits are flagged in PO History
• Account movements in subsequent credit/ debit are stock account and Vendor
account
• Case1 – If GR is posted
System makes the offsetting entry to stock account or price difference
account depending on the price control of the material and the stock position
• Case 2 – If GR is NOT posted

System posts the offsetting entry to GR/IR clearing account. When the GR
is posted and this GR/IR clearing account will be cleared and posted to stock
or Price difference account as per the price control of the material and stock
position
• In subsequent debit/ credit, there is no material movement
o We can enter a subsequent debit/ credit memo for a PO item only if an invoice
has been already posted
CREDIT MEMO/ REVERSALS
Credit Memo – received from Vendor if we are overcharged

• It can be entered with respect to a PO
• It should be posted as subsequent Credit/ debit
• The value only will change/ reduce
• Account movements are SAME as that of an invoice
Page 126 of 160

• (+) and (-) signs are available for posting the value
Reversing Invoice – Transaction code – MR8M

• When you reverse an invoice, all the items in the invoice document will be reversed
• We can reverse a PART of an invoice ONLY by entering a CREDIT MEMO
manually.
• When we reverse a Credit memo, system creates an Invoice
• We CAN NOT reverse a reversed document
Calculation of GR/IR account
=Quantity X ( Clearing Value (Total) - GR Value (1st))

(Invoice quantity - GR Quantity)
INVOICE VERIFICATION IN BACKGROUND – Transaction code – MIRA
• Used for larger invoice with hundreds of line items

• Enter the general data like Gross value, Taxes, Payment terms, etc
• DO NOT enter item-wise details.
• Save in an invoice document (without any item)
• By the settlement program (RMBABG00) by system administrator in the
background, creates the items for this invoice document. Based on quantity and
value, R/3 system checks(if the total of the items and amounts already saved results
in a ZERO balance) and system posts the invoice.
• Main Disadvantage is we can have cases of price differences cancel each other
without being noticed
• If the invoice is processed in background and given status as “errors” are to be
cleared manually only
• The invoices processed by MIRA will appear in parked invoice till the settlement
program runs
EVALUATED RECEIPT SETTLEMENT (ERS) Transaction Code - MRRS
• GRs are settled directly without the vendor invoice

• The system uses the information of PO and GR
• ERS to be defined in Material Master
• Vendor Master data and Info record should have the selection of ERS
• GR based IV should be there in PO
• We CANNOT use ERS for settling Delivery costs
• Tax code should be SAME in PO and info record
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• Customizing setting for ERS for the company code mandatory
INVOICING PLAN
2 types of Invoicing plans are used
1. Periodic
2. Partial
1. PERIODIC INVOICING PLAN

• Generally used for automatic settlement of invoices which is periodic in nature
• Recurrent procurement transactions
• Examples are Rentals, lease amounts which are fixed in nature
• TOTAL VALUE of the PO item is invoiced on EACH due date. These due dates
can be suggested by R/3 system as per your plan
• Invoicing plan types are defined in customizing and is assigned to the PO item,
while creating a PO
• Vendor should have the ERS tick if you want to work with ERS
2. PARTIAL INVOICING PALN

•Invoicing in different stages
•Example is % invoicing in a construction project
•In this type the total value of the item is SPREAD among the individual due dates
as per the invoicing Plan
•ONLY a PART of the total item is due on a payable date
•The total value of the total items is SPLIT on the dates and the values are specified
in Invoicing Plan
PRE-REQUISITES for INVOICING PLANS

1. Account assignment for the item
2. No GR or Non-valuated GR
3. Document type – FO for the Purchase Order
4. Validity period should be entered in PO
5. Invoicing Plan settings are to be defined in customizing
6. For ERS, settings of ERS
CUSTOMIZING FOR INVOICING PLANS

1. Invoicing Plan type for Periodic and Partial
2. Maintain Date IDs
3. Define and maintain Date category
4. Maintain date proposal for the Invoicing Plan type
5. Define rules for Date determination
6. Define Invoice blocks
Page 128 of 160

Periodic Partial
1. Validity period 1. Starting date
2. Periodicity of Invoicing date 2. Reference invoicing Plan number
3. Maintenance 3. Maintenance
RELEASE OF BLOCKED INVOICES – Transaction Code – MRBR
• Invoices can be released manual and automatic

• While releasing a blocked invoice, we can change the baseline date for the payment
• Basic invoice blocking reasons are Q- Quantity, D- date, P- Price, T – Quality
• Automatic release of blocked invoice done in background by running the program
RM08RELEASE
• Procedure of manual release
1. Select that particular invoice in MRBR transaction
2. Keep the cursor on the reason (X) and click on the flag icon for
deleing that particular blocking reason. Then it will change to green
in color
3. Click on ‘Save change” icon. The invoice blocking is removed. The
particular invoice will disappear from the list
GR/IR ACCOUNT MAINTENANCE
The GR/IR clearing account is cleared only if the invoiced quantity and delivered quantity
are equal.
If it is NOT equal the system expects invoice/ material. And if the material is not coming,
we have to clear this account manually.
List of GR/IR balances are available in transaction code – MB5S
GENERAL CUSTOMIZING SETTINGS OF INVOICE VERIFICATION
1. Messages
Path – LIV > Define attributes of system messages
Warning & error messages
User defined messages
2. Automatic Postings
OBYC transaction and Group – RMK for MM accounts
3. Document type & Number ranges
Path – LIV > Incoming Invoice > Number assignment
There are 2 types of transactions

1. Manual Invoice entry – RD
Page 129 of 160

2. Automatic by ERS/ EDI/ reversal – RS
Accounting Document types
1. Gross Posting – RE
2. Net Posting – RN
Number ranges are defined per document type and for a fiscal year
4. Taxes & Currencies

Path – Fin. Accounting > FA Global setting > Taxes in sale & Purchase > Basic settings
1. Tax code – For each company code
2. Set unplanned delivery cost distribution
3. Set postings of exchange rate differences
5. PO Text types – general messages
6. ITEM LIST VARIANTS
7. Duplicate Invoice check

If we have selected duplicate invoice check in Vendor master record and while
entering the invoice, there is an entry in the field ‘REFERENCE”, by which R/3
system always checks for an invoice entry already made for this vendor with same
data. The data checked by the system are :
1. Company Code
Page 130 of 160

2. Vendor
3. reference
4. Document date
5. Amount and currency
In customizing, we can decide if the system has to take care of Company code/ the
reference and dates as check criteria
8. Invoice Blocks
9. Message determination in LIV (standard condition technique)
15 GENERAL INFORMATIONS on LIV

• Most of the data related to LIV are stored in Tables – EKBE, RBKP & RSEG
• Data for LIV are
1. Master data – Material master, Vendor Master & Accounting data of G/l
Account
2. Transactional data – Purchasing documents, Material document &
Accounting documents
• If you post an invoice without checking the invoice items, variances in individual
documents can cancel each other without your notice
• Invoice can be posted directly to a G/L account OR material account by activating
direct posting to G/l account and Material account in Customizing
• If Vendor is NOT CREATED, system will post the amount to ONE TIME
VENDOR Account
• Automatic settlements facility is available for
1. Consignment & Pipeline
2. ERS
3. Invoicing Plan
4. Revaluation
• ALLOCATION FEATURE in Invoice verification (MIRO)

ALLOCATION TO MORE CRITERIA TYPE OF INVOICE ITEMS
Purchase Order/ Sch.
1Agreement 1Multiple allocation 1Goods & Services Only
2Planned Delivery costs only
Goods &services + Planned
3 delivery costs
Delivery Note (GR based
2IV) 1Multiple allocation 1Goods & Services Only
2Selection Vendor
3Bill of Lading 1Multiple allocation 1Planned Delivery costs only
2Selection Vendor
Service Entry Sheet
4(SES) 1Multiple allocation 1Services Only
5Vendor 1Plants 1Goods & Services Only
Page 131 of 160

2Deliveries 2Planned Delivery costs only
Goods &services + Planned
3Returns 3 delivery costs
4Time Periods
6Transport Agent 1means of transport 1Services Only
2Partner
3Freight Cost number
• Invoice verification of ONE time Vendor – Same as that of LIV but, the system
proposes the address data for the invoicing party and OTV button for Vendor data
screen area. Collective accounts are set up for One time vendors. These accounts
are used for more than 1 vendor so the master record does not contain any vendor
specific data. SO the details are to be entered in Purchasing OR Invoice verification.
• The procedure of Invoice verification of ONE TIME Vendor is
1. In the Vendor data of MIRO screen, choose OTV (One Time
Vendor) and enter address, Bank data, etc.
2. Enter the relevant invoice data
3. Post the invoice
• If you are having 2 types of operations – Domestic and Foreign, you have to have 2
one time vendor master record
• While posting an invoice verification of FREE GOODS, (511) Qty, MAP, total
value will be changed/ updated in material master
• If there is different payee, the option to enter this are (1) At the time of Invoice
verification (2) AT the time of Payment program run
• Work List is used in the application of (1) enter invoice (2) Park the invoice
• GR based IV can be used for invoice against PO and invoice against Delivery note
• Automatic amount correction –
When quantity changes occur, you can perform automatic correction of an
ITEM AMOUNT using the USER PARAMETER –RBB.
For enter invoice and park invoice set the user profile RBB in SAP easy menu
in Parameter tab and in value column put 12 Blanks and ‘X’ for the 13 th and
then save.
In easy Menu – Go to SYSTEM > Maintain User Profile, > Set Data, will get
parameter Tab
• Invoice reduction – Correcting quantities or Values
Tax – We can configure whether we want to take into account tax postings (a) Only
in Invoice document (b) Invoice document + Credit memo
• While SIMULATING, following POSTING LINES are NOT DISAPLYED
because they are NOT determined while simulating the document
1. Posting for withholding Tax
2. Multiple Vendor line items due to SPLIT TERMS of Payment
Page 132 of 160

3. Multiple documents due to cross-company code postings
• In simulation we can switchover currencies, if there are more than one currency
involved
• Duplicate Invoice Check
System checks only FI document created in LIV. ONLY for INVOICES
It will NOT check the Credit memos/ Subsequent
Subsequent Credit or debit
Checking will be done in FI document for – Company code, Vendor, Currency,
Document date & reference document number
Duplicate invoice check can be fixed for
1. Reference
Reference document number
2. Company code
3. Invoice document date – It will check here for
i. Invoice date
ii. Gross amount
iii. Currency
iv. Vendor
• You CAN NOT REDUCE the invoice while in PARKING

• Invoice verification in background is used for
1. Invoice with mass amount of data for which ITEM CHECK is NOT
mandatory
2. Invoicing referring to transactions NOT YET ENTERED
Program – RMBABG00
• ACCOUNT DETERMINATION in LIV DEPENDS ON
1. Information from entries
a) Vendor account
b) Amount
2. Material Master record
a) Valuation class
b) Price control
c) Material account
d) Stock details
3. Posted Document
a) Purchase Order Price
b) GR is posted or not
4. System settings
a) Gross/ Net posting
b) G/L account
account details
• If One invoice refers MORE THAN 1 PO, then the system suggests the TERMS of
PAYMENT of the FIRST PO
• If Quality management is active, SAP recommends GR based Invoice verification
• Invoice blocks indicators
1. Q – Quantity Variance
2. P - Price variance
3. D – Scheduled date
4. G – Order price quantity variance
Page 133 of 160

5. I – Quality
6. O – Others (item amount check)
• If an invoice for a Blanket PO is blocked due to DATE variance CANNOT be
released automatically.
• If an invoice is blocked (a) Blocking manually at header AND (b) item having
block due to variances,
variances, the system will display this invoice block as –DUE to
VARIANCES
• Planned delivery costs are on ITEM basis
• We CAN NOT differentiate between UNPLANNED DISTRIBUTED DELIVERY
COSTS and PRICE VARIANCES at PO History
Even system will not display the unplanned delivery cost that posted to a separate
G/l account in PO History
• System WILL NOT CHECK the maximum amount of the prices for unplanned
delivery cost
• Subsequent Debit/ Credit
System records every subsequent credit/ debit in PO history
Subsequent credit/ debit are VALUE basis
• Total based Differences – Vendor specific tolerances
1. Total based invoice reduction
Posting to Invoice reduction clearing account
2. total based acceptance
Posting the difference to Expense/ revenue account
3. Manual acceptance
as per customizing
• Credit memos can be created using ERS
• Planned
Planned delivery costs CANNOT
C ANNOT be processed with ERS
• Program used for ERS – RMMR1MRS
• Revaluation – To determine the difference values on the basis of price changes that
retro-actively valid and to create settlement documents for them
Pre-requisites
1. It should be with respect to a PO/ Sch. Agreement item
2. The item should not be deleted or blocked
3. GR based IV
4. Flagging for revaluation in Vendor Master
5. Customization
• PO History – History category of revaluation – NeuB
• CHECKS before posting of a CREDIT MEMO
1. Maximum Value – It should be less than earlier invoice value
2. Maximum Quantity - It should be less than earlier invoice Quantity
3. EQUAL – It will leads to a FULL REVERSAL (It will not create
credit memo)
• Advance payments/ Down payments (F-58) are NOT updated in PO History
• If an item out many item in an invoice is cleared for payment and other items are in
blocked for
for other reasons,
reasons, the ITEM-WISE
ITEM-WISE RELEASE
RELEASE is NOT possible
possible
• Automatic Payment Program (APP)
Page 134 of 160

Credit Master Basic Parameters Online parameters Invoice document
PROPOSAL RUN
PAYMENT RUN
PRINT RUN
OUTPUT DETERMINATION
• While maintaining a Purchasing document, R/3 system checks for if it should

generate an output for the document. This output format represents a message.
• A message is an information that is output using various media – Printer, EDI, Fax,
etc.
• R/3 system output depends on the message concerned. R/3 system can output
messages via various media. This is defined in THE DOCUMENT or
Automatically
Automatically Via MESSAGE DTERMINATION
• R/3 system places the document to be printed in a queue and it is released from here
as required for output via EDI, etc. You can release these messages manually or
auto by the system
A. MESSAGE OUTPUT WITHOUT MESSAGE DETERMINATION
• The system can output the message types already defined in the standard system
(Such as NEU for PO)
• The system generates messages using standard parameters only (Such as Output
medium – Print, Time 1, immediate output, etc.). You can change the proposed
values.
• System determines the printer in following sequence
1. Printer defined in Purchasing group
2. Printer defined in USER PARAMETER –PR1
3. Printer defined in user defaults
• We can define the message determination for each purchasing transaction
• We can change the proposed standard parameters in individual documents
• NO MESSAGE SCHMA assigned assigned in
in this case
B. MESSAGE OUTPUT WITH MESSAGE DETERMINATION
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• Any message type can be outputted
• System can suggest the output medium and time depending on the specific values of
the influencing factors (Such as document type, Vendor, etc.)
• The system determines the printer in following sequence
1. Printer defined in the MESSAGE RECORD
2. Printer defined in the PURCHASING GROUP.
• The aim of Message determination is to manage message according to a pre-defined
criteria, MESSAGE SCHEMA.
• During message determination, R/3 system checks if there is any condition records
created for that application in customizing. If it finds it, it will process it (1 or more
messages also)
• During message determination, system searches for condition records according to a
pre-defined hierarchy (Access Sequence)
• Message determination enables you to CONTROL (document output for each
Vendor) individually.
• You can define a SCHEMA that controls the message determination separately for
each purchasing transaction.
• For each message type you can specify that the R/3 system is to optically archive
the document when it is output.
• If you use message determination to output purchasing documents via a printer, the
R/3 system determines the printer name neither from the user parameter PR1 nor
from the user defaults
• Message determination function in purchasing enables R/3 system to determine the
message allowed for a purchasing transaction and suggests suitable messages
• Message determination is activated automatically in standard SAP R/3 system
(000) when you install the client
• You will define the combination of fields for which you want to create message
records in CONDITION TABLE.
• Access sequence is a strategy that R/3 system uses to search for valid message
records
• Message types represents different messages in the system (For PO/ for PR, etc)
• You can define message types ALLOWED for each message application in a
message schema.
• You can assign separate message schemas to the individual purchasing document
categories
• Maintain Message types
1. Indicator for condition access and possibly access sequence for automatic
message determination
2. Partner roles for different recipient (Ordering address, etc)
3. Processing program and form (It is as per the output medium and
requirement of client)
4. Main title and mail text for internal use, if required
• Fine tune control
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Define which print operation this message type is defined for (Like New print/ Print
for changes, etc)
• Maintain Message schema

Enter message type schema. This defines for which purchasing document and under
which conditions the system should generate a message
• Standard message types are supplied for each purchasing document
• We can define further message types for each purchasing document type separately
• You MUST create message records (condition records) for individual message
types that you want to use
• Influencing factors for Message determination are;
1. Document type
2. Purchasing Organization
3. Vendor
• You can define other criteria also for message determination in Customizing. While
creating condition tables, select these influencing factors (stated 1,2,3 above) from a
field catalogue.
• CONDITION TABLE & ACCESS SEQUENCE
We can use various key combinations to create a condition table. In access
sequence, you define the condition tables that R/3 system to check in a proper
Order/ sequence
CONDITION TABLE
Pur. Org Vendor Message record

XXXX VVVVV time -4PM
Medium - FAX
No of copies - 4
ACCESS SEQUENCE
Sequence No Condition Table
10 Pur. Orgn/ Vendor
Document type
20 CONDITION TABLE
Document type Message record
NB Time - Immediate
Medium - Print
No. of copies - 2
• Depending on purchase document type, R/3 system determines if the message

determination is active and the Schema in message determination controls the
message determination
• It check all the message types entered for the schema determined and the
requirements assigned to those message types
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• If the assigned requirements is met for an (auto) message type, the program
determines the access sequence with which it should search through the condition
tables for message records
• We can check the message determination facility using the determination analysis
• Printer determination in PURCHASING
Enter a purchasing transaction (eg. Create a PO)
Print parameter corresponds to

Purchase group criteria
Pre-defined message type (eg. NEU)
Record exists for this message type Message contains output device
of purchasing group
Record contains NO output device
Record contains output device
Determination of Form depending on

Application/ Message type/
Transmission medium
Page 138 of 160

MESSAGE DETERMINATION PROCESS
Message Determination SCHEMA PURCHASE ORDER

PO - RMBEFO Vendor - VVVVV
Pur. Orn - XXXX
2
MESSAGE TYPES
1. New Printout - NEU

2. Reminder - MAHN
MESSAGE TPYE
ACCESS SEQUENCE
3 ACCESS SEQUENCE
1. Doc Type/ Pur Orgn./ Vendor
2. Document type
RECORDS OF MESSAGE TYPES MESSAGE HEADER

1. NO valid record exists Message Type Printer
2. Valid Record exists NEU 1DRUCKLF 123
5
PRINTER
1. Output immediately
2. Number of copies -2
Page 139 of 160

CUSTOMIZING of MESSAGES in PURCHASING
1. Texts for messages. – We can maintain any text if required. Separate options for
a. Document header
b. Document Item
c. Document Supplement
d. Change Texts
e. Headings
For
1. RFQ
2. Purchase Order
3. Contract
4. Scheduling Agreement
5. Purchase Organization
2. Forms (Layout sets) for Messages

Adjust forms separately for
2. RFQ
3. Purchase Order
4. Contract
5. Scheduling Agreement Delivery schedule
3. EDI
1. Set-up partner profiles
1. Bank – B
2. Benefits Provider – BP
3. Customer – KU
4. Vendor – LI
5. Logical system – LS
6. Partner type –US
2. Profiles for sending Stocks/ Sales data
4. Output Control
1) Condition Tables for RFQ, PO, Outline Agreement/ Sch. Agreement release
Select the Tables
1. Purchase Order Type
3. Vendor
Condition Tables – General)
025 – Document type/ Purchase Organization/ Vendor
026 – Document type only
027 – Purchase Organization / Vendor EDI
987 – Purchase Organization
Variants available for selection of condition tables are:

1. Company Code
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3. Inter company
4. Ordering address
5. Purchase document type
6. Purchase group
7. Supplying Plant
8. Vendor
2) Access Sequence – it is CROSS CLIENT
Define access sequence for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery
0001 - Document type/ Purchase Organization/ Vendor (025)
Access for inbound delivery should be delivery type
3) Message (Output Type) Type
Define message types for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery.
Standard message types are
1. NEU – New PO printout
2. AUFB – Dunning Order confirmation
3. ERIN – reminder
4. MAHN – Dunning
For each message (output type) type,
Processing routines like
a. Print
b. Fax
c. EDI
d. ALE are to be fixed
For each processing routines, the partner functions like
a. Ordering address
b. Vendor
c. Delivering Plant, etc are to be assigned
4) Requirement of Output control
Keep the tick for make it active
5) Message determination Schema
Schema (Procedure) to be attached for each of
RFQ/ PO/ Outline Agreement/ Sch Agreement release Order/ Inbound delivery
6) Partner roles per message type

Define partner role for RFQ/ PO/ Outline Agreement/ Sch Agreement release
Order/ Inbound delivery
5) Assign output device to Purchasing group
Attach printer/ output device to each purchasing group
6) Field relevant Purchasing document changes

Detailed selection of filed names in the documents
Page 141 of 160

16 RELEASE PROCEDURE
Key terms in release procedure
1. Release strategy – It controls entire release procedure/ approval process. It contains
release conditions, release codes and release pre-requisites
2. Release Condition – It determines which release strategy applies for a situation
3. Release Codes – Represents an individual/ Deptt. That must give their approval. It’s
a 2 character key. These release code should be attached to a release object (‘2’ for
Purchasing documents)
4. Release pre-requisites – It will tell the system the order in which approval process
will take place.
5. Release Status/ Indicator – The code represents the release status of a document
• Release procedure can be WITH and WITHOUT Classification

• ONLY PURCHASE REQUISITION is having the facility of release procedure WITH
and WITHOUT classification. All other can have ONLY WITH CLASSIFICATION
• Release can be applied to TOTAL items (HEADER LEVEL)and also can be by
ITEM-by-ITEM (ITEM LEVEL). It is determined by the DOCUMENT TYPE
• Purchase requisition is the ONLY purchasing document that having the facility of
ITEM LEVEL release strategy. All others are at HEADER LEVEL only
• We can cancel a previously affected release and reset the former release status.
• A Release strategy can include up to EIGHT Release points
• A release condition must be defined as classification characteristic (Eg. Plant/ Gross
Amount). The part of the characteristic definition is a link to a FIELD of the
COMMUNICATION STRUCTURE (CEBAN – for PR or CEKKO – for external
purchasing documents). The classification characteristic should have the attribute
“Multiple Value” so that you can not only maintain the characteristic value but can
enter several values, if necessary
• Group together all characteristic that we wish to use in release strategy for PRs or
external purchasing documents in a class. The class must be assigned to class type
‘032’. This release class is assigned to the release object in customizing
• Pre-requisites for release strategy customizing
1. Release class type ‘032’
2. Release characteristics (WERKS –Plant, GNETW – Net PO value, etc)
• Process flow of Release Strategy
1. Create/ Edit characteristics
Create characteristics for the release strategy control objects like Plant/ Total PO
Value/ Invoice value, etc. Table –EBAN for PR & CEKKO for purchasing documents
2. Create/ Edit class

Name a class, create it in class type ‘032’
In basic data tab, you can enter the validity of this class.
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In characteristics tab, enter the characteristics created in step 1 along with Data type,
Number of character, decimal points, unit of measurement, etc.
3. Set-up Procedure with classification (Do it in a sequence)

1. Create release group/ Code
It’s a 2 digit key and is to be assigned to a release object‘2’.
Provide the overall release tick
Enter the class created in step2
2. Release codes
In each group/ code, enter the release codes.
Workflow is also can be attached here
3. Release Indicator
Define the release indicator here, like released, under process, blocked
Changeability options are available here
You can assign the % value change against each release indicator
Changeability Indicators available in standard system are:
1. BLANK – Changeable, new release in case of new strategy
2. 1 – Cannot be changed
3. 2 – Changeable, No new determination of strategy
4. 3 – Changeable, New release in case of new strategy
5. 4 – Changeable, new release in case of new strategy OR value change
4. Release strategy
Different strategies are to be created for each release groups/ Codes
1. Release pre-requisite – Select the appropriate check boxes for each
strategy
2. Release statuses – Attach the release indicator for each step in each
strategy
3. Classification – Enter the specific values for the characteristics created ion
step1 for each strategy
4. Release Simulation – Simulate and see for errors by the system
Page 143 of 160

17 BATCH MANAGEMENT
• Batch Management can be with Classification and without classification

• Batch Management via classification is used in Procurement, Production and SD
• We can search for batches via batch determination function, if the batches are
classified.
Material Master record and Batch Master record :

• In Material Master, select Batch Management indicator in any of Purchasing view/
Sales view/ Work Scheduling view / General Plant data view/ Storage 1 view/
Warehouse Management view
• For Batch Master Creation function . CS01.
• Options are creation of batch master record manually or creation of batch during
goods receipt.
• Batch number can have any alphanumeric
• The numbering can be Internal / External. If the batch number is internal, system
will create batches for goods movement and batch master will be created in the
background.
• If we are changing a material without batch to with batch, we have to post all the
stocks from the previous year, the current period and previous period.
• While canceling the batch requirement, we have to re-organize the batch master
records. Then reset the batch management indicator(edit the master record), post the
stock back
• There are specific function modules for batches. If we are running it, batches will
be created automatically. Auto Batch – EXIT – SAPLV01Z-001 & 002
• Batch can be set to CLIENT / PLANT / MATERIAL Level.
• If batches are set at PLANT / MATERIAL level:

1. Batch number can be reassigned with a different specification for a material in
each Plant.
2. We can transfer the stock from one Plant to another Plant even if the batches do
not have the same specification. The batch quantity transferred assumes the
specification of the destination batch.
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3. If you want the batch specification to be unique across the Plants, you can do so
organizationally. The system does not support.
• If the Batches are set at MATERIAL LEVEL,

1. A batch has the same specification for all Plants in which material is held.
2. The same batch number can be re-assigned with a different specification for each
material.
• If the batches are maintained at CLIENT & MATERIAL Level,

1. Same batch number can be assigned only once in the client
2. It will be uniquely assigned to one material
• Batch related customizations are:

Area of Validity of Batches – PLANT or MATERIAL or CLIENT
Standard R/3 system default setting for batch is PLANT

Switching over to higher level ( Material to Plant or Plant or Client ) is ALWAYS
allowed. But to lower levels allowed only for Client to Material
Batch Status is a central tool for identifying the use of the batch as Restricted or
Unrestricted.
We can change the batch status in the batch master record. But this results in an
automatic transfer posting of the individual stocks
18 CLASSIFICATION
The purpose of classification is to find out suitable/ similar objects available in the R/3
system (Master records)
Elements of Classification
Meaning Example
OBJECT TYPE - Inferred from a classifiable Table - MARA
OBJECT - Classifiable Unit - Material/ Vendor
CLASS TYPE - Top level unit of control of classes - Material/ Document
Page 145 of 160

CLASS - Grouping of similar objects - Monitor/ Printer
CHARACTERISTIC- Properties of the object - Size/ Weight
VALUE - Value of characteristic - 17inch / 10Kg
• Procedure from Value to Class type involves in classification

• Formats of characteristic Values
1. NUM – Numeric – Negative values also allowed
2. CHAR – Alphanumeric, But case sensitive
3. DATE – Date
4. TIME – Time
5. CURR - Currency
• Selection of multiple values are also possible
• We can give allowed values, Ranges, intervals, etc.
• Equal to (=), Greater than (<), Less than (>) functions are also possible
• We CANNOT CHANGE the CLASS TYPE once you have created a class
• In ONE CLSS TYPE, AN OBJECT can have ONLY ONE value for any
CHARACTERISTIC
• Classification is the assignment + Value assignment
• Classification means assign object to classes and use the characteristic Value of the
class to describe an object
• 2 types of assignment function
1. 1 Object to many classes
2. 1 Class to many objects
• =,<,> functions are possible to finding out an object
Page 146 of 160

19 PRICING PROCEDURE
Time dependent conditions

• We can specify in customizing via Document type whether time dependent (TD) or
Time Independent (TID) conditions can be maintained for Outline Agreements
• Conditions in Purchase Order are Time independent
• TD conditions can be maintained for
1. Plant specific
2. Purchase Organization specific
3. Reference Purchase Organization specific
4. Info Record
5. Outline agreements
6. General conditions
• TD conditions can be limited to a VALIDITY PERIOD
• Price/ quantity scaling
• We can specify the limits for TD conditions
• TD conditions from info record or Outline agreements are accepted as default
values in Pos
Maintaining TD Conditions
Conditions can be maintained using master data menu in purchasing. But SAP does not
recommend it. But maintain them in the relevant documents or in the info records
1. Using Master data menu for maintaining TD conditions

a) Master data > Conditions > Prices
b) Master data > Conditions > Discounts/ surcharges
- per Vendor
- per Condition group
- per material type
- per invoicing party
Condition types – Vendor discount – RL01
- Group discount – RGRO
- Miscellaneous – MAR1
- Accounting discount – REST
c) Master data > Conditions > Other
Condition types – GAU2, NAVS and you can create your own here
No Access sequences for supplementary conditions.
Eg. Material specific discounts & surcharges
No Separate price determination for PB00. They are found using condition record for the
gross price. PB00 is NOT having any access sequence
Page 147 of 160

CONDITION TYPES.
Each condition type is defined with
1. Condition class
2. Calculation Type
3. Condition category
4. Access sequence
• Individual conditions are described by condition types

Examples like Gross Price, Freight, etc
• Condition types are defined together with their CONTROL PARAMETERS in
customizing.
• Condition types are differentiated broadly by their Condition class and finely by
Condition Category
• Condition type stipulates how the R/3 system calculate the condition value
• ‘+’ or ‘-‘ sign determination whether a condition is treated as + or –
• -ve amounts are Discounts
• +ve amounts are Surcharges
• Scale basis foe scales depend on condition type. Scale can be on quantity or value
• Access Sequence is assigned to a condition type (Not mandatory)
• Access sequence is a search strategy that enables you to specify the order in which
condition tables are to be searched for relevant entries for a condition type
• In standard SAP R/3 system
No access sequence is attached for Discounts and surcharges (RA00, RA01..)
because they DO NOT HAVE ANY SEPARTE VALIDITY PERIODS.
They are maintained at the same time as the Gross Price (PB00) and their
validity period is always the same as the validity period of Gross Price
• Some of the condition types and its control parameters are;
Goss Price – PB00
Condition Class – Prices
Calculation type – Quantity dependent
Condition Category – Basic Price
Access Sequence – Gross Price
Freight – FRB1
Condition Class – Discount / Surcharges
Calculation type – Fixed amount
Condition Category – Delivery Costs
Access Sequence – Not applicable
CASH DICOUNT - SKTO

Condition Class – Discount/ Surcharges
Calculation type – %
Condition Category – Cash Discount
Access Sequence – Not applicable
Page 148 of 160

• The CONTROL FUNCTIONS of condition types are
1. Condition Class (Price or Discount, etc. )
2. Condition Type ( Quantity or Value or % or fixed, etc. )
3. Condition Category (Gross or delivery cost, Etc)
4. Access Sequence (Gross Price, etc)
• CUSTOMIZING CONDITION TYPES
Condition types defines the properties and characteristics of a Pricing element
Condition types are defined in customizing
We should not change the standard condition type available in the standard system
If a new condition type with a validity period is created, it must have an access
sequence assigned to it
• A condition class and a calculation type must be assigned to a Condition type along
with a Condition category
• Condition types can be defined as a HEADER CONDITION or ITEM CONDITION
or GROUP CONDITION
• Condition amounts/ Values CAN be changed or deleted by change option by manual
entry
• A CALCULATION SCHEMS (PRICING PROCEDURE) for supplementary
conditions must be assigned to the Condition type for the Gross Price
• Scaling facility and upper & Lower limits are available for condition types
• Options in Condition type (General)
1. CONTROL DATA 2. GROUP CONDITION

1Condition Class
A Discount/ Surcharge 1Group condition
B Prices 2Group condition routine
C Expenses 3Rounding difference comparison
D Taxes
E Extra Pay
2Calculation Type 3. CHANGES WHICH CAN BE MADE
A Percentage
B Fixed amount 1Manual Entries - No Limitation
C Quantity A Free
D Gross Weight B Auto entry priority
E Net weight C Manual entry priority
F Volume D No manual entry priority
3Condition Category
A Packaging
B Delivery cost
C Insurance
D Taxes
E Cash Discount
F Freight
G Cost
4Rounding Rule
Commercial
A Round up
Page 149 of 160

B Round down
5Structure condition
A Condition to be duplicated
B Cumulation of condition
6+' or '-' sign
Page 150 of 160

ACCESS SEQUENCE
• It’s a search strategy that enables you to specify the order in which Condition tables
are to be searched for relevant entries for a condition type.
• It is assigned to a condition type
• The order of access is determined by the order of the condition table in the access
sequence.
• The EXLUSIVE INDICATOR determines that the search for further entries in
condition tables is interrupted if an access was successful and a relevant entry was
found
• Condition types WITH VALIDITY period SHOULD HAVE an access sequence
• We CAN NOT assign an access sequence to a HEADER CONDITION
EXCLUSION OF CONDITIONS
Define Condition Exclusion

In this step, you define the condition exclusion process.
If several condition records are valid in the price determination process, you must define
rules stipulating which conditions are selected and which are disregarded. To do this, use
the condition exclusion mechanism.
The exclusion of condition records is controlled via exclusion groups. An exclusion group
is a list of condition types that are compared with each other during the price determination
process. The result may be the exclusion of a whole group of conditions or the exclusion of
individual conditions within a group.
The result of the price determination process can thus be influenced with regard to a
desired criterion (for example, the lowest price) by the exclusion of certain condition types,
whereas others are taken into account in this process.
Example
Page 151 of 160

You can define a condition exclusion process that determines the most favorable
price and excludes less favorable but fundamentally possible pricing results. The
lowest price then overrides the condition type priorities that would have been
dictated by the access sequence.
In the calculation schema you define the procedure by which selection within or between
the condition exclusion groups takes place. The following possibilities are available:
• Selection of the most favorable condition type within a condition exclusion group.
• Selection of the most favorable condition record of a condition type if more valid
condition records exist (for example, selection from different condition records of
condition type PR00)
• Selection of the most favorable of two condition exclusion groups (in this case, all
condition types of the two groups are cumulated and the totals compared with each
other)
The tables for the exclusion of conditions are supplied empty. You must therefore work
through the following points if you wish to use the condition exclusion facility:
• Define condition exclusion groups
• Assign condition types to condition exclusion groups
• Enter condition exclusion groups in the calculation schema and define a procedure
for the determination of the condition types to be excluded.
Activities
1. Create a condition exclusion group by entering an alphanumeric key that is max.
four characters long, together with a description.
2. Assign the condition types to a condition exclusion group. A condition exclusion
group can contain any number of condition types.
3. Enter the condition exclusion group in the calculation schema that you will be
using for price (or cost) determination purposes.
4. In the process, note the sequence (consecutive numbers) in which the exclusion
groups are to be processed.
You can use two exclusion groups for condition exclusion purposes. In this case,
you must choose procedure "C", which determines the lowest price between two
exclusion groups .
Condition records in Condition Tables

• Conditions are stored in the system in a condition record
• Condition tables enables you to vary the key structure of condition records
• Key fields of condition tables are (generally)
1. Vendor / Material / Purchase Organization / Info record category
2. Vendor / Material / Purchase Organization/ Plant / Info record category
3. Vendor / Material / Purchase Organization / Info record category/ Order
Unit
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4. Purchase Document / Item / Plant
• The entries in Condition tables are Key part or D ATA part
• Data part contains the number of condition record
• Conditions are stored in following tables
1. KONP – Time dependent conditions – Item
2. KONH – Header Conditions
3. KONM – Quantity scales
4. KNOW – Value scales
• We can creates new condition tables. The numbering should be between 501 to 999.
• We can select the required filed from “Field catalogue”
• We can include the fields of Communication structures like – KOMK, KOMP &
KOMG
PRICING PROCEDURE (Calculation SCHEMA)

• It is the frame work for determining the purchase or valuation price, which groups
together all the condition types that are relevant to this particular process
• The Pricing procedure defines
1. Permissible condition types
2. Condition type for which conditions are to be adopted automatically
(Manual indicator)
3. Condition types for which the Net price calculation is applied (Statistical
Indicator)
4. Order in which the condition types are taken into account in the calculation
of Net or effective price
5. Condition types for which subtotals are calculated
6. Requirements that must be satisfied before a certain condition type is taken
in to account
• Sequence of conditions
• The step numbers of the condition type in the pricing procedure determines the
sequence in which condition types are to be taken in to account in the calculation of
net or effective price.
• This sequence CAN NOT be changed in the document, even if Condition types are
entered manually
• Condition type assigned to the same step in the procedure are sorted by means of a
counter
• With these condition types, the order of manual entry decides the point at which the
condition type is taken in to account in the procedure for effective price
• You can limit the value of condition by fixing the lower and upper limits of a
particular condition in customizing (Define Limits)
• If any condition in the schema is not having an access sequence, then the manual
tick is a mandatory requirement. If we are not giving the manual tick, this condition
type will automatically populated in your document
Page 153 of 160

SCHEMA DETERMINATION
• The system will pick-up the pricing procedure as per the settings made in
customizing for schema determination.
• Schema Purchasing Organization, Schema group vendor (Attached in Vendor
master) and the assignment of pricing procedure for this combination
• The schema group of Stock transport order depends on
o Purchasing Organization
o Document type
o Supplying Plant
• Schema assignment for the calculation of MARKET price in Vendor evaluation
depends on Purchase Organization
• The pricing procedure for external service management depends on the
DOCUMENT TYPE
• A uniform pricing procedure per document type
INFO RECORD and ORDER PRICE HISTORY
• Info record can be created manually or auto thru documents

• If Info record is created manually, the GROSS PRICE and supplementary
conditions (Discounts & Surcharges ) CAN BE maintained for a certain validity
period
• If an info record is generated from a Contract, the gross price and
supplementary conditions are adopted in the info record
• If an info record is generated from a PO or Scheduling Agreement, the
conditions ARE NOT ADOPTED in to the info record. But adopted to
ORDER PRICE HISTORY
• If an info record conditions exists and valid, they are suggested when a new PO is
created
• R/3 system uses the PO History data, if the valid info record is NOT available
• In info record list, displays a distinction is made between
Info record conditions – Head word “CONDITION”
The conditions in Last PO – Head word “Purchase Order”
HEADER, GROUP & ITEM CONDITIONS
• Item Condition – Conditions relating to a single item of document

• Header condition - % or Fixed amount – Conditions applicable to all the items in
the document
• No automatic price determination process carried out for Hearse condition. So
there is No access sequence for header conditions
• Group condition – is a condition relating to several items of a document.
• The condition values (price/ Order quantity/ Weight/ Volume) of the relevant items
are added and the total used as the condition basis
Page 154 of 160

• Assigning of condition type to header or group condition is defined in customizing
of condition type
• If a header condition is Fixed amount, the value will be distributed to all the items
proportionately
• If the header condition is in %, the value will be distributed to all the items by the
same %
• The group condition value will be proportionately distributed to all items in the
document
• The scale value of group conditions are applicable to the basis of cumulated item
values
Logistics Information System

You can create a filed catalog in MC18 and pull it during MC21 or directly MC21
There will be 2 different application areas in MM
02 for PURCHIS and 03 for INVCO
Path in Easy Menu – Tools > ABAP workbench > Development > Work flow > Reporting
> Workflow information system > Environment > info structures (MC 21/22/23) &
Updating (MC24/25/26)
1. Create Info structure – MC21

Initial screen
The info structure number should be in between S500 to S999

Attributes taken as standard and planning possible selected
Next screen
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See the status as not saved
a) Now we have to select the characteristics and key figures of characteristics
3 Characteristics selected – Plant, Vendor & material
b) Now we have to select key figures for these characteristics
1 Key figure total valuated stock selected
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c) Save the Info structure (save as a local object)
d) Check the info structure – See that there should not be any error message
e) Now generate the info structure by clicking the icon – See that there should not be any
error message
f) Save the info structure
2. Create Update the Info structure – MC24

Initial screen
Now we have to mention rules for key figures & characteristics

a) Rules for key figures
Clicking on rules for key figures, a pop-up comes. You can click on suggest rules so that
system will suggest the entries or you can enter directly
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Select copy
b) Rules for characteristics
System automatically suggests the table name & filed names
Copy it
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c) Generate – Click on generate icon. See that there should not be any error message
d) Update – Click on update icon

System will show all info structures.
Select the respective one and look for details
In the pop-up enter the parameters for updation
Now save the updation

Again generate and check for any errors. Save and go back
Now the info structure is ready. You can view it through transaction code – MCSK for
inventory) and MCSJ for Purchasing
Page 159 of 160


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What are the main components of an SAP enterprise structure?

What are the main components of an SAP enterprise structure?

What are the basic steps involved in the procurement process in SAP?

What are the basic steps involved in the procurement process in SAP?

SAP MM STUDY NOTES

1 R/3 STRUCTURE OF SAP ..................

CLIENT – SERVER BENEFITS

Presentation Server Application Server Database Server

• R/3 structure system architecture allows separating application from presentation

- Business Object - eg. Employee

Maximum number of sessions we can open in SAP R/3 is Six

- Business framework portrays the R/3 system as a family of product made up of

- Benefits of Business Frame work architecture are :

Organizational Unit – Organizational grouping of an enterprise.

• Configuring is the method of doing customizing

Several GRs can be entered for a PO item in one operation

If MRP Procedure is set, PR will be generated automatically during MRP run.

Purchasing value Key

MANDATORY REQUIREMENTS (GENERAL)

Standard BLANK YES YES

ZERO VALUE POs

HOLD function is available for a PO while creation

Analysis of Order Values

Role – describes a set of logically linked transactions

We can BLOCK a Vendor Master Record (XK05) - Complete

Automatic PO generation is in purchasing data.

ACCOUNT GROUP of a Vendor

Vendor Reconciliation account

Pre-requisite for Vendor Partner roles

Text types for central Texts

Material Master is structured for various organizational levels.

Data at CLIENT / COMPANY CODE LEVEL (table – MARA)

Data at STORAGE LOCATION LEVEL

- Basic data is CLIENT SPECIFIC

Material type is having following CONTROL functions

Material filed selection reference

Main fields in Purchasing View are

Extending/ adding a View to an existing material master – MM50

5 PROCUREMENT OF STOCK MATERIAL

Reference Purchase Organization

Vendor Master – 1. General data 2. Company code related data(accounting) 3. Purchasing

Master records in Purchasing

PR can be created – Manual, or Auto from PP/ PS/ PM/ PPC

Flagging of PR items are “CLOSED”

RFQ/ Quotations are Created and maintained at purchasing Organization level.

PURCHASING INFO RECORD

• Info records are created for

• We can fix the PO text in Info record

Info update indicator

For Quotations/ Contracts/ Scheduling Agreements and Conventional POs

The info update Indicator can be set at PO

Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts

Inserting texts from material master record

3 options of linking material master record and purchase documents.

Option 1 - The Text is copied . Indicator status in column – NONE

Option 2 - The Text is displayed only. Indicator status column – N

Option 3 – The Text is offered for copying. Indicator in status column – X

We can create conditions in

Time dependent Time Independent