Standard Business Processes

in SAP MM

Contents
1.

STOCK PURCHASE NON ERS VENDORS

2.

STOCK PURCHASE ERS VENDOR

3.

DIRECT CHARGE PURCHASE NON STOCK ITEM

4.

DIRECT CHARGE PURCHASE SERVICE

5.

STOCK TRANSPORT BETWEEN PLANTS

6.

CONSIGNMENT PURCHASE

7.

RECURRING PAYMENTS USING INVOICING PLAN

8.

MISCELLANEOUS PURCHASING

9.

INVENTORY MANAGEMENT

1. Stock Purchase Non ERS Vendors

Scenario brief: In this scenario, material stock relevant for

MRP Planning are planned and procured. Depending
on MRP Type, Lot sizing procedure, Availability Check and
other parameters as set in material master and MRP
configuration, a daily MRP batch job determines within the
defined planning horizon, which are the parts that have
fallen below reorder point (based on Requirements vs.
Planned receipts). An entry is made against the material in
MRP Planning File, and Planned Order/Purchase requisition
is generated (as per MRP parameters).
Purchase requisitions are automatically converted to
Purchase Orders, against which Goods receipt to relevant
Plant/Storage Location is performed. Finally vendor invoice
is created, blocked invoices, if any, are cleared by relevant
authority and Vendor payments are executed.
Pre-requisites:
Material master with all relevant field details including MRP
and Purchasing data fields. Refer document PTP_Current
State Document_PTP Master Data_v0 for details on
relevant fields in material master.
Source assignment records should exist for the material for
auto PO creation from PR. This would include Outline
agreement (Contract)/Source List/Purchasing Info records.
Configurations and master data associated with all process
objects including Purchase requisition, Purchase Order,
Goods Receipt, Invoice Receipt, Material movements and
Accounts postings should be complete and valid.

Process Flow in SAP:

Step 1. Requirements for usage of stock material are
generated in the system for the material. Requirements
can be generated through manually created reservations
or Reservations automatically generated through planned
requirement for stock material in transactions such as
Maintenance Order component planning.

Manually created reservations

Transaction code: MB21

Enter Base
Date (Date
on
which
material
consumption/movement)
is
expected, Movement
Type (where the material would be consumed), Plant (Plant
issuing or receiving the material)
The relevant movement types for manual creation
consumption requirement of the material at ABC would
include 201 Consumption for Cost centre, 221
Consumption for Project.

In main screen, select Consumption object based on

Movement type (for example. Cost Centre), Material
ID, Quantity and save the reservation

Auto created reservations Maintenance Order Planning

Transaction code: IW31 (Create Order)/ IW32 (Change Order)
In Maintenance Order > Component planning, whenever a
stock material is planned as a requirement, a Reservation for
the same is created inside the maintenance order. The time
of creation of the reservation may be on Save or during
Release of maintenance order based on configuration setup
or in Order.

Check in Gen. Data tab where Reservation No. for the item
will be displayed.

Step 2. Create PR via MRP Run

Transaction code: MD01 (MRP Run for a Plant), MD03 (Singleitem, Single-Level), MDBT (Batch mode - Daily batch run,
automated)
Auto Batch is set for Daily run at ABC.
MD03 (Single-item, Single-Level)

Step 3. Create Automatic Purchase Order

Transaction code: ME59 (Automatic creation of Purchase
Order from Requisitions)

Enter
selection
parameters
such
as Plant, Material
ID, Purchase Requisition No. etc. and execute the transaction

Purchase Order created can be searched in PO List Report

transactions like ME2L (By Vendor), ME2M (By Material),
ME2K (General) and so on.

Step 4. Receive Stock

Transaction code: MIGO_GR
Transaction MIGO is mostly used for Goods Receipt but as per
Executable actions configured on MIGO transaction, A01
Goods has not been set. It is set in transaction MIGO_GR

Material document posted can be displayed in Transaction

MB03.
On Goods receipt for Stock material, the following Accounting
entries are posted, if material has Moving Average Pricing
set:
Stock A/c Dr
GR/IR A/c Cr
In case of Material with Standard pricing, and in case
Purchase price is different from Material standard price,
Stock A/c Dr
Price Difference A/c Dr
GR/IR A/c Cr
Cancellation of the Goods receipt movement can be done
through transaction MBST

Note: As per print output setting and Printer assignment

setting for output condition type in configuration transaction
OMJ3, at ABC, GR of stock items against a Plant/Storage
Location would generate a GR Note being printed to the
respective Printer mapped in OMJ3.

Step 5. Create Vendor Invoice

Transaction code: MIRO
In case of PO being marked for GR-Based IV (PO -> Item
details -> Invoice tab), Invoice can be created against Goods
receipt postings only, whereas if it is marked as Invoice
receipt, Invoice can be created against the Purchase Order as
a whole.
Basic Data Section:
Invoicing date, Posting date, Reference, Reference Document
category (Ex. Purchase Order/Bill of Lading/Delivery Note etc.)
and Reference Document No are entered.
Tick on Calculate Tax option to calculate Tax if any. Enter the
Net amount in the Amount field, till the Balance is 0.00

Payment section:

Payment terms, Payment method, Payment Block, Overall

discount (if any) can be set in this section

Other sections of the Invoice which can be maintained

include Details section (for Unplanned Delivery Cost,
Planning Level XA: Blocked for payment etc), Tax, Amount
Split(to
split
total
amount
as
per
payment
terms), Contacts, Note (for maintaining a detailed note on
Invoice)
Simulate and Save the invoice document. As by default
Invoice documents may be marked for Payment block, it gets
blocked for further clearance.

Step 6. Release Blocked Invoice

Transaction code: MRBR
Enter selection details in initial screen and execute the
report.

Select Invoice and click on the Green Flag to release the

Invoice, and save to release.

On Invoice Posting, the following Accounting entries are

posted:
GR/IR A/c Dr
Tax Account Dr (if taxes are applicable)
Vendor reconciliation A/c Cr
Step 7. Execute Payment Run
Transaction code: F110
Payment run is executed by the Accounts payable
department. A brief of the transaction is provided below.
In initial screen, Run date and Identification is entered for the
payment proposal.
Under the Parameter tab, enter Company code, Payment
method (as
relevant), Next
payment
date, Vendor
Accounts (if specific vendors are to be paid), Exchange rate
type (in case of payment in Foreign currency)

In Free selection section, Field Name (for example Invoice

Document No or a List of them) can be specifically selected
or excluded

In Additional Log section, Log types and Vendor/Customer

account range can be maintained

In Printout/Data Medium section, relevant Program variants

can be set

On Save, parameters for Payment Program run for Payment

Run date is saved.
The Next steps are to Schedule the proposal and Execute the
Payment Run in the initial screen of the Transaction

The Next steps are to Schedule the proposal.

On entering Start Date/Time, etc. and clicking on Green Tick,

it will give a message Proposal has been released

The payment run will be executed by the system as per

scheduled Date/Time

Post Payment, the following Accounting entries are posted:

Vendor Reconciliation A/c Cr
Bank A/c Dr

2. Stock Purchase ERS Vendor

Scenario brief: ERS or Evaluated Receipt Settlement is
applicable for Vendors which are marked for Auto ERS
settlement in Vendor master > Purchasing Data ->
Control Data section.
In this scenario, post Goods receipt, Auto ERS Invoices are
created, which are then subject to Payment run. This
scenario generally applies for regular/periodic purchases
from established vendors.

Pre-requisites:
Vendor Master should be setup with checkbox for Auto ERS
settlement and GR Based IV.Details of Vendor master
setting is elaborated in document PTP_Current State
Document_PTP Master Data_v0.
In the Purchasing Info record, for the Vendor Material
Purchasing Organization combination, No ERS checkbox
should not be set. Details of Purchasing Info record setting
is
elaborated
in
document
PTP_Current
State
Document_PTP Master Data_v0
Configurations and master data associated with all process
objects including Purchase requisition, Purchase Order,
Goods Receipt, Invoice Receipt, Material movements and
Accounts postings should be complete and valid.
Process Flow in SAP:

Step 1. Purchase requisition for the material is generated

based on automated MRP run as detailed in previous
section of this document

Step 2. Purchase requisition is Source assigned and

converted to Purchase Order
Transaction code: ME57
This Transaction is subject to the fact that the Material does
not have already have a source assigned to it, say through a
Fixed vendor or single Purchase Info record within the current
validity period etc. In such cases transaction ME59 as
detailed in previous section can be used.
Enter relevant details in the selection screen like Purchase
Requisition
No (if
known),Purchasing
Group, Material
ID, Material Group etc. as relevant and execute the
transaction

Select the displayed Purchase requisition and click on Assign

automatically or assign manually. In case of multiple

available sources, users would have to choose from the

available sources. Save once after assigning the Source.

Next stage is to process assignment and convert the

Purchase requisition to a Purchase Order. Select the Purchase
requisition line and click on Assignments tab

Select the Assignment line and click on tab Process

Assignment.

The system automatically proposes the Purchase Order

Type, Purchase Order Date,Purchasing Group, Purchasing

Organization. Click to continue, Edit and save the Purchase

Order.
Ensure that ERS , GR Based IV and Invoice Receipt indicators
are ticked in Purchase Order -> Item -> Invoice section. Inv.
Receipt should be unchecked. Also, under Delivery tab,Goods
Receipt indicator should be ticked.

Message Output set for Order can be checked by clicking

on Messages tab

Generated messages can be displayed in ME9F Transaction

Step 3. Goods receipt is carried out against the Purchase

Order as detailed in previous process section of this
document
Step 4. Creation of ERS Invoice
Transaction code: MRRL
Enter selection parameters in initial screen. It is usually
recommended to first run it in a Test run mode and then
perform an actual run. In the field Doc. Selection, if Purchase
Order No. is known it can be directly on Purchase Order, else
it can be set on Vendor, if vendor is known.
There is also a checkbox for Settle Goods Item + Planned
Delivery cost, which must be checked for settling Item and
Planned Delivery costs (if any). Remove Test run check for
actual run.

A List output screen with FI document no. (ERS Invoice)

generated would come up, if the transaction has not been
run in Test mode.

Step 5. Vendor Payment would be performed using

similar procedure as documented in first process section.

3. Direct Charge Purchase Non stock item

Scenario brief: Direct Charge purchase refer to manually

created Purchase requisitions created for consumption of
Non stock items directly to an account assignment object
such as K- Cost centre, P- Project, F- Maintenance Order etc.
Manual creation of Purchase requisitions can take place
directly in MM module, through Purchase requisition creation
transactions or in certain cases automatically in other
modules in relevant transaction. For example when a Non
stock item is planned directly inside a Maintenance Order
(under component section), system can be set to
automatically generate a Purchase requisition for the nonstock item with account assignment F. So when Goods will
be received, the goods and relevant costs will directly be
posted to the maintenance order.
Non stock Purchase requisitions with Account assignment are
usually subject to a Release procedure which is defined as
per characteristics values of Class PR_RELEASE in system.
Details
of
Release
Strategies
and
their
defining
characteristics values can be checked for above class and
class type 032 in transaction code CL24N
Pre-requisites:
Configurations, master data and inter-module integration
associated with all process objects including Purchase
requisition, Purchase Order, Goods Receipt, Invoice
Receipt, Material movements and Accounts postings
should be complete and valid.
Process Flow in SAP:
Step 1. Purchase requisitions are manually created with
Account assignments or created automatically through Non
stock component planning in Maintenance Order
ME51N Manual PR Creation
All details are entered including Material ID (if
known)/Text (if no material ID is known),Material Group (as

relevant), Purchasing Group (For Direct

Purchase), Quantity, Unit,Delivery Date, Plant (receiving
plant) etc. and Purchase requisition is saved.
Also Item details pertaining to Account
assignment, Valuation, and other mandatory fields should
be filled. System will automatically point out to required
fields that are missing entries.

IW31/IW32 Create/Change Maintenance Order

In the Component section of the Maintenance Order, the
details of the Non-stock components are entered

System will prompt user for entering mandatory details

pertaining to Material Group,Purchasing Group under the
Purchasing Data tab against the Line item. Other optional
fields like Vendor, Planned Delivery Time etc. as relevant can
also be entered.

Based on setting on component line, system can be

triggered to generate a Purchase requisition for the Non

stock
item
either After
release or Immediately or Never.

Order

Details of Purchase Requisition, linked to the Maintenance

Order can be directly found inside Maintenance Order ->
Purchasing Data section.

Step
2. Purchase requisition is released by relevant
authority based on Release code identified by system based
on Purchase requisition value etc., and corresponding
approving limits of approver
Transaction code: ME54

The Purchase Requisition is released and saved.

Step
3. Assignment of Source and Processing of
assignment to create Purchase Order from Purchase
requisition.
Transaction: ME57

Process is same as detailed in previous process sections in

this document.
Step 4. Goods receipt against the Purchase Order
Process is same as detailed in previous process sections in
this document.
Step 5. Invoice Receipt
Process is same as detailed in previous process sections in
this document.
Step 6. Vendor Payment
Process is same as detailed in previous process sections in
this document.

4. Direct Charge Purchase Service

Scenario brief: Service Procurement is a major procurement
activity at ABC. Services procured may be segregated under
several categories including Contract Labour hire, Fleet
Equipment hire, Consulting services, Project Based services
and Miscellaneous services among others. Further, services
are categorized from EH&S perspective as Onsite services,
Offsite services etc. to ensure that vendors comply as per
Health and Safety norms. Ongoing CMIP Project aims at
building up an SAP based process to perform Health & Safety
related capabilities of vendors prior to assigning them work
that would require due compliance.
For details of Service master maintenance and categories of
services, refer to the document PTP_Current State
Document_PTP Master Data_v0

Service entry sheets are filled up by external Service vendors

in an application called ICAPS which is a Portal based
application built for that purpose and accessible to
authorized vendors. ICAPS functionalities have not been
detailed in this document owing to controlled and limited
access to the application.
Pre-requisites:
Configurations, Service master data and inter-module
integration associated with all process objects including
Purchase requisition, Purchase Order, Service Entry,
Invoice Receipt, Material movements and Accounts
postings should be complete and valid.
Process Flow in SAP:
Step 1. Creation of Service Purchase Requisition.
Transaction:
ME51N
(Manual
Creation
of
Purchase
Requisition)/ IW31 (Maintenance Order Creation with External
Services)/ IW32 (Maintenance Order Change with External
Services)
ME51N (Manual Creation of Purchase Requisition)
Service Purchase requisitions can be directly created in this
transaction. Services are procured to an appropriate Account
assignment category (such as K Cost Centre, P Project, F
Order etc.). Item category for Service procurement should be
set as D in Purchase requisition line item.
The Material Group, and Purchasing Groups should be
correctly
assigned
and
other
relevant
details
like Quantity, Unit, Plant etc. should be filled up

Service item details like Service No, Quantity, Unit, Gross

price should be correctly filled.

Account assignment details and other required details ,if any,

should be filled up. Check and save Purchase requisition.
IW31/IW32 (Service Purchase Requisition from Maintenance
Order)
Service planning can be done inside a Maintenance order.
Services are External Service operations defined in
maintenance order using an appropriate Control Key. While
selecting the Control key in the Operation from dropdown
list, users should ensure that Service checkbox is ticked for
that control key thus classifying it as a service
Services are planned under Operations tab of Maintenance
order

All essential details including Material Group, Purchase

Group, Operation Quantity etc. should be filled in popup that
comes up

Service details are to be maintained under the External

tab at the bottom of the Operation tab

Based on configuration setting on Maintenance Order type

for field Operation Res/Preq creation, Service PR may be
created on Save or on release or Never for the maintenance
Order type.

Purchase requisition pertaining to services created from

Maintenance Order can be checked in MM Purchase
Requisition List Reports (For example. ME5A transaction, with
Account assignment category set as F) or directly inside
Maintenance Order under Operation -> Act. Data tab

Step 2. Approval of Purchase Requisition by authorized

person.
As detailed in previous process section of this document.
Step 3. Source Assignment and Conversion to Purchase
Order.
As detailed in previous process section of this document.
Step 4. Service Entry sheet created against Purchase
Order, and performed Service quantity accepted for posting
Transaction: ML81N (In SAP)/ Service entries done through
ICAPS not in scope of this document. Separate documents
may exist on the same in ABC Portal.

The Purchase Order No is entered by clicking on Other

Purchase Order tab. Then click on Create entry sheet icon
and enter values of Short Text, Document Date, Posting
Date andReference

Click on Service selection tab

If Adopt Full Quantity is not ticked, system will propose for

service entry Net pending hours (Planned hours Already
entered hours), and if it is ticked, system adopts full quantity
as planned. It is better to be left unchecked.
In next screen select the service line and click on tab
Services (Adopt Services)

The system automatically adapts the service line into the

Service entry sheet under Accept Data tab
Users should now update the Actual Quantity of service that
has been performed, to be accepted for posting.

To accept and Post the service entry, click on Green Flag on

Task bar and save the Service entry sheet.

Step 5. Invoice
accepted

created

for

services

performed

As detailed in previous process section of this document

Step 6. Vendor payments
As detailed in previous process section of this document

and

5. Stock Transport between Plants

Scenario brief: This scenario refers to internal procurement
of Stocks, between Plants where one plant would be a
supplier or vendor plant and the other would be a receiver
or customer plant. In this process the customer plant
would raise a STO Purchase Order for delivery of goods
against the supplying plant. The supplying plant would in
turn create a sales order against the requirement with
recipient plants Customer ID.
The process would follow a 1-step procedure, if set in STO
configuration setting between a pair of plants and PO
Type or 2 step stock Transfer with supplying plant issuing
out the stock from its Unrestricted use stock, stock
transferred to Stock in Transit and receiving plant finally
receiving from Stock in transit to Unrestricted use stock. In
one step procedure as soon as stocks are issued out of
supplying plant, it would get posted to stock in receiving
plant.
In ABC process perspective there is no integration setup of
PTP (SAP MM) with SAP QM module. Ideally, as per SAP best
practice guidelines, on receipt of Goods at receiving plant,
there should be check on Quality parameters of the goods
delivered and only on passing the parameters is the stock
declared as Unrestricted. For ex. In case of Finished product
of Mining, Grade check with factors such as Metal content,
Moisture content etc. should ideally be checked and recorded
system. In such a scenario, stocks would get posted to
Quality Inspection stock, generating inspection Lots against
which Result Recording and Usage decision is recorded,
based on which the stock gets transferred to Blocked stock
o5r Unrestricted use stock.
Pre-requisites:
A Vendor master should exist and be assigned against the
supplying plant and a Customer master should exist and
have been assigned in MM STO configuration against the
receiving plant.

 The material master should be active in both plants and

should have at least a Purchasing view in receiving plant
and a Sales view in supplying plant
For delivery relevant STO, all necessary delivery relevant
configuration settings should have been done on MM side
Configurations, master data and inter-module integration
associated with all process objects including STO Purchase
Order,
Outbound
Delivery/Goods
issue,
Inbound
delivery/Goods receipt, Sales billing (if relevant), Invoice
verification (if sales billing is relevant), Material
movements and Accounts postings should be complete
and valid.

Process Flow in SAP:

Step 1. Creation of STO Purchase Order (Type UB)
Transaction: ME21N
Enter Header details including Supplying Plant, Purchase
Organization, Company Code,Purchasing Group etc. as
relevant
Enter Item
details including Material
ID, PO
Quantity, Delivery
Date, Recipient
Plant,Storage
Location, Item
Pricing
Condition
details, Confirmation
control key with Delivery details (under Confirmations to be
set to Inbound delivery if relevant to same)

Check and save the Stock Transport Order

Step 2. Creation of Sales Order at Supplying Plant
Transaction: VA01
A Standard Order OR is raised in SD against the supplying
Plant

Enter relevant Header Level information like Sold to

party (for recipient plant), Ship to party(for recipient
plant), Purchase Order No. etc.
Enter relevant Item level details including Material
ID, Quantity,
mandatory Pricing
conditions, Terms
of
payment, Incoterms etc.

Check document for completeness and save the document

Step 3. Creating an Outbound Delivery for Sales Order

Transaction: VL10
In the Sales Orders tab of the Transaction, enter the Sales
Order
No.
and
execute.
TheDelivery
date and CalcRuleDefltDlvCrDt fields for selecting the Sales
documents relevant for delivery should be correctly chosen.

Select the relevant Delivery item line and click on Create in

Background

Step 4. Goods Issue against Outbound Delivery

Transaction: VL02N (Change Outbound Delivery)
Document Type: NL

Enter actual picked quantity, generate output docs (as

relevant)

Confirm and save

Post Goods issue against outbound delivery by clicking on

Post Goods Issue tab.
Note If Goods issue is simple inventory movement
(without Outbound delivery), Goods are issued through
standard MIGO transaction

The entire document flow for Purchase Order ->

Replenishment Delivery -> Picking request -> Transfer to
Stock in Transit and so on can be viewed within the
Document flow section of delivery

On posting Goods issue, movement type 641 is executed

which results in
Stock in Transit at receiving plant Dr
Inventory at supplying plant Cr
If there are Freight charges included, accounting document
would show following entries:
Inventory Transfer A/c Dr
Freight/Custom Clearing A/c Cr
This can be checked in Material movement document in
transaction MB03

Also in MB5T transaction report, Stock in Transit can be

checked

Step 5. Create Inbound delivery at Receiving plant

Transaction: VL31N (Create Inbound Delivery w.r.t PO)
Enter Vendor and PO Number and proceed

Partner Function LF should have been set under Goto >

Header Partners
Save the Inbound delivery
Step 6. Post Goods receipt
Transaction: VL32N

Check under Item overview; enter Actual GR date,

update Delivery Quantity and Receiving plant and click on
Post Goods Issue

The resulting goods movement results in transfer posting of

stock:
Stock in Transit Cr

Unrestricted (UR) Stock at receiving plant Dr

Check against Stock in receiving plant in MMBE/MB52
transactions. The UR stock value would go up.

Step 7. Sales order billing/Release to Accounting (Only

applicable in case of Intercompany billing provided that
there is a business process for same)
Transaction: VF01/VF02
Above scenario executed between Plants under same
company code. Hence no subsequent billing (at supply side)
or invoice receipt (at recipient side) is applicable. Invoice
receipt, where applicable, would follow a similar process as
documented under previous process scenarios of this
document.

6. Consignment Purchase
Scenario brief: Consignment process is based on the VMI
(Vendor Managed Inventory) concept of procurement. Vendor
has physical and financial control of the stock which is stored
at customer premises unless customer withdraws complete
or part of stock from the designated vendor consignment

stock for personal usage. This would create a liability on the

customer which is to be paid/settled to vendor.
Purchasing Info records and Contracts for Consignment items
are maintained which is the basis of source assignment while
conversion of a Purchase requisition to a Purchase Order. On
delivery of a Consignment item, Goods receipt would result
in stocks being stored in Vendor Consignment stock
segment. On requirement of stock, Goods issue from
consignment stock to account assignment object (such as
requesting Cost Centre, Project etc.) is executed using the
relevant movement type. Auto invoice for consignment stock
usage is created which is further subject to Payment run.
Pre-requisites:
Configurations, master data and inter-module integration
associated with all process objects including Material
movements and Accounts postings should be complete
and valid.

Process Flow in SAP:

Step 1. Consignment Purchasing Info record creation &
Consignment Contract creation.
Details of above are provided in the document PTP_Current
State Document_PTP Master Data_v0
Step 2. Purchase requisition created for consignment item
Transaction: ME51N
Enter relevant Item level details, such as Item Category (= K
for
Consignment), Material
ID,Quantity, Recipient
Plant, Delivery Date etc. as relevant and save the Purchase
requisition.

Step 3. Purchase requisition is released by designated

authority
As detailed in previous process sections.
Step 4. Purchase requisition
converted to Purchase Order

is

Source

assigned

and

As detailed in previous process sections. Purchase order

would be a price suppressed purchase order.
Step 5. Goods are received against the Purchase order
Transaction: MIGO_GR
Goods receipt is executed via movement type 101 K. On
receipt of Consignment goods, a special segment of stock
Consignment stock against the Vendor gets posted.
Material document does not have an associated Accounting
document.

In MMBE Report, the stock received of Consignment material

at recipient Plant/Storage Location would be displayed under
Vendor Consignment stock.

Step 5. Goods issue

Consignment stock

for

consumption

from

Vendor

Transaction: MB11/MB1A/MIGO_GI
Goods from Consignment stock can be issued out for
consumption to Cost Centre (movement type 201 K), Projects
(movement type 221 K) and so on. To reverse movements,
movement types are 202 K (Consignment consumption for
Cost centre reversal), 222 K (Consignment consumption for
Project reversal) and so on.

While posting from Consignment stock, Vendor entry is

mandatory, so that system knows as to consume from
consignment stock of which vendor.
Apart from Vendor, consumption object (such as Cost
centre), Material No, Quantity, Batch (if applicable) are to be
entered

During Consumption, associated with Material Document are

Accounting, Controlling and Consolidation documents (if
Consolidation active). The accounting document would result
in following entries:
Consignment stock Clearing A/c Cr
Stock consumption A/c Dr
In MMBE report, the consignment stock would be reduced by
the amount consumed.

Step 6. Auto settlement of

consumption of consignment stock

liabilities

created

on

Transaction: MRKO
In
the
initial
screen
enter Company
code, Vendor, Plant, Material, Consignment (ticked),Documen
t Date, Withdrawals not settled (ticked), etc. as relevant
Initially run the report with Processing option set to Display

For settlement of items, execute with processing option set

as Settle in the initial selection screen

An Invoice document would be generated in the settlement

run.

The accounting entries that are generated are:

Vendor reconciliation A/c Cr
Consignment stock clearing A/c Dr
GST/Input Tax credit a/c Dr
Step 7. Vendor payments
As detailed in previous process section of this document

7. Recurring payments using Invoicing Plan

Scenario brief: Certain procurements are done on a regular

basis and would involve payment on a periodic basis, say at
the end of each month. Such payments can be planned using
an Invoicing plan set in the Purchase order. Purchase order
created is a Framework Purchase Order. In such cases, there
is no Goods receipt performed. On a periodic basis, Invoices
would be generated through auto settlement report in
Logistics Invoice Verification.

Pre-requisites:
Vendor should have been set up for auto ERS settlement
Invoicing Plan details should be set in Purchase Order
(Framework PO)
Configurations, master data and inter-module integration
associated with all process objects including Material
movements and Accounts postings should be complete
and valid.
Process Flow in SAP:
Step 1. Creation of Framework Purchase Order
Transaction: ME21N
Choose Order type FO and enter
at Header and Item level of Purchase Order

other

details

Header details would include Vendor Data, Organizational

Data such as Purchasing Org.,Purchasing Group, Company
Code, Validity Start date, Validity End date, etc.
Item details would include Account assignment key (K- Cost
centre,
P-Projects
etc.),Material
ID/Short
text, Quantity, Unit, Price per unit, Material Group, Plant, etc.
A crucial section to be filled in is the Item details Invoice
section, where only Invoice receipt and ERS are to be
ticked and Invoice Plan details are to be filled, with planned

invoice dates. Invoice amount would be equal to the price of

the item against which Invoicing plan has been set.
Click on Invoicing plan tab and Invoicing Plan type is to be
selected from dropdown

In Delivery section of Item details either Goods receipt

should be unchecked or it can be set to GR Non-valuated

Step 2. Carry out Automatic settlement (Invoicing Plan)

Transaction: MRIS
In the Initial screen enter the details known such as
Company code, Plant, Vendor, Purchasing Document etc.
Initially execute it in Test run mode

On removing the Test run checkbox in initial screen, Invoice

document would have been generated.

Step 3. Execute Vendor Payment

As detailed in previous process sections

8. Miscellaneous Purchasing
Scenario brief: There are 4 primary
miscellaneous purchasing, namely:

scenarios

in

Direct charge purchase , GST input taxed (P3), cannot

be recovered from ATO
Direct charge purchase, Service multiple tax code
(taxable and non-taxable)
Direct charge purchase, Service multiple account
assignment
Pre-requisites:
Configurations, master data and inter-module
integration associated with all process objects including
Material movements and Accounts postings should be
complete and valid.

Process Flow in SAP:

Direct charge purchase , GST input taxed (P3), cannot be
recovered from ATO
Purchase Order is created through a Purchase requisition or
directly. The process is similar to process scenarios as
described earlier.
However, in the purchase order line item, the tax code
should be selected as P3.

The difference lies in Input tax not being recoverable from

ATO.
Direct charge purchase, Service multiple tax code (taxable
and non-taxable)
In this scenario, multiple tax codes are used across service
activities, of which some may be liable to input tax and some
may not be.

The Tax codes are then specifically set for each service
activity line of the Purchase order, in the Item details ->
Invoice section.

During Invoice verification, the postings will differ for line

item subject to Tax and item not subject to Tax
Item with Tax will have following accounting entries

GR/IR A/c Dr, Tax A/c Dr

Vendor A/c Cr
Item with no Tax will have following accounting entries
GR/IR A/c Dr
Vendor A/c Cr
Direct charge
assignment

purchase,

Service

multiple

account

Multiple account assignments could refer to each line of

Purchase order being assigned to different account
assignment objects (such as K- Cost centre, P- Projects,
etc.) or Same item line charges distributed to multiple
account assignment objects such as different Cost centres,
WBS elements etc.
In SAP Terminology, its the latter which is referenced to as
multiple account assignment. A pre-requisite to same would
be multiple account assignment should be activated in the
Purchase order and distribution rule to the various accounts
must be set within the Account assignment section of
Purchase Order.

During Goods receipt, the consumption posting to the

designated consumption objects would be split in the
percentage/amount as set within the Purchase order

9. Inventory Management
Scenario brief: As Goods receipt of Stock/non stock items has
been detailed in the previous process sections, Goods issue
is the other important aspect of Inventory Management.
Goods issues are in general carried out against Reservations
generated for Stock items planned within Maintenance
Orders in ABC process perspective. There could be direct
Goods issues to Cost centre/WBS Elements in certain cases.
There could be Goods issues of Finished Goods against Sales
Order which are usually through Outbound Delivery and not
direct. This has been detailed in one of the previous
scenarios (Stock Transport between Plants) in this document.
Goods issues has again been segregated into Normal hour
goods issues (using MIGO/MIGO_GR), After Hour Goods
issues (using ZMIGO_WO)
Pre-requisites:
All configurations and settings pertaining to Goods
movement, Account determination for movement types,
Posting periods etc. should have been done.
There should be adequate stock at source storage
location to post goods issue (may not be a requisite in
case of Negative stock scenario at ABC such as Goods
issue against Sales order of Finished products)
Process Flow in SAP:
Normal hour Goods issue

Transactions: MIGO/MIGO_GI/MB11
Movement types: 201 (Goods issue to Cost Centre), 221
(Goods issue to WBS elements), 261 (Goods issue to
Maintenance Orders)

Business Transaction (Goods issue), Account Assignment

object no. (Order etc.), relevant Movement type should first
be entered.

For Goods issue, Item Quantity should be checked,

supplying Plant/Storage Location should be checked, Item
OK should be ticked, and prior to posting, the Check
tab should be clicked to see if everything is OK. If there are
any errors, system will issue an error traffic light against the
item and its details can be checked by clicking on it.
On posting of Goods issue,
Stock A/c Cr
Consumption A/c Dr

After hour Goods issue

After hour Goods issues at ABC refers to a custom
transaction ZMIGO_WO, which has been developed for Goods
issues of spare parts and inventory for Maintenance
Orders/Order Reservations primarily. However, as per
functionalities available in the transaction, it may also be
used for Transfer postings etc.
It is assigned to specific user roles that are designated to
carry out after hour Goods issue.

The functionalities of the transaction are otherwise same as

per other Goods movement transaction.