Contents

Invoice Verification/Valuation
Automatic Account Determination
Overview and Org. Structure
Material Master
Purchasing Master Data
Procurement
Inventory Management/
Valuation
Topics
Overview and Organizational Structure
NCPDM (US National Committee on Physical
Distribution Management) :

"..physical distribution management .. is ..
the integration of one or more activities
for the purpose of planning, implementing and
controlling the efficient flow of raw
materials, in-process inventory and
finished goods from point of origin to
point of consumption..."
Definition: Logistics
Resource Management in
Logistics
Capacity resources
Capital resources
long-term short-term
Material resources
Logistics chain
Vendor
Production Sales
Purchase orders
Procurement
materials
services
Distributions
products
services
Sales orders
Ware-
house
Ware-
house
Customer
Capital Investment Expense/costs Cash
Inventory
management
Invoice
verification
Invoice
receipt
Overview of MM
?
A
B
Warehouse
management
Goods
receipt
Sales and
distribution
Internal and external accounting
Goods
issue
Transfer
posting
Material requirements
planning
External procurement
Purchasing
Internal procurement
Production
Master data
Material
Batch
Vendor
G/L accounts
Customer
Storage bins
.
.
.
Procurement Process
Order
Order processing
Order follow-up
Goods receipt and
inventory management
MM
Materials
management
6
5
4
Source
determination

2
Vendor selection 3
Invoice Order
?
Invoice verification 7
Requirement determination 1
MRP
Organizational structures in R/3
Organizational units
Company
Controlling areas
Sales organizations Purchasing organizations
Company codes
Plants
Valuation areas
Storage locations/batches/special stocks

Invent. mgmt w/o warehouse
mgmt

Storage locations
Company Code
Plants 0001 0002 0003
0001 0001 0002
Invent. mgmt with Warehouse
mgmt
Plants
Storage
locations
Warehouse numbers
Storage types
Storage bins
0001 0002
0088 0002 0088 0001
001
005 001
05-04-04 05-04-03
Company Code
Company codes
Valuation
Client
0001 0002
Plants 0001 0002 0003
Company codes
Example for Valuation
RC
Plants
Mumbai
plant
Delhi
depot
VAL. AT CO.CODE
VAL. AT PLANT
125/ BAG 125/ BAG
125/ BAG 150/ BAG
Accounting
Client
Company codes 0001 0002 0003
Business area
0001
Business area
0002
Business area
0001
Purchasing Organization
Plants
Company (Group)
Company codes
Purchasing
organizations
0001
0001
0001
0001
0002
0004 0002 0003
0003 0002
Organizational Entities in
Purchasing
Plant 1
Purchasing organization 1
Purchasing organization 2
Purchasing group 1
Purchasing group 2
Purchasing
organization
Plant 2 Plant 2 Plant 10
Material Master
Material master record
General data

Material number
Description
Units of measure
Technical data
Plant-specific data

MRP/type
Planned delivery time
Purchasing group
Batch indicator

Valuation

Valuation price
Valuation procedure
Valuated quantity
Sales-specific data

Delivering plant
Sales texts
Unit of measure
Palletting instruction
Storage location-
specific data

Storage time
Stockfields

Forecast data
Consumption data
Warehouse Manage-
ment system data
Units of measure
Base unit: Piece
Box
(unit of issue)
Crate
(order unit)
Pallet
(sales unit)
4 16 72
Material data maintenance:
accounting
Valuation class

MART Allowed values

ROH 3000
3010
HALB 7920
HIBE 3000
Maintenance of material
data
Price control

Standard-
price control:
Valuation of
standard price
from the material
master record
Moving average
price control:
Final delivered price
(such as purchase
order price) influences
the valuation price
S V
Purchasing Master Data
Purchasing Master Data
The Vendor
The vendor
Goods receipt
Bank
order account
?
=
Invoice verification
purch
ase
order
Invoice
Material
Purchasing
Payment
DEUTSCHE
MARK DEUTSCHE
MARK
DEUTSCHE
MARK
Vendor
Organizational levels of
vendor master record
General data
Purchasing
organization data
Company code
data
Company code
001
Vendor master record
General data

Address
Communication
Purchasing data

Order currency
Incoterms
Minimum order value
Accounting data

Bank data
Payment transactions
Account management
Valid
for the whole group

Valid
for one purchasing
organization
Valid
for the whole group or
for one company code
One-time
account
Account group
Type of number
assignment
Interval for number
assignment
Field selection
Account group
Enter invoice
Control account
Invoice
"Parallel"
Invoice
Payables Vendor
G/L accounting
Vendor A
Accounts payable
Vendor
You
Purchasing Master Data
Info Record
Purchasing info records
Vendor A
Material
Piece
%
Conditions
USD
Info record
Vendor B
Stock material M1
Consumable
material M2
Service S1
Info record
Info record
Info record
Info record
Data in the purchasing info
record
General data

Vendor data
Origin data
Order unit
Texts
Control data

Delivery time
Minimum quantity
Tolerances
Prices and
conditions

Gross price
Discounts
Freight
Price history
Purchasing statistics
Changes
Pricing
Records for condition type
No valid record exists
Valid record exists
Pricing procedure RM000
Item 10 120 pcs

PB00 Price $99
$100 for 1 pcs
$99 for 100 pcs
$98 for 200 pcs
1.Price PB00
2.Discount RA00
Access sequence: PB01
1. Outline agreement
2. Vendor/material/
organizational level
3. Vendor/material group/
organizational level
Condition type: PB00
Access sequence: PB01
1
2
3
4
Purchase order
Vendor 123
Purchasing organization 2000
5
Scale
Conditions
Gross price
Discount %

Net price:
Fixed freight
charge +

Effective price:
PB00
RA01
FRA1
Condition type
Calculation type
Scale basis
Price/quantity
scale
Pricing procedure
Purchasing Master Data
Source List

Source list

1.1.95 - 30.6.95


Vendor 1 allowed
Vendor 2 allowed
Vendor 3 allowed




Source list
Material M1
Plant 0001
1.7.95 - 31.12.95


Vendor 1 fixed
Procurement
Procurement
Procurement Environment
External procurement
environment
Source list
Quota
arrangement
Piece
%
Conditions
USD
Info record
RFQs
Quotations
Invoice
receipt
Purchase
requisition
Source
determination

Vendor
selection
Requirements
determination
Outline
agreement
Goods receipt
Purchase
order
Purchase
order
history
Purchasing documents
RFQ
Purchase order
Purch.order
Quotation
Quotation
A
Quotation
B
?
Purchase requisition
Purchase
requisition
Release order
Contract
Scheduling
agreement
31. 1.
RFQ
?
Structure of a purchasing
document
Item 1

General data
Conditions
Texts
Schedule line
Additional
data for item 1

Purchase
order history



.

.

.

Item 2

.

.

.

Additional
data for item 2




.

.

.

Purchasing
document

ocument

General data
statistics
Messages
Conditions
Document header

Item category
Purchasing
document
Item
category
Account assign.
category
A B C
Account assignment type
Purchasing
document
Item
type
Acct.assign.
type
A B C
Procurement for stock
Material
Purchasing
document(s)

Item:
no account
assignment
category
Vendor
Goods
receipt
Goods
issue
Warehouse
Production
Production
Procurement for consumption
Material
Purchasing
document(s)

Item:
with account
assignment
category
Vendor
Goods
receipt
Procurement
Consumption-driven MRP
Consumption-driven MRP
Requirements
planning
Net requirements calc.
Lot sizing
Scheduling
Inventory
management
Material master
Material
A
Purchasing
Forecasting
Materials planning and
control procedures
Requirements
planning
Deterministic MRP Consumption-based
Reorder point
procedure
Stochastic
VM, VB VV
Time
Consumption Stock level
Time
Reorder Point Procedure
Replenishment
lead time
Stock Lot size
Reorder level
Safety stock
Reorder point Delivery date Time
Net Requirements Calculation in
the Reorder Point Procedure
Reorder level
Purchase order
Fixed planned
orders
Fixed purchase
requisition
Purchase order proposal
to the amount of
the lot size
Warehouse stock
Shortage
Comparison
Safety Stock and Reorder Level
Replenishment
lead time
Reorder
level
Safety stock
Time
Stock
Replenishment
lead time
Service level
MAD
Daily
x Replenishment
lead time
Net Requirements Calculation in
Forecast Based Plng.
Fixed inward movements
e.g. purchase orders
Purchase orders proposals
Planned orders
Purchase requisitions
Lot size
Warehouse stock
Shortage
Comparison
Forecast requirements
Safety stock
Lotsizing procedures
Exact lot
size
Fixed lot
size
Replenish to
maximum stock
level
Static
procedure
Periodic
procedure
Optimum
procedure
Lot sizing procedures
Part period
balancing
Groff procedure
...
Static Lot-sizing
Procedures
Quantity
Time
Exact lot size
Replenish to
maximum stock level
Fixed lot size
Inward
movements
Outward
movements
Planned warehouse stock =
Periodic Lot-sizing Procedures
Quantity
Time
Period length Period length
Inward
movements
Outward
movements
Dynamic Planning
Calculation
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed costs Storage costs
06.07.1994 1000 1000 100 0
13.07.1994 1000 2000 38.36
20.07.1994 1000 3000 76.71
27.07.1994 1000 4000 115.07
Optimum
Part Period Balancing
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed
costs
Storage
costs
Total storage
costs
06.07.1994 1000 1000 100 0 0
13.07.1994 1000 2000 38.36 38.36
20.07.1994 1000 3000 76.71 115.07
27.07.1994 1000 4000 115.07 198.78
Optimum
Least Unit Cost Procedure
Req. x Price x Storage costs x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs : $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed
costs
Storage
costs
Total
costs
Unit
costs
06.07.1994 1000 1000 100 0 100 0.10
13.07.1994 1000 2000 38.36 138.36 0.07
20.07.1994 1000 3000 76.71 215.07 0.11
27.07.1994 1000 4000 115.07 330.14 0.08
Optimum
Scheduling in the case of
external procurement
1 2
1 2
Forward scheduling
Backward scheduling
Replenishment lead time
Replenishment lead time
GR processing time
GR processing time
Today + 1 Purch. order
delivery date
MRP
delivery date
t
t
Purch.order
delivery date
MRP
delivery date
Start /
release date
The requirements planning
process
Purchasing
MRP
Order
Planned order
31. 1.
Opening period of
materials planning/
control
Material requirements
planning
Planning mark-out
Purchase
requisition
Process
relevant to
MRP

Purpose of the forecast
Reorder level
Safety stock
Forecast
Forecast requirements
VM VV
Forecast
MRP type
Material
A
Procurement
Processing Purchase Requisitions
Purchase requisition

Department
Requisition Requisition
Purchasing
MRP
Purchase requisition
processing
RFQ
?
Release
order
o.k.
MRP Direct entry
Purchase requisition
Determine source of supply
Vendor
Release
Allocate and process
Purchase
order

Procurement
Processing Vendor Inquiry / Quotations
Request for quotation/
quotation
RFQ 1
Quotation 1 Quotation 2
Purchase
order

Rejection
RFQ 2
?
Price comparison list
Vendor 1 Vendor 2
Requirements known.
Procure from which
source?
Entering an RFQ
Inquiry 2
?
Vendor 1
Vendor 2
Inquiry 1
?
Item list
1 2
Issuing output
Output
Reprint
Purchasing
document
Reminder
Rejection
Order
acknowledge-
ment check
Printer EDI Fax
Processing Quotations:
Example
Enter price and pricing conditions
1
Vendor B
Quotation for
RFQ 2
Item 10
Gross price: 400/t
Surcharge: 50%
Vendor C, B
- Rejection-
Thank you for your
offer. Unfortunately,
we cannot place an
order at this time .....

Vendor A
Quotation for
RFQ 1
Item 10
Gross price: 400/t
Discount: $50
Vendor C
Quotation for
RFQ 3
Item 10
Gross price: 400/t
Fixed costs: $40
Vendor A
- Order -
Mat. Qty Price

Steel 2t 350/t

Create info record or reject quotation
3
Steel 2 t

Price


350/t 480/t 520/t 450/t
Quotation 1 Quotation 2 Quotation 3 Mean value
quotation
Compare quotations using price comparison list
2
Procurement
Processing Purchase Orders
Processing Purchase Orders
Purchase
requisition
RFQ
?
?
Reference
document
Contract
Pcs
%
Conditions
$
Info record
Order history
Purchase
order
Vendor
One-time vendor
Contract
Contract
request
Reference
RFQ
Reference
contract
Contract
Purchase
requisition
Vendor
Release order
1 2
Scheduling Agreements
Einstellungen
Einstellungen
Purchase
requisition
RFQ
Reference
scheduling
agreement
Purchase
requisition
Vendor
1 2
Schedule lines
Scheduling
agreement
PROCUREMENT OF EXTERNAL SERVICES
Inventory Management/Valuation
Inventory Management
Goods Movements
Inventory management
Warehouse 1
Warehouse 2






























































Goods receipt
Goods issue
Old system Vendor
In-house
production
Consumption
Scrapping
Transfer posting
Documents for goods
movements
Goods movement
Material
A
Material
document
Accounting
document
Warehouse
Plant
Valuation area
Material valuation levels
Material Valuation Levels
Company code
0001
Split Valuation: Structure
Valuation area 0001
Material 1
Valuation category H
Quantity 100
Mvg. av. price 5.20
Valuation
Plant 0001
Material 1
Plant
Storage
location
Batch
Stor. loc. 0001
Quantity 30
Stor. loc. 0002
Quantity 70
Italy
Quantity 10
France
Quantity 20
Italy
Quantity 30
France
Quantity 40
Quantity 40
V - price 4.00
Quantity 60
S - price 6.00
Valuation type
Italy
Valuation type
France
Updating the stock situation
Stock situation
On a quantity basis
Material master
Special stocks
Stock fields per
plant, storage location
and special stock

On a value basis
G/L accounts
Debits and credits
per company code,
period and, possibly,
business area

Entering material
documents
Movement type
Material document item
Account determination
Consumption update
Quantity update
Indicator for printout
Field selection
Standard analyses
Analyses in inventory
management
Analyses
Stocks
overviews
Stock per material
Material
movement list
Inventory
control
Plant stock availability
Reqs./stock list
Warehouse stock list
ABC-Analyses
Stock value
Range of coverage
Slow-moving items/
inventory turnover
Inventory Management
Processing Goods Receipts with Purchase
Order Reference
Purchase Order Views in
Inventory Management
Purchase order
General
Purchase order
history
Changes
Statistics
$ Conditions
01/01/95
10/01/95
30/03/95
Schedule
lines
Account assignment
Texts
Header
Vendor Conditions
Texts Output
Items
Determining the purchase
order during GR
Manuell
Goods receipt for
purchase order




Purchase
order
List of open purchase orders by
- vendor
- material
- delivery plant
Matchcode
Manual
Stock types for goods
receipt
Account assignment object
Unrestricted-use stock
Stock in quality inspection
Blocked stock
Goods receipt blocked stock
Warehouse
Cost center
Order
......
Vendor
Posting procedure for goods
receipt (example)
Stock account
Stock value

GR/IR clearing



Price differences
( ) ( )
Update for goods receipt
Inventory Management
Processing Goods Receipt w/o Reference
GR w/o Reference to a Purch.
Order or Production Order
Goods receipt
Preplanning
without purchase order

without production order
Initial entry of stock balance
Without purchase order
Without production order
Goods receipt of by-products
Delivery free of charge
Returns from customer
Inventory Management
Processing Stock Transfer / Transfer Postings
Transfer posting
Transfer posting
Stock transfer
Miscellaneous
transfer postings
From plant
to plant
From storage
location to
storage
location
From
material
to material
From QM to
unrestricted use
From
consignm.
stores to
warehouse
Valuation in the Case of
Stock Transfer
Receiving plant Issuing plant 100 pcs
Stock plant 01

( a ) 200.00
( b ) 200.00
Stock plant 02

300.00
200.00
Expense / revenue
from stock transfer
100.00
Standard-
price 2.00
(a)
(a)
(b)
(b)
Moving average
price 2.00
Standard-
price 3.00
Any moving
average price
Inventory Management
Processing Goods Issues
Goods issues
From warehouse
From consignment
stores
Goods issue
Sampling
Scrap
Consumption
Cost center
Asset
Sales
Order
Issue
Effects of goods issue
Material document
Accounting document
G/L account.
Stock account
Consumption account
...
Reservation
Order
Stock quantity
Consumption statistics
...
Point of consumption:
Cost center
Order
...
Warehouse mgmt:
Transfer order
Quality management:
Inspection lot
Goods issue
Posting method for goods issue
Stock account
Stock value

Consumption account


Update on goods issue Special Stocks and Special
Procurement Types
Consignment
Subcontracting
Stock Transfer with Stock Transport Order
Third party processing
Returnable Transport Packaging
Pipeline handling
Sales order stock
Project Stock Companys Own
Special Stock
Stock of material provided to Vendor
Consignment stock at Customer
Returnable packaging stock at Customer
Companys Own Special
Stock
Managed at plant level
Stock types
Unrestricted use stock
Quality inspection stock
Externally-Owned
Special Stocks
Vendor Consignment
Returnable Transport Packaging
Sales order stock
Project Stock
Externally-Owned
Special Stocks
Managed at Storage
location level
Stock Types
Unrestricted Use
stock
Quality inspection
Stock
Blocked stock
Inventory Management
Physical Inventory
Physical Inventory
Procedures
Periodic inventory
Continuous inventory
Cycle counting
Inventory sampling
Physical Inventory
Can be carried out for Companys own stock and
Special Stock

Inventory for Companys own stock and Special
stock must be taken separately in different physical
documents

Physical inventory can be taken for
Unrestricted-use stock in the warehouse
Quality inspection stock
Blocked stock

Physical inventory
procedure Create physical
inventory document
1
Set blocking
indicator
2
Physical
inventory document
4
Post differences
Batch-Input
Batch-Input
Arrange
recount
Change
count
6
List of
differences
5
Print physical
inventory
document
3
5a
5b
Invoice Verification / Valuation

Types of invoice
verification
Purchase
order
Purchase
order
?
Invoice verification
Vendor
invoice
Goods receipt
or or
----
Invoice verification
environment
Purchase
order
Goods receipt
Material master
Vendor master
Conditions
Invoice
verification
Invoice
document
G/L accounts
Assets
Cost centers
Purchase order
Material master
Posting an invoice

Purch. order history

Goods receipts
Down payments
Invoices

Material master

Moving average
price
Value
Invoice
relating to
purchase
order
Post
A
XX
B
XX
GR/R account


Vendor account


Doc. No. 51000123

Vendor 100-
GR/R 100+
Variances
Goods receipt
Quantity
Invoice
50
pieces
WE 40
Price
Goods receipt
Invoice
10 pcs = 200g
Date
Invoice
Purchase
order
$5
Invoice
$6
at
= 2 kg
Purchase
order
10 pieces at
$20/kg
Order
price quantity
04/12/95
Invoice
10 pieces
= 2.5 kg
26/11/95
10 pieces
= 250 g
Purchase
order
Planned
delivery date
Tax
Company


Material value
+Tax on sales/
Purchases
Material value
+ input tax
Tax office
Tax payable
Vendor
A A
A
Customer
Invoice receipt postings
Stock account
Stock value
( ) ( )

GR/R clearing

Input VAT
Vendor
(control acct.)

Price differences
( ) ( )
Postings at Standard Price
Purchase order price 2.40 / pc
Invoice price 2.20 / pc
Stock account
( 2 ) 200.00
Exp. / revenue Price difference
( 2 ) 40.00 20.00 ( 3 )
Vendor / general ledger
220.00 ( 3)
GR / IR clearing account

( 3 ) 240.00 240.00 (2)
Event Stock Total value Standard Moving av.
price price
( 1 ) Initial situation 100 200.00 2.00 2.00
( 2 ) GR for purch. order: 100 @ 2.40 200 400.00 2.00 2.20
( 3 ) IR for purch. order: 100 @ 2.20 200 400.00 2.00 2.10
Postings at Moving
Average Price
Stock account
( 2 ) 240.00 20.00 ( 3 )
( 4 ) 240.00 550.00 ( 5 )
10.00 ( 6 )
Event Stock Total value Moving av. price
Exp.. / revenue Price difference
10.00 ( 6 )

( 1 ) Initial situation 100 200.00 2.00
( 2 ) GR for purch. order: 100 @ 2.40 200 440.00 2.20
( 3 ) IR for purch. order: 100 @ 2.20 200 420.00 2.10
( 4 ) GR for purch. order: 100 @ 2.40 300 660.00 2.20
( 5 ) Goods issue: 250 @ 2.20 50 110.00 2.20
( 6 ) IR for purch. order: 100 @ 2.20 50 100.00 2.00
Raw material consumption
( 5 ) 550.00
GR / IR clearing account
( 3 ) 240.00 240.00 ( 2 )
240.00 ( 4 )
( 6) 240.00
Vendor / general ledger
220.00 ( 3 )
220.00 ( 6 )
INVOICING PLANS
Facility to schedule Invoicing dates for planned
procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan
Account Determination Procedures for
Automatic Postings in MM
Types of Account
Determinations
Movement Type based
Transactions
SD
MM
PP
QA
PM
HR
FI
CO
AM
PS
WF
IS
R/3-
Client/Server
ABAP/4
SD MM
Non-Movement Type
based Transactions
Cond. Technique
Grouping Organizational Levels
for Account Determination
Valuation
grouping
code
Plant Company code
Case: valuation area = plant
Chart of accounts
0001
0003
0002
0001
0004
0005
0003
0002
0003
0004
0002
IKR
0001
GKR
Grouping of Material Type -
Valuation Class
Valuation
class
Account category
reference
Material type
FERT
HALB
HAWA
.
.
.
ROH1
ROH2
ROH3
. . .
0001
0002
0003
0004
7900
3000
3010
3020
3030
3040
3100
3200
Grouping of Materials for
Account Determination
Option 1:
Acct. 1
Acct. 2
Acct. 3
Option 2
Acct. 1
Acct. 3
Option 3
ROH
Acct. 1
Acct. 2
Mat 1
Mat 2
ROH
Mat 2
HIBE
Mat 3
Mat 4
Mat 1
ROH
Mat 1
Mat 2
HIBE
Mat 3
Mat 4
FERT
Mat 5
Mat 6
FERT
Mat 5
Mat 6
Procedure Part 1: Value String
- Processing Keys

Transaction
Inventory Management Invoice verification
Value String
(Generalized
posting record)
BSX
Processing keys
G/L account number
Material
Invoice
verification
?
=
WRX
191100 300100 425000
KBS
Procedure Part 2: Processing
Key - Rules
Transaction
Processing keys
for debit/credit posting
Parameters on which
account allocation
depends
1
Processing Key
(Transaction)
Chart of accounts
Rules
2
Procedure Part 3: Rules -
Account Allocation
Rules specify
account determination
key
(Valuation grouping
code)
(Account grouping
code)
(Valuation class)
Account
number
Processing Key
(Selection of
transaction)
Selection of
chart of accounts
Account Determination
Procedure: Overview
Legend
Information derived from Transaction type
Information derived from Material Master
Information derived from the organiz. Structure
Main Customizing area
Movement
type based
Transaction
"Type of
Material"
Step 1 or 2
Material
Type
Plant
Value
Posting String
Qty.
Posting String
Step 3
Processing
Key (GBB)
Company Code
Chart of
Account
Valuation
Class
Val. Grouping
Code
Rules
Step 4
G/L Account
Account
Categ. Reference
Material
Master
Type of
Transaction
Non-move-
ment type based
Transaction
Account
modification
Processing
Key (AUF)
Automatic Posting:
Maintenance of the Settings
Selection of the
valuation grouping code
1
Selection of the posting transaction
2
Allocation of the G/L account number(s)
per valuation class
(and account grouping code)
3