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Procurement with Origin


Procurement with Origin Acceptance

In import procurement, the buyer or purchasing organization typically negotiates with a
vendor to accept goods or to take ownership of goods at the vendor premises. In other
words, the buying entity takes the financial ownership of the goods at the vendor premises
and is therefore liable to pay the vendor even though the goods have not yet physically
arrived at the buyers location (plant/warehouse). In international commerce trading
terminology it is called EX-Works procurement and recognized by the International
Commercial Term (Incoterm) EXW.
Standard SAP provides the capability to use the Incoterm EXW in the purchasing documents such as
purchase orders, contracts and/or scheduling agreements. Though SAP also has an inventory
movement type (107) which can accept goods at the origin, the standard SAP solution doesnt have
end to end integration to use the Incoterm EXW, origin acceptance along with movement type 107.
The lack of integration of the origin of acceptance functionality with the follow-on business processes
(goods receipts, invoice postings and releases, vendor payments, MRP functionality and so on) requires
some manual intervention at each business process step starting with the PO creation up to the
invoice processing in order to use it efficiently. Manual intervention in the business process can
potentially impact the following areas:
Account Payable/Finance
Material Requirement Planning

-Delay vendor payment

- In-transit stock ownership and
financial posting in SAP system

-Uncertainty of delivery
date/ownership from
- Supplier performance

- Stock availability for use

- Over or under planning by MRP

The purpose of this document is to describe how to design and build the end to end
procurement process for origin at acceptance functionality within SAP with additional
configuration as well as custom development work which will allow for the avoidance of any
manual intervention.
Below is the expected high level procurement business process flow regarding the concept
of origin at acceptance:

Process Flow- Procurement by Origin Acceptance

GAPs in Standard SAP

When above described process mapped within standard SAP, following gaps occurs.

How to Fix these GAPS

All of the above referenced gaps can be addressed with the below listed work: additional master data
setup, configuration and custom development in SAP ECC. This can make procurement with origin of
acceptance a seamless process avoiding any manual interventions.
Master Data Setting:

Perform below configuration activities to determine Movement Type 109 in IBD
Configure new item category for inbound delivery: Create new item category e.g. ZEL for
inbound delivery and assign movement 109 for this item category.
IMG Path: SPRO->Logistics Execution->Deliveries-> Define Item Categories for Deliveries


Define Item Category Usage: Define new item category usage

IMG Path: SPRO->Logistics Execution->Deliveries-> Define Item Category Usage)


Define Item category determinations in Deliveries: Define new item category determination
(defined in step) during inbound delivery creation for combination of item categories.

Repeat this step for all item categories defined in material master.
Custom Development

Development to determine Origin of Acceptance in PO automatically

To default origin of acceptance indicator in purchase order, implement BADI
PROCESS_ITEM.In the BADI write logic to check incoterm at
PO line item level and if it is EXW, set origin of acceptance indicator in PO (you can use other logic as
well to set origin of acceptance indicator).


Create Custom Table to Maintain Transportation Time:

Create custom table to maintain transportation time for the combination of vendor, material,
plant and incoterm. (Client may use other criteria based on business requirement). Include this table
maintenance in one of the support role.


Delivery Date in Purchasing Form Output:

Modify Purchase order form output to read delivery date as below for procurement with origin
acceptance scenario only.
If Inco term at PO line item level is EXW then
PO Delivery date for line item = PO Delivery Date (EKPO- EEIND) Transportation Time from
custom tabbased on vendor/material/plant/incoterm combination.


Delivery Date in Purchasing Output by EDI: (Optional)

This development is required only if procurement with origin acceptance is done with EDI
vendor. In this case, identify enhancement spot in outbound PO message type
ORDERS05 and
apply same logic as mentioned in step 3.
Delivery Date in ASN or order confirmation by EDI: (Optional)
This development is required only if procurement with origin acceptance is done with EDI
vendor and vendor sends and vendor send order confirmation and advance shipping
notification by EDI. In this case, identify enhancement spot in inbound PO confirmation
(Message type ORDRSP) and advance shipping notification (DESADV) and apply below logic.
Delivery date in order confirmation or ASN= Delivery date provided by vendor +
Transportation Time from custom table based on vendor/material/plant/incotem combination
Delivery date from order confirmation or ASN is used by MRP for planning purpose.



Development to determine Movement Type 109 in IBD

Implement enhancement spot ES_SAPMV50A and object MM_INB_DEL_ITEM_CATEGORY and
write logic to determine item category ZEL in IBD (inbound delivery) for origin of
scenario. In the logic, check inco term at PO line item level (EKPO-INCO1), if it is EXW then select
item category from table T184L for delivery type is EL and usage Z and update in the field XLIPSPSTYV (item category in inbound delivery).
Supplier Evaluation:
Update your supplier evaluation program to calculate delivery score for procurement with origin
acceptance as below (Generally Supplier evaluation program is customer
specific therefore program
details not provided)
If PO line item has inco term EXW, then target delivery date as
Target delivery date= Delivery date from PO (EKPO-EEIND) - Transportation Time from custom
table based on vendor/material/plant/incoterm combination
Actual Delivery Date= EKEB-BUDAT (Delivery date with ref to PO posted by movement type 107)
by using PO# and where EKBE- BWART= 107
Compare target delivery date actual delivery date and assign delivery score appropriately.
Update security profile
To allow buyer to post good receipt for procurement with origin at acceptance by using TCode
MIGO and movement type 107.

Value Addition/Benefit and Impact

Seamless end to end integrated process without manual intervention
Actual delivery date communicated to vendor and actual physical goods receipt date used by MRP
Origin acceptances by movement type 107 have following impact on MM, FI and LIV.
FI Impact

Accounting document

MM Impact
Origin acceptance date
Item placed in valuated
blocked stock
Not available for use

LIV Impact
Invoice block removed
Invoice available for payment as per
agreed term prior to taking
physical control of the items

Actual good receipts by movement type 109 have following impact

FI Impact
MM Impact
No financial documented

Physical goods receipt date

Goods available for use

LIV Impact

No Impact

Possible to monitor goods accepted at origin and current stock status by using
report MB5OA