Maini1 Blueprint MM 100 Maindocument Ver 2.0

Unisoft Infotech Pvt Ltd.
mySAP ECC Ver 6.0 Implementation
At
Maini Precision Products Pvt. Ltd.
Business Blue Print

Materials Management
Prepared by
Yashpal Supe
Business Process Blueprint
Sign Off Document
Project Name: LOTUS – Lean Operations Through Us in SAP

Project Manager: N.Anandapadmanaban Document Version No: 2.0
Project Phase: Business Blueprint Document Version Date:
Prepared By: Yashpal B. Supe Preparation Date: 04.03.2009
Reviewed By: N.Anandapadmanaban Review Date: 04.03.2009
Document Tracking
Revision Version date Revised by Change Description

1.0 10.01.2009 Mr. Yashpal B. Supe
2.0 Mr. Yashpal B. Supe
Name
The following acknowledges the acceptance of Business Blueprint of mySAP ECC 6.0
Implementation Project developed in agreement between Unisoft InfoTech and Maini
Precision Products Private Limited.
Reference
This acceptance is in accordance with the terms and conditions expressed in Unisoft
Proposal to Maini Precision Products Private Limited.
Work Accepted
Business Blue Print Document for Project Systems with the file name:
MAINI1_BLUEPRINT_MM_100_MAIN DOCUMENT_VER_2.0.DOC
Material Management Version 2.0

Confidential Page 2 of 70
Acceptance
In witness thereof, the parties, in signing this acceptance, have agreed that Unisoft
Infotech has successfully completed the Business Blueprint and has met all the
deliverables as mentioned in the contract.
Name Title, Department Company Date Signature

P.B. Sathyanarayana. Process Owner MPP 04.03.2009
S. Irudayaraj. Key User MPP 04.03.2009
N.Anandapadmanaban Project Manager Unisoft 04.03.2009
Yashpal B. Supe Application Consultant Unisoft 04.03.2009

Content
1 Introduction............................................................................................................................................ 6
1.1 Purpose of this document .................................................................................................................... 6
1.2 Who should read this document .......................................................................................................... 6
1.3 Document Derivation ........................................................................................................................... 6
1.4 Overview of Business Blue Print Phase .............................................................................................. 6
2 Project Charter....................................................................................................................................... 8
2.1 Group History ...................................................................................................................................... 8
2.2 Solution Chosen .................................................................................................................................. 8
2.3 Project Objectives and Goals. ............................................................................................................. 8
3 Organization Structure .......................................................................................................................... 9

3.1 Company Code ................................................................................................................................... 9
3.2 Plant .................................................................................................................................................... 9
3.3 Storage Location ................................................................................................................................. 9
3.4 Purchasing Organization ..................................................................................................................... 9
3.5 Purchasing Group ............................................................................................................................... 9
4 AS-IS Process Vs TO BE SAP Process .............................................................................................. 14
5 Master Data .......................................................................................................................................... 15

5.1 Material Master.................................................................................................................................. 15
5.2 Vendor Master ................................................................................................................................... 18
5.3 Purchasing Info Record ..................................................................................................................... 20
5.4 Source List ........................................................................................................................................ 20
5.5 Quota Arrangement ........................................................................................................................... 20
5.6 Excise Master Data ........................................................................................................................... 21
6 Business Process Master List ............................................................................................................ 22

6.1 Quotation for Procurement ................................................................................................................ 22
6.2 Procurement without QM ( Ex: Stockable tools and consumable) ..................................................... 24
6.3 PO Amendment ................................................................................................................................. 27
6.4 Quality Management for Procurement with Vendor Evaluation.......................................................... 28
6.5 Subcontracting .................................................................................................................................. 31
6.6 MRP .................................................................................................................................................. 33
6.7 Subcontracting – External processing from production...................................................................... 35
6.8 Rework Processing – (Vendor poor quality) ...................................................................................... 37
6.9 Consumable Purchasing ................................................................................................................... 39

6.10 Procurement - Capital Goods. ....................................................................................................... 41

6.11 Procurement import (EPCG) ......................................................................................................... 43
6.12 Procurement import (Duty Exception scheme – Advance Authorization)....................................... 45
6.13 External Procurement of Services ................................................................................................. 47
6.14 Procurement Contract ................................................................................................................... 49
6.15 Goods Movement .......................................................................................................................... 51
6.16 Stock Transfer with Delivery.......................................................................................................... 53
6.17 Stock Transfer without Delivery ..................................................................................................... 55
6.18 Return to Vendor ........................................................................................................................... 57
6.19 Physical Inventory and Inventory count and adjustment................................................................ 60
6.20 Re-sharpening of tools and recycling of oils .................................................................................. 62
6.21 Logistic Invoice Verification ........................................................................................................... 64
6.22 Excise Register Maintenance ........................................................................................................ 65
7 Forms ................................................................................................................................................... 68
8 Reports ................................................................................................................................................. 68
9 Authorization ....................................................................................................................................... 69
10 Annexure – 1 : BBP Walk through MOM ............................................................................................ 70

1 Introduction
1.1 Purpose of this document
This document is the Business Blueprint for delivering the “SAP Implementation Project
LOTUS” at Maini Precision Private Ltd. It outlines the business requirements, ‘AS-IS’
analysis, ‘TO-BE’ processes and design considerations for the project.
1.2 Who should read this document
This document is meant for MIS Managers, MIS Team leads and Key Users who will have
to have a good understanding of business processes. This document explains all the
specifications that are broadly captured for successfully delivering the SAP R/3 project.
This is a controlled document and its circulation is left to the discretion of Unisoft InfoTech
and MAINI project sponsors.
1.3 Document Derivation

This document is derived based on the following activities conducted at MAINI starting.
• Discussion with key users
• Requirements discussion with business Process Owners.
It is the intent of this document to capture the entire design to support the requirements
specified in the requirement document. However, these modules will not be discussed in
detail.
1.4 Overview of Business Blue Print Phase
This document summarizes the findings of the Unisoft InfoTech consulting team, which
conducted requirement analysis of MAINI for the SAP ERP ECC 6.0 system. The
information was gathered through interviews conducted at the MAINI plant with the
managers, key users and personnel from Information Systems, as well as through reviews
of business processes, business procedures, documentation and relevant reports using Q
& A db from Value SAP tool.
The immediate purpose of the analysis is to prepare to move forward rapidly with the
implementation of MAINI’ ECC 6.0 system. At the conclusion of the blueprint, the Unisoft
consultants will determine the SAP functionality required to run the MAINI business.

The Blueprint and its associated appendices present a summarized perspective of all
functional business processes that will be implemented. As such, the Blueprint document
will serve from this point forward the dual role of both official project scope as well as
system acceptance criteria.
The body of this document describes the organizational structure, enterprise area, and
ECC 6.0 functional process flows to be implemented at MAINI. Generally, requirements
that can be met using standard ECC 6.0 functionality through routine configuration tasks
are not explicitly documented. However, certain key requirements are explicitly identified
and summarized to highlight their importance to MAINI and to document the approach
proposed to meet the requirement. The project team should discuss this list with
agreement on the approach going forward.
Acceptable approaches may require
Recognition and acceptance of procedural changes ("Workarounds") using standard ECC

6.0 additional resource commitment.
The deferral of a feature to a support phase

The recognition and acceptance of a system limitation is done.
The Blueprint reiterates the ECC 6.0 organizational structures that have been identified
and will serve as the basis for the initial configuration activities. The Unisoft team believes
that ECC 6.0 can accurately model MAINI organizational requirements.
The information gathered and documented in the Blueprint is sufficient for the team to go
forward into the Realization phase. However, it is critical that both the Unisoft and MAINI
team agree on the scope of the project as presented in this document. Acceptance - by
both teams - is required to move the project into the next phase.

2 Project Charter
2.1 Group History
Maini Precision Products commenced business in the year 1973. The first customer was
Bosch. Over the past 36 years the company has grown considerably to register a turnover
of Rs. 150 corers in 2007-08.Maini operate through two Manufacturing locations - at
Peenya, Bangalore and Bommasondra, Bangalore with total 7 units. Maini Precision
Products today is a leading manufacturer of Auto Components, Precise Machined
Components & Aerospace components for globally renowned automotive original
equipment manufacturers.
2.2 Solution Chosen

Unisoft’s solution based on SAP ERP ECC6.0 specially catering to market.
2.3 Project Objectives and Goals.
• To prepare for expansion and growth plans in the coming years.
• To optimize total Supply Chain Operations in terms of Delivery, Quality and Cost.
• To help the decision makers in achieving set business targets.
• To move towards ‘Lean Manufacturing’ by applying Value Stream concept

comprising Material and Information flow throughout the supply chain.
• To integrate all the business functions like Business Development Production,

Finance and Controlling, Vendors etc on one common system.
• To implement SAP solutions in the core business functions.
• To reengineer and establish the business processes so as to reduce non-value

adding activities.
• Cutting down and thereafter eliminating the Wastage cost.

3 Organization Structure
3.1 Company Code
The company code is the smallest organizational unit in external accounting for which a
complete, self-contained bookkeeping system can be replicated. This includes the
recording of all accounting-relevant events and the production of all legally required final
statements of accounts, such as balance sheets and profit and loss (P&L) statements.
3.2 Plant
The plant is an organizational unit within logistics that subdivides the enterprise for the
purposes of production, procurement, maintenance, and materials planning. In a plant,
materials are produced and/or goods and services made available.
3.3 Storage Location
The Storage Location is the level at which the stocks of materials of a plant are physically
managed; The Physical Inventory (Stocktaking) takes place at storage location level. The
Stocks are managed at storage location level on quantity basis only, not on a value basis
and a storage Location is always defined as belonging to a certain plant.
3.4 Purchasing Organization
A purchasing organization is an organizational unit within logistics that subdivides an

enterprise according to the requirements of purchasing. A purchasing organization
procures materials or services, negotiates conditions of purchase with vendors, and
assumes responsibility for such business.
3.5 Purchasing Group

The purchasing groups carry out the activities of the purchasing organizations. However, a
purchasing group is assigned neither to a purchasing organization nor a plant. A
purchasing group can thus be active for all purchasing organizations and all plants if no
restrictions have been imposed through authorization management.

Purchasing – Organization Structure
Plants
MAINI
(Std. SAP – BP01)
1) BP11 – (B-59 – Filter Unit)
Company Code 2) BP12 – (B-165 – Auto Component Unit)
SAP Definition – 3) BP13 – (Bomma – Auto Component Unit)
Legal Entity
4) BP14 – (Bomma - Aero Unit)
5) BP15 – (B-163 – MSA Auto Unit)
6) BP16 – (C 217 – Filter Unit)
MAINI Purchasing Organization Warehouses Overseas

BP01
One Purchasing Organization
for the 1) BP51 TNT Freight Management France SAS
Entire Company Code – all Plants 2) BP52 Expeditors International of Washington Inc.
3) BP53 TNT Freight Management AB
4) BP54 Schenker Deutschland AG
5) BP55 Eaton corporation UPS SUPPLY Chain Solutions
C/o Eaton VMI Program
6) BP56 Eaton Global VMI Program, UPS Supply Chain
Solutions
7) BP57 SEA-AIR
8) BP58 Expeditors International of Washington Inc.
9) BP59 Bowman Logistics
10) BP60 SCAC/SDV
11) BP61 Stock Redler Limited
12) BP62 Agility AB
13) BP63 GETRAG Getriebe und Zahnradfabrik
14) BP64 Houston Distribution Center
Storage Location List Plant wise:
Plant BP11
Storage Location Storage Location Description
1001 Material Receiving Stores & Storage (all types - RM, SFG, etc...)
1002 Material Receiving Stores & Storage (all indirect materials)
2001 Shop
2002 Assembly Shop
3000 Finished Goods Storage
3001 Bonded Store Room
4001 Shop Rework
Material Rejection (all types of vendor rejection - RM, SFG, IDM
5001 etc...)
5002 Endbits Storage
5003 Component Scrap Storage
5004 Boring Scrap Storage
6001 Spares Storage
7001 Gauge Storage

Plant BP12
Storage Location Storage Location Discription
2001 Shop - CNC
2002 Shop - Conventional
2003 Shop - BT
2004 Shop - Redler
2005 Shop - Grinding
2006 Shop - Blackening
4001 Shop Rework
5001 Material Rejection (all types of vendor rejection - RM, SFG, IDM etc...)
6001 Spares Storage
7001 Gauge Storage
Plant BP13
Storage Location Storage Location Discription
2001 Shop - Cutting
2002 Shop - Welding
2003 Shop - CNC
2004 Shop - NONCNC
2005 Shop - MSA
2006 Shop - Volvo
2007 Shop - GM
2008 Shop - Bosch
2009 Shop - Eaton Valve Body
2010 Shop - Eaton Greenwood
4001 Shop Rework
5001 Material Rejection (all types of vendor rejection - RM, SFG, IDM etc...)
6001 Spares Storage
7001 Gauge Storage

Plant BP14
Storage
Location Storage Location Discription
2001 Shop
4001 Shop Rework
5001 etc...)
6001 Spares Storage
7001 Gauge Storage
Plant BP15
Storage
2001 Shop
4001 Shop Rework
5001 etc...)
6001 Spares Storage
7001 Gauge Storage

Plant BP16
Storage
2001 Shop
2002 Assembly Shop
4001 Shop Rework
5001 Material Rejection (all types of vendor rejection - RM, SFG, etc...)
6001 Spares Storage
7001 Gauge Storage

4 AS-IS Process Vs TO BE SAP Process
Refer attached Excel file “MM AS IS and TO BE 25Feb09.xls”

5 Master Data
5.1 Material Master
The data stored in the material master record is required for many purposes, including the
following:
• Purchasing data is required for ordering purposes
• Inventory management data is needed to post goods movements and carry out
physical inventories
• Accounting data is required for material valuation
• Materials planning data is needed for material requirements planning
Since different user departments within an enterprise work with one material, and each
department enters different information relating to it, the data in a material master record is
subdivided according to area of use. Each user department thus has its own view of a
material master record and is responsible for maintaining the data covered by this view.
Examples of Material Master Views – Basic data, Purchasing, Sales, MRP, Stocks
at plant/Storage location, Work scheduling, Accounting, Quality Management, Forecasting.
Material Master: Organization levels

Some material data is valid for all organizational levels, while some is valid for certain
levels only. So that the material data can be administered centrally, without unnecessary
load on the database due to redundant information, the material master is organized in
such a way that it reflects the structure of an enterprise.
Data at client level: General material data that is valid for the whole enterprise is stored at
client level.
Data at plant level: All data that is valid within a plant and for all storage locations
belonging to it is stored at plant level.
Data at storage location level: All data that is valid for a particular storage location is stored
at storage location level.
Material Type:
Materials with the same properties are assigned to the same material type. Examples of
material types are raw material; semi finished products, and finished products.
Among other things, the material type controls:

. Which user-department-specific data is suggested for entry (in views)
. Which procurement type is allowed for a material (that is, whether the material is
produced in-house, procured externally, or both)
Along with the plant, the material type determines a material’s inventory management
requirement (whether quantity changes are continuously recorded in the material master
record and/or value changes in the stock accounts of financial accounting).
Furthermore, the material type determines which accounts are posted when a receipt of a
material into (or an issue from) the warehouse is booked.
Following are the material types relevant to MPP.

Material
Sr no Type Description
1 DIEN Service
2 ERSA Spare Parts
3 FERT Finished Product
4 FHMI Production Resource/Tool
5 HALB Semi finished Product
6 HAWA Trading Goods
7 HIBE Operating supplies
8 LEIH Returnable packaging
9 NLAG Non-stock materials
10 PIPE Pipeline materials
11 ROH Raw materials
12 UNBW Non valuated materials
13 VERP Packaging
DIEN - Services
Services are either internally supplied or externally supplied by a vendor. Service material
master records will not have storage information. The services can involve activities such
as consulting, garbage collection or legal services.
ERSA - Spare Parts

Spare parts are materials used for equipment maintenance in the plant. The material is
purchased and stored like any other purchased items, but a spare part is not sold and
therefore does not contain sales information, if a maintenance item is sold, then this should
use a different material type such as a trading goods.
FERT - Finished Goods

A finished goods is a material that has been manufactured by some form of production
from items, such as raw materials. The finished good is not purchased, so it does not
contain any purchasing information.
FHMI - Production Resources / Tools (PRT)

PRTs are purchased and used by the various departments. This material type is assigned
to items used in maintenance of plant equipment, such as test machines, drill bits, or
calibrating tools. The material type for PRTs does not contain sales information, as the
PRTs are not purchased to sell.
HALB - Semi-finished goods

Semi finished products are often purchased and then completed and sold as finished
goods. The semi-finished products could come from another part of the company or from a
vendor. The semi-finished material type allows for purchasing and scheduling, but not
sales.
HAWA - Trading Goods

Trading goods are generally materials that are purchased from vendors and sold. This kind
of material type only allows purchasing and sales information, as there are no internal
operations carried out on these materials.
HIBE - Operating Supplies

Operating supplies are vendor purchased and used in the production process. This
material type can contain purchasing data, but not sales information, this type of product
includes lubricants, office supplies-stationary.
LEIH - Returnable Packaging

Reusable packaging material is used to pack finished goods to send to the customer.
When the finished good is unpacked, the customer is obliged to return the returnable
packaging material.
NLAG - Non Stock Material

Non Stock material type is used for materials that are not held in stock and are not
inventoried. These materials can be called consumable and include items such as
maintenance gloves, safety glasses, or grease. Items like this are purchased when needed.
PIPE - Pipeline Material

The pipeline material type is assigned to materials that are brought into the production
facility by pipeline. Materials like this are not planned for because they are always at hand.
This type of material type is used e.g. for oil, water, electricity or natural gas.
ROH - Raw Materials

Raw material is purchased material that is fed into the production process and may result
in a finished good. There is no sales data for a raw material, as it is not sold. If the
company wanted to classify a material that would normally be a sold, then it should be
considered as trading goods.
UNBW - Non valuated material

Non valuated material type is similar to the NLAG (non-stock material) except that the non
valuated material is held by quantity and not by value. Examples of this often seen in plant
maintenance, where there are materials that are extremely important to the plant
equipment but of little or no other value. Therefore, the plant maintenance department will
monitor inventory to allow for planned purchases.
VERP - Packaging Material

The packaging material type is for material that are packaging but that are free of charge to
the customer in the delivery process. This does not mean that the packaging material has
no value ; often packaging material has a value and a physical inventory is recorded.
Material Group
The material group is a method of grouping similar materials. The material group
can be defined either by using classification or by configuration. The material group is
important not only for searching for materials but also in other areas such as purchasing.
For example, a purchase information record can be created without material number, but

must require material group and a vendor, this is material group/vendor purchase
information record is used in production order where in-process material is sent to vendors
for outside processing.
Material valuation
Raw materials and purchased materials are valuated as per Moving average price basis.
Semi-finished materials valuated as per Standard Price basis
Finished Goods valuated as per Standard Price basis
Special features of material valuation: Split Valuation -
Split valuation is the option for differentiating partial stocks of a material according to
particular criteria and handling them differently, regarding the valuation,
So within a plant a split valuation may be necessary in the following cases:
• According to procurement type -When the stock of material from in-house
production has a different valuation price to the stock of the same material from
external procurement
• According to quality-When the stock of a material is to be distinguished by quality
and the value is also determined depending on the quality.
• According to country of origin – When the purchased material procured from
sources of different country, like Italy, U.S. or domestic purchase.
Valuation Class:
The valuation class is a key used to group together materials with the same account
determination and used to achieve automatic account determination that varies depending
on the material.
The permissible valuation classes depend on the material type and entered in the
accounting data of the material master record.
5.2 Vendor Master

The vendor master record contains information on an enterprise’s vendors. This
information is stored in individual vendor master records. In addition to the vendor’s name
and address, a vendor master record contains data such as the following:
• The currency used for transactions with the vendor
• Terms of payment
• Names of important contacts (e.g. salespersons)
Since, for accounting purposes, the vendor is also a creditor of the enterprise; the
vendor master record also contains accounting data such as the reconciliation account
from the general ledger. The vendor master record is therefore maintained by both
purchasing and accounting. This is also the reason for the subdivision of the data in the
vendor master record into different categories.
The data in the vendor master record is subdivided into the following categories:
• General data:
This data is valid for the whole client. It includes the vendor’s address and bank details,
for example.
• Accounting data:
This is maintained at company code level. It comprises data such as the number of the
reconciliation account and the payment methods for automatic payment transactions.

• Purchasing data:
This data is maintained for each purchasing organization. It includes the purchase order
currency, Incoterms, and various control data pertaining to the vendor. You can also
maintain different data for specific plants or for vendor sub ranges.
Material Supply control:
To prevent further deliveries from a vendor who has supplied goods of poor quality.
Vendor can be freeze or "block" the vendor account in the vendor master record.
Once you have set the blocking indicator in the vendor master record, purchase orders
can no longer be placed with this vendor. The "blocked" status for the vendor applies until
such time as you cancel the blocking indicator.
And for Deleting vendor from the master record the Flag for deletion can be set for the
vendor and Purchase organization.
Vendor Account Group

When vendor master record is to be created, you must decide which account group
you are going to assign to this vendor. The account group has control functions. When you
maintain the vendor master record, for example, only the screens and fields that are
needed for the relevant role of your business partner appear and are ready to accept user
input. This is controlled by the account group. Examples – vendor (goods supplier),
Forwarder/carrier, One time vendor, etc.
Among other things, the account group determines:
• The type of number assignment (internal or external) and the number series from
which the account number that the system uses to identify the vendor is to be
assigned.
• The field selection - which fields are ready for user input, which field must be
maintained, and which fields are hidden.
• Which partner schemas are valid.
• The status - whether the vendor is a one-time vendor.
Reconciliation Account
When vendor master record is to be created, it needs a unique number for the vendor
(creditor). This is assigned either automatically by the system, or manually by the clerk,
depending on the account group. The vendor (creditor) number is also used as the
subsidiary ledger number in financial accounting. In sub ledger accounting, the total
liabilities are continually updated for each vendor.
When creating a vendor master record, you must also maintain a reconciliation
account. The reconciliation account is a G/L account in G/L accounting. It depicts a
company’s liabilities towards several vendors in G/L accounting. When entering invoices,
the user specifies the vendor and the system pulls the reconciliation account from the
vendor master record.

5.3 Purchasing Info Record

The purchasing information record (or info record for short) is a source of information
for the purchasing department. It contains data on a certain material and the supplier of
this material. It contains data such as the vendor’s current price for the material. The prices
and other data stored in the info record are used as default values in documents such as
purchase orders.
An info record contains information such as:
• The current prices and delivery costs for the responsible purchasing organization or
plant
• The number of the last purchase order
• The number of the quotation, if the info record has been generated automatically
• The purchase order price history.
• Tolerance limits for over- or under deliveries.
• The vendor’s planned delivery time for the material.
• Vendor evaluation data.
5.4 Source List

Source list is maintained to administer sources of supply for the material. The source
list contains the allowed and prohibited sources of a material in a certain plant over a
certain period. Each source is defined by a source list record.
The source list has the following purposes:
• Restriction of the selection of sources during the automatic source determination
process
• Definition of a source as fixed, meaning that the relevant source counts as preferred
for a stipulated period during automatic source determination (For example, the
preferred vendor for material 1 is Miller Corp. in the first quarter and Myers & Co. in
the second quarter.)
• Definition of a source as blocked (This means, for example that no release orders can
be issued against, say, contract 4712 for a certain period.)
5.5 Quota Arrangement

Like the source list, the quota arrangement facilitates the administration of sources of
supply at plant level. If procurement of a certain material from a number of different
sources, quota can be assigned to each individual source. The quota arrangement applies
to a certain period and specifies how the receipts should be distributed amongst each
source of supply. If a quota arrangement exists for a material, it is taken into account
during source determination. A quota arrangement applies to a certain period of time. A
quota arrangement item is created for each source during that period.
Important field in quota arrangement as follows
• The procurement type for each source (in-house production or external procurement).
• Wherever appropriate - special procurement type (for example, stock transfer).
• Enter the vendor or supplying plant.
• Specify the quota ratios on the basis of which requirements arising over the period
are to be apportioned.

5.6 Excise Master Data
Following are the master Data available in SAP for Excise.
Chapter-ID
Material and Chapter-ID combination
Material Assessable value
CENVAT determination - (Plant - Input Material – Output material combination)
Vendor Excise Details
Codification and number range
Material number ranges:
Material Material number range

1 DIEN Service External
2 ERSA Spare Parts External
3 FERT Finished Product External
4 FHMI Production Resource/Tool External
5 HALB Semi finished Product External
6 HAWA Trading Goods External
7 HIBE Operating supplies External
8 LEIH Returnable packaging External
9 NLAG Non-stock materials External
10 PIPE Pipeline materials External
11 ROH Raw materials External
12 UNBW Non valuated materials External
13 VERP Packaging External
Purchase Order Document number ranges:

Document Number range
1 FO Framework Purchase Order Internal
2 NB Standard Purchase Order Internal
3 UB Stock Transfer Order Internal
4 YAPO Capital PO Internal
5 YIPO Import PO Internal
6 YIDV Sample PO Internal
Vendor number series:

Direct material ( RM & BO parts ) : 10001 to 19999

Sub Contract vendors : 20001 to 29999
Imports vendors : 30001 to 39999
Indirect material : 40001 to 49999
Service Vendors : 50001 to 59999
Transporters (incoming & outgoing) : 60001 to 69999
Group company vendors if any : 70001 to 79999
Provisional series : 80001 to 89999
Employee : 90001 to 99999
Material Document number ranges: Internal (company Specific)
6 Business Process Master List

6.1 Quotation for Procurement
Purpose
Request for quotations for material from vendors; A price comparison list
enables evaluation and follow-on activities like sending of rejection letters
and later creation of a purchase order.
Benefits
Material-specific information including vendor pricing and lead-time from the
quotation are captured within SAP master data records.
System-supported quotation process
Automated efficient processing
Key process flows covered
Create request for quotation
List quotations
Maintain quotations
Compare, select and reject vendors
Maintain source list
Company roles involved in process flows
Buyer
Business Analyst Purchaser
Quotation for Procurement:

In this process, a purchasing employee requests quotations for the supply of a
specific material from different vendors. A quotation comparison list enables him to select
the best source of supply by evaluating the responses/quotations of the relevant vendors.
The accepted quotation is later converted into a purchase order and a rejection letter is
sent to the vendors whose quotations were rejected.

Confidential
Quotation for Procurement (RFQ)
Material Management
Quotations Need for
Needed from Procurement End Process
Vendors
Event
Print RFQs Quotations Rejected
from Vendor Quotation
Vendor
Purchasing
Create RFQ Info Record
Update
Create PO
Maintain Select Maintain from Procurement
Buyer
Quotation(s) Vendor Source List Quotation
Reject
Compare Vendor
Quotation
Yes
Accept
Quote No
Manager
Purchasing
Page 23 of 70
Version 2.0
6.2 Procurement without QM ( Ex: Stockable tools and consumable)

Purpose
Procurement without Quality Management
Benefits
Use of integrative data sets like purchasing info records, source lists,
contracts
Automatic assignment of RFQs to purchase orders
Display and assign purchase requisitions
Convert assigned requisitions to purchase orders /Schedule lines/ Create
purchase order manually
Change purchase order
Approve purchase order
Print purchase order
Receive goods from vendor
Invoice receipt by line item
Outgoing payment
Return Delivery (Optional)
Purchasing Manager
Buyer
Warehouse Clerk
Accounts Payable Accountant
Procurement without QM (Procurement-to-Stock)

In this procurement process a quotation comparison list enables the purchasing
employee to select the best source of supply by evaluating the responses/quotations of the
relevant vendors.
A purchase requisition is either generated via the Material Requirements Planning
(MRP) process or manually by a requestor. A buyer validates the accuracy of the purchase
requisition and converts the purchase requisition into a purchase order. The purchase
order is subject to approval based on a predefined amount prior to being issued to a
vendor.
In case of sample order with no value PO needs to be created with sample indicator
so for which inventory will be maintained and invoice verification for the same is not
needed.
MRP – MRP is simplifying the procurement process through the automation of
functions. The process can start with the determination of requirements by materials
planning and their forwarding by the later to purchasing in the form of purchase requisitions.
In turn, purchasing can completely automate the conversion of requisitions into purchase
orders.
MRP is performed as per MRP procedures and parameters which maintained in
material master record as per best suitable planning methods for the material. Ex.
Consumption base planning, MRP based planning (Sales order). Determination of source
of the material and quota for allocation of the requirements in between sources
(supplier/vendor), master data in the system needs to maintain like source list for the
material and quota arrangement.

Gate Entry System:
Release
GR at Gate
GR at Gate/Blocked stock: GR at Gate/Blocked stock is non-valuated stock posting

and not require storage location posting so initially goods posted to the goods receipt
blocked stock (GR blocked stock) upon receipt, using movement type. The quantity posted
to GR blocked stock does not yet part of your regular inventory. It is merely recorded in the
PO history.
The material document generated at the time of the goods receipt serves merely as
a record of the receipt of the goods. Since GR blocked stock is not valuated, no accounting
document is generated at the time of the goods receipt.
The valuated stock is not changed as a result of a receipt to GR blocked stock.
Furthermore, GR blocked stock is updated in the PO history, the open PO quantity is not
reduced as a result.
Release GR at Blocked stock:

After GR made at the gate/conditional acceptance you can transfer the material to
unrestricted-use stock, stock in quality inspection, or blocked stock by GR at store which is
releasing GR. The valuation and updating of the stock data does not take place until the
material is released by GR at the store using specific movement type. If the conditions for
release are not satisfied, it is possible to return the goods to the vendor.

Procurement without QM
Confidential
- (Procurement to stock) - ( Ex: Stockable tools and consumable)
Material Management
MRP
Generated
Procurement
Needs
Create
er
Purchase
MRP
Requisition Yes
Approve
No Purchas
e Order
Pur-
chasing Controll Event
Manager
Yes
PO Print Send
Need No Purchase Accura No Change Appro Purchase
Purchase val No Purchase
RFQ Order (PO) te? Order Order (to
Order require
d? Vendor)
Quotation
Buyer
Yes for
Procurement Yes
Receive Goods Receive

Inspect QM Key Goods from
Stock GR/IR Print GR Slip Goods (no maintained from Vendor to Vendor to the
No for the Purchase
record restricted
material Order
Clerk
defects)
Ware-
Stock
house
Procurement Vendor Invoice
Yes Invoice
with QM Receipt by
GR/IR Line Item
Payable
Accounts
External
Outgoing Financial
AP
Payment
visor
Accounting
Super-
Cost
Account-ant
(Month End)
Page 26 of 70
Version 2.0
PO Amendment
Confidential
Material Management
Need for Need for
price
amendment Procurement
Event
6.3 PO Amendment
PO
Price Amendment
increase / Send
Reduction rejection
proposal letter
Vendor
Negotiate
No
Manual Review
of Pending
Accept Credits
Price
Procurement
Buyer
Yes
Maintain Info
Record Maintain PO
GR/IR Vendor Credit Memo /

Subsequent End Process
debit/credit
Account Payble
Page 27 of 70
Version 2.0
6.4 Quality Management for Procurement with Vendor Evaluation
Purpose
This scenario deals with quality inspection activities during the procurement
process. A purchaser orders goods from a specified vendor. On goods
receipt, an inspection lot is generated according to the defined material
specification. A usage decision is then made as to whether to accept or reject
the material, based on the inspection result (in this scenario, the rejection is
made). Subsequent processes such as quality notification and vendor
evaluation then follow.
Benefits
Inspection lot creation at goods receipt
Key points
Quality inspection
Results recording / Usage decision
Defects and returns
Vendor evaluation
Warehouse Clerk
Quality Specialist
Business Analyst Purchaser
Quality Management for Procurement with Vendor Evaluation

Display and assign purchase requisitions
Convert assigned requisitions to purchase orders /Schedule lines/ Create
purchase order manually
Change purchase order
Approve purchase order
Receive goods from vendor based on purchase order
Inspection report / Inspection lot worklist
Quality inspection at goods receipt / Defects recording
Usage decision after inspection
Quality Notification creation and completion
Move of the amount of material to the appropriate stock - unrestricted or
blocked quality stock
Goods return to vendor and return delivery creation
Vendor evaluation process
Return to vendor
Return to vendor : Goods from a vendor is entered in the system with reference to a
purchase order. Now it is determined that, for example, the incorrect material was
delivered, or that the quality of the delivered material is insufficient. In this case, you
return the material to the vendor. Such a return delivery can take place from
unrestricted-use stock, stock in quality inspection, or blocked stock, but also from GR
blocked stock, according to the stock you posted from in the goods receipt and after
such returns the PO quantity is made open automatically by the system.

For return to vendor by using the functions of the Shipping when posting a return
delivery can also be done; for example, you can use picking and packing. You will
therefore have detailed shipping documents and delivery notes and credit memo can
be booked for reducing the libility towards the vendor.
Such kind of material if reworked and send back by the vendor can also accepted by
subsequent delivery. In a subsequent delivery, you refer to the material document of
the original goods receipt or to the material document of the return delivery. The original
reference document number (delivery note number) is therefore copied into the new
material document.
Vendor Evaluation : Vendors can be evaluated according to several main criteria that
you consider important. The scores for the main criteria are a more accurate
representation of the performance of a vendor and based on these main criteria and
overall score of the vendor are calculated.
The system calculates the scores for automatic subcriteria on the basis of data from
other areas of the enterprise (for example, Goods Receiving or quality Management).
Each automatic subcriterion is based on one calculation approach.
For example, the system checks all purchase orders and goods receipts, then it
calculates a vendor's score for the subcriterion “On-time delivery performance” on the
basis of the average variance between actual and planned delivery dates. The method
of arriving the score can be customised as per MPP requirement.
The following table lists the automatic subcriteria that the system offers you for the main
criteria “Price”, “Quality”, “Delivery”, and “Invoice”:
Main criterion Sub criteria

Price Price level
Price history
Quality Goods receipt
Quality audit
Complaints/rejection level
Delivery On-time delivery performance
Quantity reliability
Compliance with shipping

instructions
Gate Entry System: if required(as explained above)

Quality Management for Procurement
Confidential
with Vendor Evaluation
MRP
Generated
Material Management
Procurement
Event
Needs
Procuremen
t w/o QM
Buyer
Goods
Inspection Issue Goods Issue for
Lot Slip Return Delivery
Receive Goods from
Vendor against
Purchase Order Goods
Receipt
Slip
Capture Excise
document for
excisable goods
Warehouse Clerk
No Usage Decision
Quality Goods Defects & Create Return

Inspection Record Results
are OK? Recording Quality Notification Delivery

Creation
Yes
Print Call
Inspection Inspection Usage Decision
Report Lot Worklist
Complete
Notification
Quality Specialist
Move Material
to Unrestricted
Stock
If vendor
Vendor Performance is not
Evaluation as improving Block
per MPP Logic vendor / Flag for
deletion
Analyst
Business
Purchaser
Page 30 of 70
Version 2.0
6.5 Subcontracting
Purpose
The Subcontracting process involves sending raw components to a vendor
for specific manufacturing processes and receiving the value-added finished
material back into inventory.
Benefits
Subcontract PO/Schedule lines and BoM explosion triggers follow-on
functions like delivery to subcontractor etc.
Automatic posting of inventory value flow.
Automatic posting of stocks into corresponding stock types(Subcontractor
stock).
On goods delivery, the scenario focuses on the following activities:
Purchase order creation based on a scheduled purchase requisition created
by last MRP run
Optional: manual purchase order creation
Purchase order approval (if required)
Transferring of components to subcontractor
Creation of subcontracting challan.
On goods receipt, the scenario focuses on the following activities:
Goods receipt for purchase order delivered by subcontractor.
Component reservations and consumption of component quantities as
provision of material.
Reconcile subcontracting challan.
Complete/Reversal/Re-credit subcontracting challan.
Invoice receipt by line item.
Invoice verification and validation of tax expenses.
Outgoing payment.

Buyer
Purchasing Manager
Warehouse Clerk
Subcontracting
A subcontract purchase requisition is either generated via the Material
Requirements Planning (MRP) process or manually by a requestor. A buyer validates the
accuracy of the purchase requisition and converts it into a purchase order. The purchase
order is subject to approval based on predefined parameters prior to being issued to a
vendor.
The consumption of sent components is recorded upon receipt of the value-added
finished material. The vendor sends the invoice for the services provided which is paid
during the normal payment cycle.

Subcontracting
Confidential
Material Management
Requirement of
Subcontracting Incoming
Material Vendor
(MRP/Manual) Invoice
Event
Annexure II ,
Subcontract VAT515,Delivery Dispatch of
PO/Schedule Note Goods
Vendor
Create Subcontract Approve
PO/Schedule Lines PO/Schedule
Buyer
Goods Receipt Print GR Slip
Transfer
Components to
Subcontractor
Return to
vendor
Reconcile Procurement (Optional) /
Create Subcontracting with QM Inventory
Subcontracting Challan Transactions
Challan postings
Complete/Reversal Inventory GR/IR
Warehouse Clerk
/Re-credit Subcontracting
Subcontracting Consumption
Chanllan
GR/IR Vendor Invoice

Vertification
Payable
Accounts
Page 32 of 70
Version 2.0
6.6 MRP
Material Requirements Planning
In MPP, There are two types of Planning Run. One is Regular MRP Run for the Materials
which are included as components in the BOM. Second one is Consumption Based
planning (CBP) for the Materials which are having Reorder Point.
MRP Flow Chart:
Firmed Customer Independent
SD Processing
Order Requirement
Capacity Planning MRP
Planned Order Purchase Scheduling

Requisition Agreement
Conversion Process Dependent
Requirement for the
lower Level
Production Purchase
Order Order
MRP at Plant Level

The main function of material requirements planning is to guarantee material
availability, that is, it is used to procure or produce the requirement quantities on time both
for internal purposes and for sales and distribution. This process involves the monitoring of
stocks and, in particular, the automatic creation of procurement proposals for purchasing
and production.
You can use MRP or consumption-based planning as the materials planning procedure.
Automatic Planning Run
The automatic planning run in MRP determines any shortages and creates the appropriate
procurement elements. The system generates messages for critical parts and unusual
situations so that you can rework the planning results in the specific area with problems.
Process Flow
The system carries out the following processes in the planning run:
1. The system checks the planning file. During this process, the system checks
whether a material is to be planned due to a change relevant to MRP and how to
proceed if there are already existing procurement proposals.
2. The system calculates net requirements for every material. For this calculation,
the system checks whether the requirements are covered by the warehouse stock
from Purchasing or Production. If the requirements cannot be covered, the system
creates a procurement proposal. The dynamic safety stock is also calculated during

the planning if it is applicable for the Material. This ensures sufficient material
availability even for unplanned additional requirements.
3. The system calculates procurement quantities. When doing this, the system takes
into account the selected lot-sizing procedure.
4. The system carries out the scheduling in order to calculate the start and finish
dates for the procurement proposals.
5. The system determines the type of procurement proposal. Dependent upon the
defined setting, planned orders, and purchase requisitions or delivery schedules are
created by the system for a material.
6. For every procurement proposal of an assembly, the system explodes the BOM
and determines the dependent requirements.
7. During the planning run, the system recognizes critical situations that have to be
assessed manually in the planning result by the work scheduler. The system creates
exception messages.
Integration
Capacity Planning is integrated in many applications viz. Sales and Distribution, Production
Planning Control, Sales and Operations Planning, long term planning etc. Capacity
Planning can be flexibly adjusted to planning demands and to the area of responsibility
within the company.
The process starts with the determination of requirements by materials planning and
their forwarding by the later to purchasing in the form of purchase requisitions and
schedule lines. In turn, purchasing can completely automate the conversion of requisitions
into purchase orders.
MRP is performed as per MRP procedures and parameters which maintained in
material master record as per best suitable planning methods for the material. Ex.
Consumption base planning, MRP based planning (Sales order). Determination of source
of the material and quota for allocation of the requirements in between sources
(supplier/vendor), master data in the system needs to maintain like source list for the
material and quota arrangement.

Subcontracting – External processing from production
Confidential
Vendor Receives Ship External Incoming
Material and Perform External
Material Management
Performs Services Material Back Vendor
External Services to Plant Invoice
Vendor
Production Order
Generates Completion
Purchase Confirmation
Requisition for of Production
External Services Order
Event
Create PO /
Scheduling lines from Print Purchase Customized
Purchase Req (Vendor Order / Shedule Report for
assigned by Info stock at
record) vendor
Print Excise
Subcontracting Challan and
without delivery challan
payment of
excise duty
Purchase Dept.
Subcontract Deliver
Ship Goods Receipt Material
Material to Services GR/IR for PO Back to

Vendor Shop Floor
Payment: GR/IR PPV

Financial Vendor Invoice Receipt
Payable
Accounting
Accounts
6.7 Subcontracting – External processing from production
PP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price
Variance
Page 35 of 70
Version 2.0
External Processing of Operations

An externally processed operation is not carried out within your own organization, but is
assigned to a vendor, who then does the work.
If certain components are required to carry out an external operation, you can also provide
these components for the vendor, then it will be called External Processing with Material
provided to Vendor.
Process Flow
When you create a Production order, the system creates a purchase requisition for an
externally processed operation.
When a purchase order with reference to a purchase requisition is created, all data
necessary to process the material externally is transferred to the purchase order. After the
material has been processed, the vendor delivers the material back to stock.
The goods receipt of an externally processed material causes the status of the operation to
be updated:
• For partial delivery, the status is: EOPD (External operation - partial delivery)
• For final delivery: EOFD (External operation - final delivery)
After the goods receipt, the material can be processed further in-house, if required.

6.8 Rework Processing – (Vendor poor quality)

Rework from stock
This process focuses on rework activities and material postings after goods receipt
at store from supplier, with an additional rework production order.
In case of defective material is received at store and need to rework In-House after
it has been posted into inventory. For realization of this process it gives several
possibilities:
After execution of a material transfer posting from the original product onto a dedicated
rework material, a new production order is raised. The rework material is then used as
component; the product again is the original material. Costs are collected within the new
production order.

Confidential
Rework Processing (Vendor Poor quality)
Material Management
Rework In-House
for supplier
material
Event
Create Rework Confirmation of
Production Order Rework
(Purchase dept) Production
Activities
Manual Review
of Pending
Credits
Production / Purchase Dept.

Goods Issue for

defective Material
Stores Dept.
Posting Goods GR/IR PPV
Receipt for Vendor Credit Memo End Process
Rework
Production
Order
Production /
Purchase Dept.
Page 38 of 70
Version 2.0
6.9 Consumable Purchasing
Purpose
Purchasing of consumable goods or services
Benefits
Possibility of quick one-time-purchases: Material consumption is directly
posted, no posting into storage
Use of service entry sheets as inspection report of performed services
Purchase order creation for consumable goods
Approval of purchase orders for consumables
Goods receipt of consumables
Purchase order creation for services
Service entry sheet creation
Service entry sheet approval
Period-end plant
Buyer
Purchasing Manager
Warehouse Clerk
Consumable Purchasing
This scenario deals with purchase order creation activities during the procurement
process. Furthermore, it describes the additional process steps of a purchase order
approval, goods receipt of consumables, approval of service entry sheets and invoice
receipts by line item. The process also covers the related processing of outgoing payments.
Consumable items (goods or services) are entered without material number but
rather a short text description as the main identifiable characteristic. The purchase order is
subject to approval based on predefined parameters prior to being issued to a vendor.
For consumable goods, there is no inventory in the system. By posting a goods
receipt the value of the goods is expensed to a cost center or another cost element.
Procurement of a consumable service follows the same general process. The difference is
that the consumable service is not posted by means of a goods receipt, but with a service
entry sheet. The invoice follows the same rules in both cases.

Consumable Purchasing
Confidential
Yes
Material Management
PR for Quotation for
Consumable Procurement Receiving Incoming
Goods/Service (RFQ) Service No Material at Vendor
Item? Dock Invoice
Event
Yes
Approve
No Purchase
Order
Manager
Purchasing
Yes
Purchase Update Print Create /

Order for Accurate PO Approve
No Purchase Approval No Purchase
Consumable ? Order Service Entry
Goods/Service Order Required Sheet
Buyer
Yes
Stock GR/IR Print GR Slip Goods

Receipt
Clerk
GR/IR Vendor Invoice Receipt
Payable
Accounts Warehouse
AP- Accounts
AP
Payable
Supervisor
Cost
End)
(Month
Accountant
Page 40 of 70
Version 2.0
6.10 Procurement - Capital Goods.

Purpose
Purchasing of Capital goods.
Benefits
Material consumption is directly posted, no posting into storage
Purchase order creation for Capital goods
Approval of purchase orders for Capital.
Goods receipt of Capital Goods.
Buyer
Purchasing Manager
Warehouse Clerk
Capital Purchasing
approval, goods receipt of Capital. For capital items it is mandatory to maintain asset no
and G/L account no in PO.
Capital items are entered without material number but rather a short text description
as the main identifiable characteristic. The purchase order is subject to approval based on
predefined parameters prior to being issued to a vendor.
For capital goods, there is no inventory in the system. By posting a goods receipt the value
of the goods is expensed to a cost center or another cost element or assets.

Procurement – Capital Goods
Confidential
Purchase
requisition /
Material Management
requirement of Receiving
capital purchase
Event
Quotation for Approval of
Procurement Purchase Order
(3 RFQ) by respective
departments
Yes
Inspection
Purchase Order for PO at site
Print before
Capital Goods with Appro Purchase
Buyer
account assignment for val No dispatch
Order
asset and maintain Requir
asset number ed
Goods Commissio
Asset a/c GR/IR Print GR Slip
Receipt ning -
against PO Inspection
Clerk
In-house
Invoice
Vendor a/c Invoice Verification for
GR / IR Receipt against Logistic
PO Services against
PO
Payable
Accounts Warehouse
AP- Accounts
AP
Payable
Supervisor
Page 42 of 70
Version 2.0
6.11 Procurement import (EPCG)
Purpose
Purchasing of Capital goods.
Benefits
Material consumption is directly posted, no posting into storage
Purchase order creation for Capital goods
Approval of purchase orders for Capital.
Goods receipt of Capital Goods.
Buyer
Purchasing Manager
Warehouse Clerk
Capital Purchasing
approval, goods receipt of Capital. The process also covers the related processing of
EPCG license details maintenance in the system and monitoring of export obligation by
reports (if applicable) and outgoing payments. For capital items it is mandatory to maintain
asset no and G/L account no in PO.
Capital items are entered without material number but rather a short text description
as the main identifiable characteristic. The purchase order is subject to approval based on
predefined parameters prior to being issued to a vendor.
For capital goods, there is no inventory in the system. By posting a goods receipt the value
of the goods is expensed to a cost center or another cost element or assets.

Procurement – Import
Confidential
EPCG- Capital Goods
Request for
Material Management
purchase of
Capital Goods Receiving
Material at
Dock
Event
Purchase Order Approve
for Material Purchase
with zero Duty Order
rate
Invoice verification for
Payment of Customs Duty AP- Accounts
Yes Payable
against PO
(Vendor = Customs)
Buyer
PO Print
Confirm Application for Appro
EPCG and maintain val No Purchase Invoice
details – EPCG license no Requir Order Verification for
Expiry date, etc ed Logistic
Services against
PO
Return to
Goods vendor OR / And
OR / And Insurance
Stock GR/IR Print GR Slip Receipt (Optional)/ Claim
against PO Rework
Clerk
Goods supplier Invoice

GR/IR Invoice Verification for
Vendor Receipt against Logistic
PO Services against
PO
Payable
Accounts Warehouse
AP- Accounts
AP
Payable
Supervisor
Page 44 of 70
Version 2.0
6.12 Procurement import (Duty Exception scheme – Advance

Authorization)
Purpose
Purchasing of Raw materials.
Benefits
Material is inventoried and posting into storage.
Purchase order creation for Raw material
Approval of purchase orders for Raw material.
Goods receipt of Raw material.
Buyer
Purchasing Manager
Warehouse Clerk
Import Raw material Purchasing

approval, goods receipt of raw material. The process also covers the related processing of
advance authorization license details maintenance in the system and monitoring of export
obligation by reports (if applicable) and outgoing payments.
The purchase order is subject to approval based on predefined parameters prior to being
issued to a vendor.

Procurement – Import
Confidential
- Duty Exemption Scheme - Advance Authorization
Requirement
for purchase
Material Management
of Capital Receiving
Goodsc Material at
Dock
Event
Approval of
Purchase Order
Purchase Order by respective
for Material with departments
zero Duty rate
Invoice verification for
Payment of Customs Duty AP- Accounts
Yes against PO Payable
(Vendor = Customs)
PO
Buyer
Appro Print
Purchase Invoice
Create and Confirm val No Verification for
Application for Advance Requir Order
Logistic
Authorization and ed Services against
maintain details – License PO
number, Expiry date, etc
Goods Return to
Stock GR/IR Print GR Slip vendor And
OR /Insurance
Receipt (Optional)/ Claim
against PO
Clerk
Rework
Invoice
GR/IR Invoice Receipt Verification for
Vendor against PO Logistic
Services against
Payable
PO
Accounts Warehouse
AP- Accounts
AP
Payable
Supervisor
Page 46 of 70
Version 2.0
6.13 External Procurement of Services
Purpose
The service need from a 3rd party.
Benefits
Transparent view of outstanding orders, shipments and inventory.
Automated efficient processing

Creating a purchase order.
Maintain a Service Entry Sheet.
Approve the Service Entry Sheet
Invoice Verification

Buyer
Service Employee
External Procurement of Services

The business process starts with a purchase order. It is possible to create a
purchase order without reference or with reference to a purchase requisition.
The service entry is booked to confirm the service performed. The invoice is
booked with reference to the purchase order.

External Procurement of Services
Confidential
Material Management
Need for a
Service from
3rd Party
Event
Release Service
PO
Buyer
Maintain a
Service Entry
Sheet for
service PO
No
Service
Entry Approve the

Sheet Yes Service Entry
ok? Sheet
Service
Employee
Invoice
Verification
Payable
Accounts
Page 48 of 70
Version 2.0
6.14 Procurement Contract

Purpose
This scenario deals with the use of contracts in procurement activities.
Benefits
Reduced procurement costs
Securing of supplies
Transparency of supplier agreements

Creating a basic agreement (quantity contract)
Creating a purchase requisition
Assigning requisition and creating purchase order
Approval of purchase orders
Contract monitoring
Goods receipt
Outgoing payment

Buyer
Approver (Procurement Manager)
Warehouse Clerk
Procurement Contract
This scenario deals with the use of contracts in procurement activities. Contracts are
agreements with the vendor to supply materials or services under negotiated conditions
and within a certain period.
Contracts are differentiated as follows:
Quantity contracts: An agreement that a company will order a
certain quantity of a product during a specified period.
Value contracts: A contract in which the purchase of goods or
services up to a total value is agreed.
In source determination, contracts replace the purchasing info records and can be
assigned in the source list as the fixed source for MRP.
Company role are purchasing managers as well as buyers.
Purchase requisitions and purchase orders are created after the contract, if they don’t exist
yet.

Procurement Contract
Confidential
Material Management
MRP Generated A Need for Material Material Arrival at
Need for Contract Procurement Plant Dock
is Identified
Needs
Event
Goods Receipt with
Reference to PO
Clerk
Purchase
Requisition
Requestor Warehouse
Assign Requisition to
Create Procurement
Contract Contract and Create Monitor Contracts
Purchase Order
Buyer /
Total Net
Procurement Order Value Maintenance Value or Quantity
Contract > Contract Yes of contract Contracts Report
value (e.g.
INR 25000)
Purchase Manager
No
Released PO
Purchase Order
Approver
Page 50 of 70
Version 2.0
6.15 Goods Movement

Goods Issue
GI against a production/sales order.
GI for scrapping.
GI for consumption.
GI for spares.
GI for Stock correction.
Goods receipt
Based on the Purchase Document / Production order, Stock correction.
Goods Receipt for stock Correction.
Goods Receipt generate a material document as a proof of the material as arrived.
Goods Transfer
• Stock transfer from Plant to Plant, Storage location to Storage location,
• Stock transfer to sub contractor will be done.
• Stock transfer from one Plant to other Plant.

Stock handling : Goods Issue
Confidential
Material Management
Non-Customer Goods Issue requirements for
Returns and Related production/consumption/spares
Complaints Disposition
(Production)
Event
Inspect Inspect
Product Product Verify
availability
Stock Stock
Scrapping: Scrapping:
Goods Issue to Goods Issue to Goods Issue against
CO-PA Cost Center production order/
Maintenance order and
other requirement
Quality Inspector
/ Warehouse Clerk
Scrap Expense Scrap Expense Material

Inventory Inventory Document
Accounting
Page 52 of 70
Version 2.0
6.16 Stock Transfer with Delivery

Purpose
Transfer material requested automatically by MRP or manually by a buyer
from one plant to another within the same company code
Benefits
Transparent view of outstanding stock transfers, stock-in-transit.
Efficient Processing of internal stock transfers.
Stock transport requisition (with MRP)
Changing stock transport purchase order (with MRP)
Stock transport order (without MRP)
Delivery for stock transport order
Delivery due list
Picking confirmation
Goods Issue
Creating Billing
Creating Excise Invoice
Receiving transferred material
Buyer
Production Planner
Warehouse Clerk
Stock Transfer with Delivery

The stock transfer process begins with a requirement to transfer material from one
plant to another within the same company code. This request, in the form of a stock
transfer requisition, may be created in the procuring plant automatically by MRP or
manually by a buyer.
There are no master data requirements beyond the material master to support the
stock transfer process. The material master must exist in both the procuring (receiving)
plant and the providing (shipping) plant. Also, stock transfer purchase orders are not
subject to approval like other purchase orders.
A buyer validates the accuracy of the stock transfer purchase requisition and converts it
into a stock transfer purchase order.
A warehouse clerk at the shipping plant monitors the materials due to be shipped
and creates deliveries as required. Once a delivery is created, a pick list is generated for
the materials. A warehouse clerk gathers the materials and confirms the picked quantities.
Once the delivery is complete, the delivery quantities are issued, appropriate
documentation is generated, and the goods are shipped, ending the process for the
shipping plant.
Goods are received at the receiving plant referencing the delivery number on the
shipping documents. Inventory is received into storage based on fixed parameters
proposed from the material master which can be changed at time of transactional data
capture i.e. purchase order creation or goods receipt.

Stock Transfer with Delivery
Confidential
Material Management
Daily Shipment Material
Worklist, Arrival at
No Enough Inventory
Need for w/o Forecast, Plan Plant Dock
Event
material MRP & Run MRP
Inventory Transfer
Yes @ Standard Cost
Gain/Loss
Inventory Transfer
Delivery
Process Delivery
Due List for STO
(Create Outbound
Delivery)
Pick List Picking

Confirmation
Delivery Note
Check Status Post Goods

of Stock
Transfer Issue
Warehouse Clerk
Post Goods
GR Slip Receipt for
Delivery
Create Stock
Transport Order Check
Delivery (w/o MRP) Stock
Buyer
Process Stock End Process
Transport order
Page 54 of 70
Version 2.0
6.17 Stock Transfer without Delivery
Purpose
Transfer material requested automatically by MRP or manually by a buyer
from one plant to another within the same company code
Benefits
Simple handling for processes where delivery is not required: Less
documents are generated
Stock-in-transit can be monitored

One-step stock transfer
Creating stock transport order
Posting goods issue for stock transport order
Checking the status of the stock transfer
Receiving transferred materials

Buyer
Warehouse Clerk
Stock Transfer without Delivery

The cross-plant internal procurement of materials can be carried out within one
company code (inter-company). This process can be dealt with using standard functions,
such as material requirements planning, purchase requisitions, stock transport orders,
transportation planning, and the handling of internal deliveries.
The process begins with a requirement to transfer material from one plant to another within
the same company code. The stock transfer without a delivery can be performed in two
different ways:
A one-step transfer posting at the issuing plant is possible which moves the stock
immediately from the issuing plant to the receiving plant. This is useful if the distance
between the two plants is short and when there is no need for stock-in-transit stock
overview.
A buyer at the receiving plant requests material with a stock transport order. This is
useful if the issuing plant needs a formal request to send material to the receiving plant or
the distance between the two plants is longer and there is a need for stock-in-transit stock
overview.
There are no master data requirements beyond the material master to support the
stock transfer process. The material master must exist in both the procuring (receiving)
plant and the providing (issuing) plant. Also, stock transfer purchase orders are not subject
to approval like other purchase orders.

Stock Transfer without Delivery
Confidential
Material Management
Need for Material
material Arrival at End Process
Plant 2
Event
MRP -
Controller
Create Stock
Transport Order
(UB) (w/o MRP)
Buyer
Plant 2
Receiving
GI Slip
Inventory Transfer
@ Standard Cost Post
Gain/Loss Goods
Inventory Transfer Issue Check Status of
Plant 1
Stock Transfer
Warehouse
Clerk Issuing
Post Goods
receipt for
Delivery
Post Goods receipt
(one step stock
transfer)
Plant 2
GR Slip
Warehouse
Clerk Receiving
Page 56 of 70
Version 2.0
6.18 Return to Vendor

Purpose
The scenario deals with the business process of returning goods back to the
vendor.
Benefits
Goods can be returned with a return reason captured in the document
All information for follow-on FI functions like invoice reduction, rejection,
cancellation, etc. is provided

Creating return purchase order
Delivery due list for purchase orders
Picking confirmation
Goods issue
Manual review of pending credits

Buyer
Warehouse Clark
Return to Vendor
The return to vendor process begins with a requirement to return an item to a
vendor. The buyer then creates a return purchase order in the system. The return
purchase order is similar to a standard purchase order except the return flag which sets up
the return delivery to enable shipment of the item(s) back to the vendor.
The return purchase order confirmation goes to the vendor and the return delivery is
sent to the shipping department where the item(s) are picked and shipped back along with
a delivery note. When the shipping department creates the delivery the item(s) are
withdrawn from stock. A credit memo is generated which transfers the liability to the vendor.
In case of material is rejected in production due to poor quality of material supplied
by supplier/vendor then this can be handled by above process, In this case raw material is
posted to the blocked stock of storage location from which material is sent back to
supplier/vendor and credit memo can be raised for the same for transferring the liability to
vendor.
If required faulty material can be processed in-house by rework production order
and charged for the same to supplier/vendor along with any penalty charges.

Return to Vendor – GR Stock
Confidential
Need to Return
Purchased Item Vendor
Material Management
(Rejection at GR / receives
Customer) material
Event
Return PO Delivery Note
Confirmation
Vendor
Create Return Review
PO Requirements
Buyer
Manual Review
of Pending
Credits
Manager
Purchasing
Delivery Due
List for POs - Stock Inventory GR/IR Post Goods
Return Delivery Movement Issue
Shipping
Delivery Pick Generate
List Transfer Order
Picking
GR/IR PPV
Vendor Credit Memo End Process
Payable
Accounts
Page 58 of 70
Version 2.0
Return to Vendor - Line Rejection
Confidential
Need for return of
rejection of
Material Management
Vendor
supplier material receives
from production material
Event
line
Production Delivery Note
tion
Order
consumption
reversal Return PO
Confirmation
Vendor Produc
Create Return Review
PO Requirements
Buyer
Manual Review
of Pending
Credits
Manager
Purchasing
Delivery Due
List for POs - Stock Inventory GR/IR Post Goods
Return Delivery Movement Issue
Shipping
Delivery Pick Generate
List Transfer Order
Picking
GR/IR PPV
Vendor Credit Memo End Process
Payable
Accounts
Page 59 of 70
Version 2.0
6.19 Physical Inventory and Inventory count and adjustment
Purpose
This scenario covers the periodic process of making necessary adjustments
to stock on hand after a physical count
Benefits
Transparent and actual stock on hand levels
Efficient processing of inventory adjustments

Create physical inventory documents
Print physical inventory documents
Execute physical count / recount
Enter physical count
List and post physical count differences

Warehouse Clerk
Warehouse Manager
Plant Controller
Physical Inventory
The process begins with the generation of the required inventory count sheets.
Materials can be blocked here for posting during the physical inventory. Once the inventory
sheets are printed out, the actual physical inventory count is realized for the given
materials. Afterwards, the count result is entered in the system and then any discrepancies
against the system quantities are reviewed. The inventory may be recounted until final
counts are accepted and inventory differences are posted.

Physical Inventory
Confidential
Material Management
Periodic Physical
Inventory
Verification needed
Event
Create Physical Print Physical List Count Recount and
Inventory Inventory Accept Corrective
Differences Count? No
Document Document action
Manager
Warehouse
Yes
Physical
Inventory Physical Enter Count
Document Count
Clerk
Warehouse
Inventoy Post Inventory
Adjustment Count Accept
End Process Count? No
Difference
Yes
Plant Controller
Page 61 of 70
Version 2.0
6.20 Re-sharpening of tools and recycling of oils

MPP is currently doing this activity to extend the life of tools and consumption
of oils at supplier end so this can be covered under any one of the following
processes.
1. Issue of material against returnable DA (Repair PO as Dispatch Note) for

stock monitoring at vendor and payment through PO .(PO with for account
assignment for cost center and for material with TOOL no)
2. Issue of material and receipt against subcontracting process.
First process is considered as explained below in flow chart.

Tool Resharpening
Confidential
Material Management
Monitoring of Stock
Requirement at vendor as Per Incoming
Tool Pending Repair Vendor
Resharpening order for the tool no Invoice
Event
Delivery Note Dispatch of
Repair PO tool from
vendor
Vendor
Create Repair PO
for Resharpening
Service with acc Approve PO
assignment “K”
Buyer
and Tool no
Goods Receipt Print GR Slip

against PO
Transfer
Components to
Subcontractor
Consumption GR/IR
Warehouse Clerk
GR/IR Vendor Invoice
Vertification
Payable
Accounts
Page 63 of 70
Version 2.0
6.21 Logistic Invoice Verification

Logistics Invoice Verification is part of Materials Management. At the end of the
logistics chain comprising Purchasing, Inventory Management, and Invoice Verification,
Logistics Invoice Verification checks incoming invoices for accuracy with regards to content,
price, and accounting.
The main task of Logistics Invoice Verification is to complete the procedure of
materials procurement by posting the vendor invoice and to pass on information
concerning the invoice to Financial Accounting and subsequent applications. Logistics
Invoice Verification can also process invoices that do not originate in materials
procurement.
Subsequent Debit / Credit

A subsequent debit/credit arises if a transaction has already been settled, and a
further invoice or credit memo is received afterwards. A subsequent debit/credit changes
the total invoice value of a purchase order item; the total invoice quantity remains
unchanged. Therefore, only a value-based update of the purchasing transaction takes
place. There is no quantity-based update.
You must enter an invoice as a subsequent debit if a purchase order item has
already been invoiced and further costs are incurred.
(Example: A vendor has inadvertently invoiced you at too low a price and then sends a
second invoice for the difference.)
Credit Memo
Credit memo arises if a vendor has overcharged the invoice. As for invoices, credit
memos refer to specific purchase orders or goods receipts.
Credit memo is posted if too large an amount has been invoiced. When you post the
credit memo, the total invoiced quantity in the PO history is reduced by the credit memo
quantity. The maximum quantity you can make a credit for is the quantity that has already
been invoiced.

6.22 Excise Register Maintenance
Purpose
The Materials Management (MM) component covers the most important laws and
business practices specific to India.
Features
Country Version India (CIN) comes with functions for calculating, posting, remitting, and
reporting excise duty, and for handling incoming and outgoing excise invoices.
For these purposes, extra fields are available in the vendor master data and material
master data for information required in India only.
Country Version India offers two ways of calculating excise duty, a condition-based method
and a formula-based method.
You can enter incoming excise invoices in the SAP system for goods receipts arising from
external procurement, subcontracting, and stock transfer. Excise clerks can capture
incoming excise invoices using a dedicated transaction, or, alternatively, warehousemen
can capture them in the standard Goods Movement transaction, MIGO, when they enter a
goods receipt.
Finally, you can prepare copies of all excise registers for submission to the excise
authorities.
The country template for India comes with settings for calculating and posting all
forms of taxes from MM.
Excise Registers
Use:
The excise authorities require the company to maintain a number of registers relating to
excise duty. They have to be printed out monthly and shown to the authorities in the event
of an audit. The SAP system makes all the entries for these registers automatically, and
copies of them can be prepared as and when necessary.
Features
The SAP system handles the following excise registers:
Register RG 1
Register RG 23A and 23C, Parts I and II
Register RG 23D
Personal Ledger Account (PLA)
Register RT-12
A monthly report that summarizes the CENVAT and PLA information from the other
registers are extracted from the system.

Bu
usiness Process
s Blueprint
Materials Mana
agement
Capturring of exc
cise Invoic
ce:
ntracting Wiithout Paym

Subcon ment of Exccise Duty
1. Create
C a su
ubcontract order
o for the
e goods thaat you wantt to subcontract.
2. Make
M transffer posting order for th
he materials
s that are too be sent to
o the vendo
or.
3. Create
C a su
ubcontractinng challan oon the basiss of the tran
nsfer postin
ng order.
This
T is the consignmen
c nt documen
nt that you will send to
o the subcontractor alo
ong with
the
t materials that are to
t be proce
essed.
4. Send
S the materials
m to the
t subcon ntractor, alo
ong with a p
printout of th
he subcontrracting
challan.
c
5. The
T subcon ntractor processes thee materials and
a returnss the finishe ed goods. When
W
the
t goods are
a delivere ed back to you,
y the sto
oreperson pposts the go oods receip
pt and
the
t challan..
The
T delivery y may not necessarily
n y cover all th
he goods frrom the cha
allan: It mayy also
include gooods from a number
n of ddifferent challans. The
e SAP functtions allow for
f this
eventuality.
e
T excise departmen
6. The nt reconciless the goodss receipt ag
gainst the challan,
c therreby
accounting
a for the retu
urn of the materials
m tha
at you have e sent for su
ubcontractinng.
Material Managemen
nt V
Version 2.0
The challans here include those that have been captured online at the time of goods
receipt and those entered manually.
7. Monitoring a list of the outstanding challans.

8. Complete the challan.
If a subcontractor fails to return all the materials within the time allotted, you have to
scrap the material by specifying it as such in the bill of material for the parent
material then assigning the bill of material to the subcontracting purchase order. If
the scrap generated is not returned by the subcontractor, excise duty relevant to the
scrap generated has to be paid. If this scrap is returned after the duty has been paid,
an excise journal voucher should be created to reverse the excise duty paid.

7 Forms
GRN tag
PO (Import/domestic/STO/PO Amendment)
Purchase indent (Purchase Requisition)
Delivery challan, Excise annexture
Issue Slip ( Dup PPC )
Rejection - Invoice cum Delivery challan
VAT 515
Inventory slips
Physical stock statement
Delivery challan-Scrap
Excise challan scrap
Route card
Delivery sheet
Material Rejection NOTE
Delivery rating evaluation ( To be prepared )
Quality rating evaluation ( To be prepared )
8 Reports
Supplier list based on category,Spec etc
Customer approved supplier list
Pending purchase indent
Tool cost amortization recovery report
SOB variation report
Price trend chart data sheet / Trend chart
Price increase registration & Pending price increase report
Buyerwsie shortage report
Purchase order in common stationary for all plants
PR pending status report
PR to PO lead time report
Budget provision vs utilisation report
Budget (requirement to be revised)
ASN facility for supplier & report
Payment voucher ( Refer Fin Module )
Gate entry pending report
Supplier wise, plant wise, buyer wise supply value report.
Schedule vs supply tracking report
Quality performance tracking sheet
Invoice and receipt variance
ABC classification report
Project code based inventory reports
Project code based "effect of order cancellation" report
Pending items sent out for service on returnable basis
Inventory trend chart
Conversion norm & yield report

Advance payment pending report

Scrap generation report
Nonmoving stock report ( location )
The above list is apart from agreed standard reports.

This Reports list is not finalized; List is subject to change as per requirements.
9 Authorization
Change in Business Process : Process Owner

Master Data Maintenance : Key User
Transaction Activities : End User

10 Annexure – 1 : BBP Walk through MOM
Refer attached Excel file “MM AS IS and TO BE 25Feb09.xls”


Maini1 Blueprint MM 100 Maindocument Ver 2.0

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Unisoft Infotech Pvt Ltd.

mySAP ECC Ver 6.0 Implementation

Maini Precision Products Pvt. Ltd.

Business Blue Print

Sign Off Document

Project Name: LOTUS – Lean Operations Through Us in SAP

Revision Version date Revised by Change Description

Material Management Version 2.0

Name Title, Department Company Date Signature

Material Management Version 2.0

3 Organization Structure .......................................................................................................................... 9

4 AS-IS Process Vs TO BE SAP Process .............................................................................................. 14

5 Master Data .......................................................................................................................................... 15

6 Business Process Master List ............................................................................................................ 22

Material Management Version 2.0

6.10 Procurement - Capital Goods. ....................................................................................................... 41

10 Annexure – 1 : BBP Walk through MOM ............................................................................................ 70

Material Management Version 2.0

1.1 Purpose of this document

1.2 Who should read this document

1.3 Document Derivation

• Discussion with key users

• Requirements discussion with business Process Owners.

1.4 Overview of Business Blue Print Phase

Material Management Version 2.0

Acceptable approaches may require

Recognition and acceptance of procedural changes ("Workarounds") using standard ECC

The deferral of a feature to a support phase

Material Management Version 2.0

2.2 Solution Chosen

2.3 Project Objectives and Goals.

• To prepare for expansion and growth plans in the coming years.

• To help the decision makers in achieving set business targets.

• To move towards ‘Lean Manufacturing’ by applying Value Stream concept

• To integrate all the business functions like Business Development Production,

• To implement SAP solutions in the core business functions.

• To reengineer and establish the business processes so as to reduce non-value

• Cutting down and thereafter eliminating the Wastage cost.

Material Management Version 2.0

3.1 Company Code

3.3 Storage Location

3.4 Purchasing Organization

A purchasing organization is an organizational unit within logistics that subdivides an

3.5 Purchasing Group

Material Management Version 2.0

Purchasing – Organization Structure

MAINI Purchasing Organization Warehouses Overseas

Storage Location List Plant wise:

Material Management Version 2.0

Material Management Version 2.0

Material Management Version 2.0

Material Management Version 2.0

4 AS-IS Process Vs TO BE SAP Process

Refer attached Excel file “MM AS IS and TO BE 25Feb09.xls”

Material Management Version 2.0

Material Master: Organization levels

Among other things, the material type controls:

Following are the material types relevant to MPP.

Material Management Version 2.0

ERSA - Spare Parts

FERT - Finished Goods

FHMI - Production Resources / Tools (PRT)

HALB - Semi-finished goods