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4.Materials Management
As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
Power (India) Pvt. Ltd. Ltd.
(Implementation of mySAP ERP and Walvoil by CVS IT Services (I) Pvt. Ltd. for Walvoil Fluid Power (India) Pvt Ltd
yiva
Sign-off on Business Blue Print on
4. Materials Management
Introduction
This Business Blue Print Document describes the following:
Enterprise Structure of Walvoil (GO LIVE on 21st Feb 2006)
Business r Users
Mr. Ivano Chiossi
Project Sponsor
Mr. Amarnath Ramchandran Mr. Fabrizio Strozzi Mr. N H Krishnamurthy Mr. Avinash Humbrey
Mr.Srinivasa Rao .V Mr. Narayana Rajan. N Mr. Vinay Kumar Reddy Mr. SathyaNarayana.A & Mr. Ravikanth S.
Consultant, CVSIT Module Owner, Walvoil Team Member, Walvoil Team Members, Walvoil
Business Blue Print – Materials Management – Mr.Rajan, Mr.Vinay – WALVOIL, Mr.Srinivas - CVS IT Page 1 of 77
As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
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Introduction
This Business Blue Print Document describes the following:
Enterprise Structure of Walvoil
Business requirements as given by the Walvoil Key Users
Suggestions by CVS IT consultants wherever mySAP ERP features are found to be useful to Walvoil business functionality
To-Be Process on mySAP ERP system suggested by CVS IT Consultants
Comments whether the requirement can be realized on the SAP R/3 system or not.
Gaps which are at different stages of exploration
The following codes are given to each module that is within the scope of the agreement:
Module
Module
ID
1 Financial Accounting
2 Controlling
4 Materials Management
6 Quality Management
Further processes, sub-process and activities in each module are denoted by, say. 1.1, 1.1.1, 1.2.1 etc.
A Business Blueprint document is prepared for each module and reference shall be made wherever required to other modules, whenever
there is an overlap of business processes across modules or a business process requires to be completed in more than one module. The
reference to the business process shall be made using the process numbers as described above;
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For e.g.:
As per the above notation, All processes in Sales & Distribution start with 3.*… So if a reference has to be made to process in Accounts
Receivable of Financial Accounting, then the reference is made using the notation say, 1.2.*… where ‘1’ refers to Financial Accounting and
1.2 refers to Accounts Receivable and then further numbers denote the sub-processes and activities in the module.
Step 1:
The Module Owner shall identify various existing business processes at a broad level and make a list of them as described under section 1
of this document
Step 2:
Depending upon the various business processes thus identified in Step 1, various business scenarios are described in the following way:
As Is Business Processes: The current way of executing the business process shall be explained in detail with data/information flow along
with the IT systems / Manual Systems being used in the whole cycle.
Business Requirement: Under this head, the module owner shall describe the requirements of the company vis-à-vis this business scenario,
if necessary with examples. Following situations can arise:
The current provisions in the system are sufficient enough and additional configuration efforts are not required.
The current provisions are not sufficient and satisfactory and additional features need to be incorporated in the system
There is no current provision to handle this transaction at all.
The module owner shall identify each business scenario with the above classification.
Step 3:
Based on the Business Requirement, CVS IT consultant shall do a detailed Requirement Analysis and based on the analysis, shall propose
the best fit business process on the SAP R/3 system.
It may not be possible to decide the realization possibility of all Business requirements on the mySAP ERP/CIN4.0A system immediately
and hence the following legend is being followed for describing the statuses:
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As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
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The To-Be business process realization is
dependent on the following aspects:
Scope of services described in the Software Services Agreement signed by WALVOIL & CVS IT
Scope of functionality described in the Software Services Agreement mentioned above.
Capabilities & Limitations of mySAP ERP
As-Is Business Knowledge Transfer from mySAP ERP Project Team members
Business Requirements defined by the Walvoil Project Team members
WALVOIL accepts that the decision to accept the ‘To-Be’ Business Processes is completely it’s own and not influenced by CVS IT. CVS IT
shall not be responsible for the business consequences on Walvoil after the realization and usage of the processes being suggested here.
Walvoil shall indemnify CVS IT from all responsibilities for any other business consequences during the framing of the To-Be Business
processes, or at any time during or after the realization / implementation of these processes on mySAP ERP system or while using the
system.
Methodology to be adopted for preparing Business Blue Print:
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1. Definitions:
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Company Code:
The Company code is smallest organizational unit of external accounting for which a complete, self-contained set of accounts can be
created. This includes the entry of all transactions that must be posted and the creation of all items for legal individual financial
statements, such as the balance sheet and the profit and loss statement.
Walvoil Fluid Power (India) Pvt. Ltd. are mentioned as Company in this document.
Chart of Accounts:
This is a list of all G/L accounts used by one or several company codes.
For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account
functions and how a G/L account is created in a company code.
Plant:
A plant is an organizational logistics unit that structures the enterprise from the perspective of production, procurement, plant
maintenance, and materials planning. A plant is manufacturing a facility or branch with in a company.
Purchase Organization:
A purchase Organization is an organizational level that negotiates conditions of purchase with vendors for one or more plants. It is legally
responsible for completing purchase contracts.
Purchasing group: is the key for a buyer or group of buyers responsible for certain purchasing activities.
Storage Location:
A Storage location is a Storage area comprising warehouses in close proximity. Material stocks can be differentiated with in one plant
according to storage location.
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A document that is required at the time of sale of finished goods produced by using the state excisable goods like Rectified Spirit as Raw
Materials.
VAT:
Type of tax introduced by Govt of India, and has been implemented by many states including Karnataka where Walvoil operates from.
As per the provisions of the Karnataka State Excise Act, the company is filing an application to take the approval of State Excise
Department, for using the excisable inputs in the manufacturing activity by remitting the applicable duty on the assessable value of the
proposed finished product. This approval needs to be taken before the commencement of the Manufacturing Activity. The said application
shall contain all the details of “products to be manufactured” and “Quantity in each batch” during a given period of time. In case, the
company produces more quantity in a batch than that was mentioned in the approved application, then company shall remit the excise
duty on the differential quantity. If the quantity produced in a batch is less than the approved one, the refund of unutilized excised duty
from the department cannot be claimed. The produced units shall absorb the said unutilized excise duty amount. The company considers
the normal loss while making the application and accordingly mentions the estimated quantity in each batch.
Custom Duty:
Duty levied by the government when a material is imported to India from abroad.
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Purchasing Organization
Definition
An organizational unit subdividing an enterprise
according to the requirements of Purchasing. It
procures materials and services, negotiates
conditions of purchase with vendors, and is
responsible for such transactions.
Structure
The form of procurement is defined by the
assignment of purchasing organizations to
company codes and plants.
The following forms of purchasing exist:
Corporate-group-wide
A purchasing organization procures for all the
Walvoil Fluid Power (India) 1100 Walvoil Purchase
company codes belonging to a client.
Pvt Ltd Organization
Company-specific
A purchasing organization procures for just one
company code.
Plant-specific
A purchasing organization procures for a plant.
Mixed forms are possible, which can be
replicated in the system by the use of reference
purchasing organizations.
A purchasing organization can utilize the more
favourable conditions and contracts of the
reference purchasing organization that has
been assigned to it.
Purchase groups
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Current New
Justification / Purpose of the Organizational
Code Description Code Description Unit
Storage Locations
Current New
Justification / Purpose of the Organizational
Code Description Code Description Unit
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Business Process
Business Process Description
Id
4.1 Master data Maintenance
4.1.1 Material Master Maintenance
4.1.2 Service Master Maintenance
4.1.3 Vendor Master Maintenance
4.1.4 Purchase info records
4.1.5 Source list maintenance
4.1.6 Maintain vendor evaluation criteria
4.1.7 Maintenance of Conditions for Procuring Materials
4.1.8 Payment Terms
4.2 Procurement Process
4.2.1 Purchase Requisition
4.2.2 Request for Quotation
4.2.3 Quotation
4.2.4 Purchase Order - Local (RM, PM, MRO Items)
4.2.5 Release Strategy
4.2.6 Purchase Order - Imports
4.2.7 Outbound service orders / Job work
4.2.8 Purchase order - services
4.2.9 Purchase Order Amendment
4.2.10 Cash Purchases
4.3 Goods Receipts
4.3.1 Quality Check
4.3.2 GRN due to Purchase of Assets
4.3.3 GRN due to Production
4.3.4 GRN due to Finished Goods Rejection
4.3.5 GRN for MRO items
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Walvoil makes the following type of purchases it also takes some time to function fully:
Procure-to-Stock (RM and MRO items)
Need-based Procurement – based on Purchase Requisition (RM, MRO items)
Capital - Budgeted
Capital - Non-budgeted
Service Contracts
Service with material supply - Job work
Repairs
Cash Purchases
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Material Coding
As Is
Material Type
External /
Total Length Logic1
Internal
Semi finished
Goods
Finished Goods
Spares
Misc
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To Be
Materia
l Type Ext Group Group Group
Total
/ 1 Logic1 2 Logic2 3 Logic3
Length
Int. length length length
Part No. as per Walvoil
Ext 10
(Italy)
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Vendor Master
Data in vendor master records controls how transaction data is posted
and processed for a vendor. The vendor master record also contains all
the data you require to do business with your vendors.
The master record is used not only in Accounting but also in Materials
Management. By storing vendor master data centrally and sharing it
throughout your organization, you only need to enter it once. You can
prevent inconsistencies in master data by maintaining it centrally. If one
of your vendors changes their address, you only have to enter this
change once and your accounting and purchasing departments will
always have up-to-date information.
Purchase info records
You use this component if you wish to store information on a vendor and
a material as master data at purchasing organization or plant level. You
can create purchasing info records for different procurement types
(standard, subcontracting, pipeline, consignment).
Source List
The source list is used in the administration of sources of supply.
It specifies the allowed (and disallowed) sources of a material for a
certain plant within a predefined period. Each source is defined by
means of a source list record.
Vendor Evaluation Criteria
The Vendor Evaluation component supports you in optimizing your
procurement processes in the case of both materials and services.
Gaps:
4.1.1 Material Master Maintenance
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changes Display etc., Also one can make use of setting deletion indicator
for a material at various levels in the organization structure. Walvoil can
make use of this available feature as per the business requirement.
Clicking on the right mouse button displays all of the search help control
functions available in the current context.
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Material Type:
Materials with the same basic attributes are grouped together and
assigned to a material type. This allows Walvoil to manage different
materials in a uniform manner in accordance with your company's
requirements. Examples of material types are given in the graphic
below.
Material Group:
Key that you use to group together several materials or services with
the same attributes, and to assign them to a particular material group.
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Use
You can use material groups to:
Restrict the scope of analyses
Search specifically for material master records via search helps
Gaps :
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General data
This is data that applies to every company code and every purchasing
organization in your company. The general area includes, for example,
the vendor’s name, address, language, and telephone number.
Company code data
This is data that is specific to an individual company code. Company
code data includes, for example, the reconciliation account number and
payment terms.
Purchasing organization data
This is data relevant to the purchasing organization of your company. For
example, requests for quotations, purchase orders, and invoice
verifications are stored in this section.
Vendor groups
1. Raw material supplier- domestic
2. Packing material supplier -Domestic
3. Miscellaneous purchases Vendors
4. Capital Purchases
5. One time vendors
6. Financial vendors
7. Transport vendors
8. Raw material supplier- Imports
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Gaps:
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Gaps:
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4. Quantity Discounts: In specific Slabs of the Some of the discounts can be maintained at the time of preparing the
PO Or Order quantity the discount % or the purchasing document.
value changes.
4.1.7.3 Excise andExcise Duty 1. Vendor, Material and other factors that determine the Excise duty
Import 1.Excise Duty in %: Percentage could be in shall be maintained through the CIN Module of SAP R/3.
Duty whole number or could be in Decimals 2. This shall include the Exceptional rates that may be applicable for
2.Special Excise Duty in %: Percentage could certain vendors and material combination.
be in whole number or could be in Decimals 3. This shall also take into account different tax rates based on the
Vendor’s Status (SSI or Normal). The setoff of excise duty or
inventorying of excise duty will be controlled by Tax codes.
In Imports the CVD, which needs to be captured for CENVAT postings,
shall also be incorporated.
4.1.7.4 Sales 1.For Raw materials and Packing materials 1. Tax condition records can be maintained in the system for various
Tax/VAT Normal Sales tax (KST/CST) are taxed at % levels of taxes, like central and state level, which will be automatically
2.Present VAT Tax rate is 12.5% determined during a transaction depending upon the receiving plant
and the vendor’s locations.
2. The tax values are maintained as percentages with the help of tax
codes.
4.1.7.5 Local Hamali charges (as per slab). Local delivery and Cartages can be maintained in the system, these
Delivery 2. Other Handling and Delivery charges (as conditions shall be determined during the transaction.
and per slab).
Cartages
4.1.7.6 Freight/Tr Freight % of the Basic 1. The Planned Freight costs shall be booked in the same Purchase
ansport Freight/Transport on Actual Order for which the procurement is to be done.
Freight/Transport on fixed amount 2. In cases where the Material carrying party is different from the one
Freight as per quantity on whom the PO is raised the Freight Vendor shall also be maintained
in the same PO.
Freight/Transport borne by the supplier
Transport Per Load - fixed amount.
4.1.7.7 Service Service tax % on gross Service Tax will be maintained as condition type
Tax
4.1.7.8 Cess 1. Local: % on the ED or Service Tax. Education cess will be maintained as condition type in both local as
2.Import: well as in Import procurement.
Assessable value = “X” = CIF Price X 101%
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As Is Business Process
Procurement process at Walvoil Suggested business process:
Walvoil procuring office needs like furniture and
Capital Goods like machinery etc., Procurement Process is mentioned in following points 4.2.1 to 4.2.11
Business Requirement:
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also store the prices and terms of delivery from certain quotations in
1. SAP Best Practises for IM & C to be implemented where ever an info record for future accessing.
suits to Walvoil requirement. Gaps:
4.2.3 Quotation
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As Is Business Process:
Purchasing raw materials, Bought-Out items, consumables, MRO Suggested Business Process:
Items, Capital Goods, Tools and samples. Walvoil shall make use of this component to procure materials or
Based on the indents received manual segregation of urgent and services.
normal indents are made, enquires over phone, fax, mail etc., are Purchasing Document - Definition
made. At times numerous attempts are made to obtain realistic, A purchasing document is an instrument used by Purchasing to procure
competitive prices from vendors of the material group. Depending materials or services.
on the quotes received negotiations with the prospective vendor is
The following list shows the various external purchasing documents
made and order confirmation over phone is first made. On this
available in the standard SAP System. (Note: purchase requisitions are
context it is to be noted that details of the specifications to be
not included on this list because they are usually regarded as internal
communicated over phone or fax is an important aspect of
documents used within Purchasing and are therefore treated
obtaining possible offers. It is also possible that vendors taken for
separately.)
obtaining quotes may not be interested, may not be dealing in that
line of product or make. Hence new vendors are explored through Request for quotation (RFQ)
old records, yellow pages, Indenting department’s contacts. Transmits a requirement defined in a requisition for a material or
service to potential vendors.
Once PO is made after the terms are finalised, PO are faxed to the
party and original is sent by courier/post. Quotation
Contains a vendor's prices and conditions and is the basis for vendor
PO is generated using excel worksheet and a manual register for
selection.
PO number is maintained. This register will contain brief details of
the item on order and the file number of the item on order. Purchase order (PO)
The buying entity’s request or instruction to a vendor (external
The typical PO will contain PO number, date, File number, Quote or
supplier) to supply certain materials or render/perform certain
offer reference if any,
services/works, formalizing a purchase transaction.
Also details of material description, specification, rate, quantity,
Requirements of materials or services can be reported to Purchasing by
and value are incorporated. Further order terms such as price,
means of purchase requisitions.
delivery, delivery schedule, duties, taxes, transport, payment
terms as well as excise and tax particulars are mentioned in the Structure
order. Each purchasing document is subdivided into two main areas: the
header and individual items. Each document will contain a header and
can contain several items.
Business Requirement :
The header contains information relevant to the whole document. The
items specify the materials or services to be procured. For example,
1. SAP Best Practises for IM & C to be implemented where ever information about the vendor and the document number is contained
suits to Walvoil requirement. in the document header, and the material description and the order
quantity are specified in each item.
The additional data provides extra information about the item, and has
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the header.
A procurement type is defined for each of the document items. The
following procurement types exist:
Standard
Subcontracting
contracts
Stock transfer
External service
Delivery of the total quantity of material (or performance of the total
volume of services) specified in a purchase order item can be spread
over a certain period in a delivery schedule, consisting of lines
indicating the individual quantities with their corresponding planned
delivery dates.
An item of the procurement type "external service" contains a set of
service specifications. The latter can be hierarchically structured. The
summary view of such a hierarchical structure is referred to as an
outline. The outline comprises a number of levels, each representing a
level of the service hierarchy. The order quantities are set out in
service lines, representing individual jobs or activities. Value limits are
specified instead of service lines for services or work that initially
cannot be specified precisely.
If services covered by an already existing contract are released
(ordered, or called off against the contract), the PO item can contain a
value limit relating to the contract in question.
Conditions
Conditions can apply at various levels:
To the entire purchase order
At item level, to the material to be supplied or to the set of service
specifications in the case of services
At service line level for individual services (tasks or activities)
Account Assignment
Costs can be apportioned among various Controlling objects via the
account assignment.
PO History
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Gaps :
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Imports Raw materials and capital goods , Finished Goods Walvoil make use of this component for import procurement.
Import Procurement procedure Difference will be the Conditions in purchase pricing procedure. A
Based on the above formal indent is obtained for a specific quantity Detailed explanation shall be made available to the user team about
and delivery schedule. If necessary new vendors are also the pricing procedure
approached and offers are obtained before final vendor is finalised A purchase order is a formal request or instruction from a purchasing
and the import price is fixed after negotiating. Also in certain cases organization to a vendor or a plant to supply or provide a certain
our buyer of the FG advises the vendor and the import price and quantity of goods or services at or by a certain point in time.
accordingly order is placed for import. The same price details are Pricing conditions will be maintained based on Imports pricing and tax
taken for costing purposes (worked out using excel) conditions.
Separate Document type and Number range shall be maintained for
PO are created manually with all the import indent terms and local purchases.
bankers details etc., and forwarded to the seller/indenting agent. Advance payment shall be through Internal order (Based on the
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However before the imported material is received at our stores a Payment request) from FI, Internal order shall have reference to the PO
formal order is created through the system to account the material created.
on receipt. LC cannot be addressed in Standard SAP System.
Copies of such manual order are passed to accounts for Duty Payment (CVD) and Customs duty payment shall be through the
information. Advance payment request, For availing the Customs duty; This will be
As and when import activities take place, generally an estimated same process as that of availing cenvat. Customs duty and CV D
funds requirement plan is advised to accounts. This plan takes into condition shall have vendors mentioned against to those conditions
account the LC’s being opened, Bank documents to be retired, mentioned in PO. Customs department shall be created as vendor in
customs duty payments becoming due during the week/month. the system. Clearances Charges (CHO charges) shall also mentioned in
Payment Procedure PO as conditions. These conditions shall have provision to maintain
Depending on the payment terms agreed with the vendor like Vendors in PO.
advance LC or DD payment procedure is initiated.
For Opening LC the following documents are prepared. Gaps:
Covering letter to bank
LC application
Declaration
Indemnity bond
PO
Proforma invoice or indent
Such documents duly signed by authorised signatories are
forwarded to the bank for further action.
Once LC document or advice is received the same is forwarded by
fax to the buyer and indenting agency.
In case of FOB terms of shipment, Insurance company is
approached and PO details are faxed to obtain a premium advice.
Based on this advise cheque is requested from the accounts
department for forwarding to insurance company and further issue
of the policy. Once shipment is effected shipment details are
advised to insurance company by way of letter, fax.
In case of CIF terms of purchase insurance is taken by the vendor
themselves and accordingly shipment takes place.
Follow ups are made with the vendor about the despatch and
shipment details. Shipment advice from vendor is immediately
communicated to the clearing agent for follow up with
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Business Requirement
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Gaps:
Gaps:
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PO Number and Date of creating any orders e.g PO it is possible to refer to the approved
Delivery Challans Number and Date vendor list and give error or warning message.
Duplicate for Transporters Available or not
Manufacturer Name approved or Not Suggested Business Process:
Transporters name
LR Number and Date Inventory Management
Vehicle number and This component deals with the following tasks:
Item Lot number Management of material stocks on a quantity and value basis
Manufacturing date Planning, Entry, and Documentation of all Goods Movements
Delivery Challans Qty Carrying out the Physical Inventory
Received Qty Managing Stocks by Quantity
Location All transactions that bring about a change in stock are entered in real
Category (Customer name or Parent Company name) time, as are the stock updates resulting from these changes. You can
obtain an overview of the current stock situation of any given material
Division
at any time. This, for example, applies to stocks that:
Excisable / Non excisable
Are located in the warehouse
GRN number
Have already been ordered, but have not yet been received
Authorised Signatory
Are located in the warehouse, but have already been reserved
for production or a customer
Are in quality inspection.
If a further subdivision by lots is required for a material, one batch per
Business Requirement lot is possible. These batches are then managed individually in the
stock.
1.SAP Best Practises for IM & C to be implemented where ever suits Special Stocks
to Walvoil requirement Inventory Management can manage various types of a company’s own
special stocks and externally owned special stocks separately from
standard stock.
Managing Stocks By Value
The stocks are managed not only on a quantity basis but also by value.
The system automatically updates the following data each time there is
a goods movement:
Quantity and value for Inventory Management
Account assignment for cost accounting
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System
Use
Inventory Management is part of the Materials Management module
and is fully integrated in the entire logistics system:
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receipt document are checked to ensure that they match those in the
invoice.
Integration in Production Planning
Inventory Management is closely linked to the Production Planning
module:
Inventory Management is responsible for staging of the
components required for production orders
The receipt of the finished products in the warehouse is posted
in Inventory Management.
Integration in Sales & Distribution
As soon as you enter a sales order, you can initiate a dynamic
availability check of stocks on hand.
When the delivery is created, the quantity to be delivered is marked as
"Scheduled for delivery". It is deducted from the total stock when the
goods issue is posted.
It is also possible to create sales order stocks.
Integration in Quality Management
In the case of a goods movement, the system determines whether the
material is subject to an inspection operation. If so, a corresponding
activity is initiated for the movement in the Quality Management
system.
Integration in Plant Maintenance
Inventory Management is linked with Plant Maintenance as follows:
It is possible to post goods movements with reference to equipment
BOMs.
When serial number management is active, the individual serial numbers are
entered in the case of every goods movement. Serial numbers are managed in
the Plant Maintenance system
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This simplifies both the data entry and checking (over deliveries and
under deliveries).
The quantity delivered and the delivery date is updated in the order.
The order number is usually listed on the slip accompanying the
delivered material. If it is not listed on the slip accompanying the
delivered material, you can find the order pertaining to the delivery via
the material number.
Gaps:
As Is Business Process:
Not following Suggested business process: (PP Module)
Even without a returns delivery, you can post returns from a customer
Business Requirement: into blocked stock returns.
1.SAP Best Practises for IM & C to be implemented where ever There is no need to create new material code for receiving such
suits to Walvoil requirement rejected materials. The returned lot of material will be separately
maintained in the system as blocked stock. Walvoil once taking a
decision on such materials relevant movement like destroy or scrap can
be carried out.
Gaps:
4.3.5 GRN for MRO items
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Goods Receipt
Purpose
You use this component to post the receipt of goods from an external
vendor or from production. A goods receipt leads to an increase in
warehouse stock.
Features
The R/3 System distinguishes between the following types of goods
receipts:
Goods receipts with reference to a reservation
Goods receipts with reference to an order
Other goods receipts
Goods receiving can check whether the delivery actually
corresponds to the order.
The system can propose data from the purchase order during
entry of the goods receipt (for example, the material ordered,
its quantity, and so on). This simplifies both data entry and
checking (over deliveries and under deliveries).
The delivery is marked in the purchase order history. This allows
the Purchasing department to monitor the purchase order
history and initiate reminder procedures in the event of a late
delivery.
The vendor invoice is checked against the ordered quantity and
the delivered quantity.
The goods receipt is valuated on the basis of the purchase order
price or the invoice price.
Gaps:
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4.3.7 GRN due to Outbound Service / Job Orders(Purchase Orders for Service)
Not following Automatic Entries to Cenvat Credit/Debit will happen during the
postings happening while doing the excise transactions using Standard
Business Requirement: SAP Transactions.
Party wise Debit note and Credit note and the transaction details like
Excise invoice number, Excise invoice details shall be made available as
1.SAP Best Practises for IM & C to be implemented where ever suits
a report
to Walvoil requirement
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Use
When you procure goods externally, an excise invoice accompanies
each delivery that your vendors make. You have to post these in the
system. This document is required as proof of the excise duty that you
have paid, so that you can then offset the duty against the excise duty
that you levy on outputs.
You can capture and post excise invoices in one or two steps,
depending on your business requirements.
In the two-step procedure, the excise clerk captures the
incoming excise invoice. This means that the clerk enters the
data, but the system does not yet create an entry in Part II of
the appropriate excise register. Another user (the excise
supervisor) checks the excise invoice and posts it. The system
then creates a Part II entry.
In the one-step procedure, the excise clerk captures and posts
the incoming excise invoice simultaneously. The system creates
the Part II entry automatically.
Generally speaking, you have one excise invoice for each goods
receipt; u can also do multiple GR for a single excise invoice.
In the R/3 System, the excise invoice consists of header data and line
items. The header data comprises:
An internal number
The excise invoice number
The date of the excise invoice
The details of the original vendor who generated the excise
invoice, if your vendor purchased the goods from another
vendor and was merely selling them on to you
At line item level, the excise invoice lists the materials on the excise
invoice, showing the following information:
Chapter ID
Quantity of materials
Excise duty base amount
Rates of excise duty
Amount of duty paid
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Excise Registers
Use
The excise authorities require you 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 R/3 System makes all
the entries for these registers automatically, and you can prepare
copies of them as and when necessary. Alternatively, you can download
the data for processing by non-SAP software.
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)
This is the bank account from which you transfer any money
owing to the excise authorities.
Register RT-12
This is a monthly report that summarizes the CENVAT and PLA
information from the other registers.
Register RG 1
Definition
A register of excisable finished goods kept by manufacturing plants.
The register shows goods movements from the factory to a store
specifically for excisable finished goods.
Register RG 23A/23C
Definition
A record of receipts and issues of excisable materials, as kept by
manufacturing plants. The register consists of two parts:
Part I shows the quantities of the materials.
Part II shows the amounts of excise duty on the materials, and
how much you have transferred to the CENVAT accounts.
Previously, manufacturers were required to keep two separate
registers, RG 23A and RG 23C for raw materials and capital goods
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respectively. This is no longer the case, but the distinction still remains
in the R/3 System.
Register RG 23D
Definition
A record of receipts and issues of excisable materials, as kept by
depots.
Serial Numbers
Use
The system automatically numbers all entries in the following registers
with a serial number:
RG 1
RG 23A and RG 23C, Parts I and II
RG 23D
PLA
Each excise group defines its own number range intervals
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Use
Businesses are allowed to set off excise duty on purchases of capital
goods against excise duty on outputs. However, unlike with raw
materials, you can only set off half of the duty in the first year, and the
rest in any year after that.
Features
When you post an excise invoice that contains capital goods, the
system posts half of the excise duty to your CENVAT account and post
the rest to a G/L account for CENVAT on hold.
In following years, you can use a report to identify the capital goods
with excise duty on hold and transfer the duty to the CENVAT account
Transfer of CENVAT Credit on Capital Goods
Use
You use this report to display a list of the vendor excise invoices where
the vendor has levied excise duty but you have not posted it (in full) to
your CENVAT account.
This is particularly useful in the case of capital goods in order to find
out how much credit remains from previous years.
Capturing Excise Invoices Without Reference Documents
Use
This procedure shows you how to capture an incoming excise invoice if
you do not have any reference documents.
You can also follow this procedure if you do have a material document
that you want to use as a reference document, but you want the
system to cross-check the excise invoice data against other master
data or transaction data less stringently than it normally would
You commission a construction company build a new plant for you. The
company purchases all the materials it needs to build the plant, deals
with all of the invoices and most of the other paperwork, with the
exception of the incoming excise invoices, which the law requires you
to deal with yourself. The subcontractor sends you all excise invoices
accordingly and you capture them in the system without any reference
documents.
Gaps :
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1.SAP Best Practises for IM & C to be implemented where ever Any Rejections shall be handled through SAP Transactions. If
suits to Walvoil requirement in case the rejected materials are to be sent to back to
vendor by creating excise invoice can also be carried out
using Standard SAP transactions.
Gaps:
As Is Business Process:
Suggested Business process:
Not Following
Companies usually distinguish between various types of
goods issues, each of which is handled in the R/3 System as
Business Requirement: follows:
1.SAP Best Practises for IM & C to be implemented where ever Stock Scheduled for Delivery
suits to Walvoil requirement
Withdrawal, picking, and shipping of goods to customers are
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Gaps:
Gaps :
4.4.2 Goods Issue To Scrap
W
As Is Business Process: Suggested Business Process:
Not Following Walvoil scrap a material if cannot use it any more, for example
because:
Business requirement:
the quality has been reduced due to long storage time
1. SAP Best Practises for IM & C to be implemented where ever
the quality rejected materials lying long time in stores
suits to Walvoil requirement.
In the R/3 System, you post a scrapping like a goods issue without
reference
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unrestricted-use stock
quality inspection stock
blocked stock
A scrapping has the following results in the system:
the relevant stock is reduced
the value of the scrapped material is posted from the stock
account to a scrap account
the costs of the scrapped material are assigned to the cost
center specified.
The value used is the value from the material master record at
the time of the posting.
Gaps:
to production
4.4.3 Goods issue to production
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As Is Business Process:
Not Following Suggested business process:
In Standard SAP system any Goods issues and Goods receipts are
Business Requirement: handled through Movement type Goods issues to customers are
1.SAP Best Practises for IM & C to be implemented where ever automatically handled through Post Goods issue. Goods returns to
suits to Walvoil requirement vendor are addressed through A Separate transaction. This is same to
third party
Gaps:
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Invoice verification for services (Labour work, AMC, Testing charges invoice has already been cleared and a subsequent invoice has been
etc.,) raised by the vendor for materials already sent. Example: Rate change
with retrospective effect.
Business Requirement Subsequent Credit shall be used when any deduction/ penalty is to be
levied on the vendor.
1.SAP Best Practises for IM & C to be implemented where ever suits There are 3 options, which can be used for Invoice Verification.
to Walvoil requirement 1.Goods / Service Item
2.Delivery Costs
3.Goods/Service Item + Delivery costs
Based on the Goods/Service and delivery vendors, the option shall be
selected.
Gaps:
4.5.1 Entry of Vendors’ Invoice Sub Process S
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for Invoice amount less than Rs 6000/-) In these adjustments wherever the invoice involves the CENVAT, based
on the Tax code maintained, vendor and material tax details CENVAT
Under this scenario GRN and PO reference is taken, check for the clearing account is prompted and will be updated on saving. Simulation
Excise or Non-excise, qty received, PO number, GRN Number, facility is available for checking the accounting effect.
Accepted Qty. Import Vendor
4.Invoice verification for transporters payment (Reference is Imports invoice verification is slightly different from the normal invoice
agreement) verification. In this case the CVD applicable is taken into RG23
Under this scenario commercial department will send the vendor Registers. In Import PO the CVD and other conditions are maintained
invoice. Commercial department will mention the GAN number on as delivery condition types hence the Invoice verification for the CVD
back end of the invoice. Invoice entries are done using Excel. part is to be done first before the GR is done. Then RG part1 entries are
done then GR is done and then RG part2 entries are posted. Invoice
5.Invoice verification for services (Labour work, AMC, Testing
verification is done for the Purchase Order. In this case No GR based
charges etc.,)
Invoice verification is possible (This is specific to Imports only).
Entries are done by referring to PO (>6000) else the entries are
The other functions as mentioned under Local Vendor Invoice
passed without any reference.
verification are also applicable for Import Vendor.
Business Requirement
Business Blue Print – Materials Management – Mr.Rajan, Mr.Vinay – WALVOIL, Mr.Srinivas - CVS IT Page 74 of 77
As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
4.Materials Management
Power (India) Pvt. Ltd. Ltd.
Split Valuation
Split valuation serves the purpose of valuating stock at different
values based on different sources of procurement.
If a material is subject to split valuation, every quantity (sub-stock) of
this material must be assigned to a valuation Type.
If you want to valuate stocks of a material separately, you must create
a material master record with the appropriate valuation category. This
record is called the valuation header record. Each material always has
only one such record for each company code or plant (depending on
whether the material is valuated at company code level or plant level).
Business Blue Print – Materials Management – Mr.Rajan, Mr.Vinay – WALVOIL, Mr.Srinivas - CVS IT Page 75 of 77
As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
4.Materials Management
Power (India) Pvt. Ltd. Ltd.
Once you have specified the valuation category, you can create a
material master record for each quantity of the material you want to
valuate separately, with the appropriate valuation type and accounting
data
Gaps:
4.5.5 Physical Inventory
Requirement Analysis:
As Is Business Process: With physical inventory process the adjustment of stocks shall be done
Not following with the required accounting effect
Suggested business process:
Business Requirement: Physical inventory component allows the carrying out of physical
1.SAP Best Practises for IM & C to be implemented where ever inventory of the company’s warehouse stock for balance sheet purpose.
suits to Walvoil requirement There are different types of physical inventory procedures like Periodic
Processing, Continuous inventory, Cycle counting. Any of these
techniques can be used for this process.
Periodic Inventory:
In this process all the stocks in the company are physically counted on
the balance sheet key date. The entire warehouse must be blocked for
materials movement
Continuous Inventory
Continuous inventory ensures that all the material is counted at least
once during the year. Stocks are counted throughout the year.
Cycle counting
Cycle counting is a method of physical inventory where inventory is
counted at regular intervals within a fiscal year.
Inventory Sampling
Inventory sampling method uses random selection of stocks and these
samples are physically counted on the balance sheet date. If only small
variances occur in the count and the physical inventory, it is presumed
that the inventory balances and book stock are correct.
The counts can be entered in the system and the differences can be
reconciled between physical and book balance. The required accounting
effect is provided through this reconciliation.
Business Blue Print – Materials Management – Mr.Rajan, Mr.Vinay – WALVOIL, Mr.Srinivas - CVS IT Page 76 of 77
As Is Business Process and Business Requirement from Walvoil Fluid To Be Business Process for Walvoil Fluid Power (India) Pvt.
4.Materials Management
Power (India) Pvt. Ltd. Ltd.
Gaps :
5.0 Reports
Gaps :
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