Sap MM Business Blueprint Sample

Walvoil Fluid Power India Pvt ltd
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
Steering Committee Steering Committee Steering Committee Steering Committee

Member, Walvoil Member, Walvoil Member, CVS IT Member, CVS IT
Mr. Avinash Humbrey Mr. Narayana Rajan.N
Project Manager, Project Manager,

CVS IT Walvoil
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
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
3 Sales & Distribution
4 Materials Management
5 Production & Planning
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;
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:
Status of To-Be Business

Status Description
Process
A-Possible Can be implemented on mySAP ERP and WALVOIL
B-Possible with workaround Can be implemented on mySAP through indirect means
C-Possible with ABAP Can be implemented on mySAP through ABAP/4 development

Contents
D-Possible with ABAP (But Can be implemented on mySAP through ABAP/4 development but system performance may be
performance issue) effected Page Numbers
# Topic
E-Not possible with out Major Cannot be implemented on mySAP without major system modification
Start End
Modification
1 Definitions 5 7
F-Open for exploration Possibility of implementation will be explored in the development environment. Cannot be confirmed
2 at thisstructure
Enterprise stage
8 9
G-Not possible Cannot be implemented on mySAP
3 Business Process Scope 10 11
H-Not in Scope Cannot be implemented because it is not part of the scope defined in the “Software Services
4 Agreement”
Business between CVS IT & Walvoil
Process Details 12 76
5 Reports 77 77
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:
1. Definitions:
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.
State Excise Invoice:
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.
State Excise Duty:
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.
2. Enterprise Structure on SAP R/3 System
Purchasing Organization
Current New Justification / Purpose of the

Code Description Code Description Organizational Unit
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
Current New
Justification / Purpose of the Organizational
Code Description Code Description Unit
buyer or group of buyers responsible for certain

101 Domestic
purchasing activities
102 Imports
103 Services
104 MRO
105 Jobwork
106 Miscellaneous purchasing activities
Storage Locations
Current New
Justification / Purpose of the Organizational
Code Description Code Description Unit
RM01 Raw materials Storage location

SF01 Semi Finished Storage location
FG01 Finished Storage location
SP01 spares Storage location
PK01 Packing Storage location
SC01 Scrap Storage location
3. Business Processes scope:
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
4.3.6 GRN in to Blocked Stock

GRN due to Outbound Service / Job Orders(Purchase
4.3.7
Orders for Service)
4.3.8 Excise Transactions
4.3.9 Normal rejection handling
4.3.10 Line Rejection handling
4.4 Goods Issue
4.4.1 Goods Issue to Outgoing Service/Job Work Orders
4.4.2 Goods Issue to Scrap
4.4.3 Goods Issue to Production
4.4.4 Goods Issue to Sales Order
4.4.5 Goods Issue to Quality
4.4.6 Goods Issue to Customer/Vendor/Third Party
4.5 Logistics Invoice Verification
4.5.1 Entry of Vendors Invoice
4.5.2 Parking Vendors Invoice
4.5.3 Cancelling Vendors Invoice
4.5.4 Material Valuation
4.5.5 Physical Inventory
4. Business Process details:
Material/Services Coverage & Different Types of Procurement

Procurement at Walvoil covers the following items but it will take some time to function completely:
Raw Material required for Production
Semi finished goods
MRO Items – Maintenance, Repairs & Operating Supplies
Services - Adhoc & Periodic
Services with Material Supply Repairs etc
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
Material Coding
As Is
Material Type
External /
Total Length Logic1
Internal
Raw materials Not following any codes now
Semi finished
Goods
Finished Goods
Spares
Misc
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)
4.1 Master Data Maintenance
As Is Business Process: Requirement Analysis

Not following any separate master data like SAP R/3 provides functionality for maintaining the following master data:
Material master Materials
Vendor master Services
Customer master Vendors
Vendor approved price list Purchasing Info Records
Service master Source List
Vendor Evaluation Criteria
Business Requirement : Conditions (Commercial)
Payment Terms
1. SAP Best Practises for IM & C to be implemented where ever
suits to Walvoil requirement. Suggested Business Process:
Materials:
The material master contains information on all the materials that a
company procures or produces, stores, and sells. It is the company's
central source for retrieving material-specific data. This information is
stored in individual material master records.
The material master is used by all components in the SAP Logistics
System. The integration of all material data in a single database object
eliminates redundant data storage. In the SAP Logistics System, the
data contained in the material master is required, for example, for the
following functions:
In Purchasing for ordering
In Inventory Management for goods movement postings and physical
inventory
In Invoice Verification for posting invoices
In Sales and Distribution for sales order processing
In Production Planning and Control for material requirements planning,
scheduling, and work scheduling
Service Master
Service master records, in which descriptions of all services that may
need to be procured can be stored
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

Not following any material master data 1. You can identify material or document changes that are made with
Item Code Numbering System reference to a change number by the use of revision levels.
When you want to process the BOMs for these materials or documents at
a later date, you can find and call them using either the change number
Business Requirement:
or the revision level.
1.SAP Best Practises for IM & C to be implemented where ever
You can assign a revision level to a material either from an engineering
suits to Walvoil requirement
change management function or while you are processing a material

master record or BOM for the material.
2. Over deliveries
In the standard, over deliveries are not allowed. In the event of an over
delivery, the system issues an error message.
If over deliveries are to be allowed, you can specify the following data in
the purchase order:
Unlimited indicator
If this indicator is set, over deliveries of any size are allowed. The
system does not issue any message.
Over delivery tolerance
You can enter a percentage over delivery tolerance in the purchase
order. If a quantity of goods is received that is larger than the order
quantity plus the over delivery tolerance, it is not accepted by the
system.
3.Scrap factor is generally considered in the Bill of Materials of
production planning module
4. By using the relevant fields in net requirements planning and
scheduling of MRP2 view in material master this can be addressed.
5. SAP provides various fields using MRP1 View in the material master
and by selecting the MRP Procedure one can maintain Lot Size, Lot for
Lot Order quantity, Minimum lot size, Maximum lot size and maximum
stock level.
6. System Distinguishes between the following units of measure.
Base Unit of measure
This is the unit of measure in which the stocks of a material are
managed.
This is the unit of measure in which the stocks of a material are
managed. The system converts all quantities entered in other units to
the base unit of measure.
Alternative units of measure
Individual departments may have their own units of measure. For
example, Purchasing may use a different unit than Sales or Warehouse
Management (WM). All units of measure other than the base unit of
measure are referred to as alternative units of measure. The R/3 System

supports the following alternative units of measure:
Order unit
Allows a material to be ordered in a unit differing from the base unit of
measure. The order unit is proposed automatically in purchasing
functions, where it can be changed.
Sales unit
Allows a material to be sold in a unit differing from the base unit of
measure. The sales unit is proposed automatically in the sales order,
where it can be changed.
Unit of issue
Unit of measure in which the material is issued from the Stores. It allows
consumption, stock transfers, transfer postings, and physical inventories
to be recorded in a unit differing from the base unit of measure and from
the stock keeping unit.
8. FIFO valuations are a method that enables you to valuate the stocks
of a material as realistically as possible. FIFO (first in, first out) stands
for the assumption that the first stocks of a material to be received are
the first to be consumed. The value of the stock is therefore calculated
based on the last stocks received.
FIFO valuation has a number of uses:
Listing the FIFO values of certain materials.
When you run FIFO valuation, the system calculates the FIFO values of
the materials concerned. The results are displayed in the form of a list
that contains the following information:
- The closing stock quantity and closing stock value for each material for
the period in question as well as the FIFO value and the difference
between that and the stock value
- The net value based on lowest value determination (if you carry out
FIFO valuation with lowest value comparison)
- The totals for each valuation area or company code by material stock
account
- The totals by valuation area or company code
9. Date Freezing – There are Various features available in SAP System
features like Scheduling for activation of newly created materials,
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.
10. Search help control is an ActiveX component. It was developed to

support the SAP search help technique.
In contrast to the previous search help technique, which used R/3 dialog
boxes, search help control uses a dialog technique that is session-
independent. This means that the user can only open search help
windows one at a time.
Search help windows may, however, remain open within a single
transaction. This allows you to refer to the results displayed in a
particular search help window on subsequent screens of the same
transaction.
With match codes, you can use the menu to choose from the various
different search possibilities displayed
Clicking on the right mouse button displays all of the search help control
functions available in the current context.
11. A material may have various documents such as drawings and

photographs assigned to it. The system differentiates between these
documents by means of the document type. If your company uses SAP’s
document management system, you can manage documents and assign
existing documents to a material in the material master record.
Document data is managed at client level.
If one document of the standard document type has been assigned to
the material, the details are displayed directly on the Design documents
assigned sub screen. In the standard R/3 System, this sub screen
appears on the:
Basic Data screen in the industry system
Other Basic Data screen in the retail system
You access the Other Basic Data screen from the Basic Data screen by
choosing Other basic data.
If the document is not of the standard document type, the No link
indicator is set on the Design documents assigned sub screen. You can
display such documents by choosing Additional data -> Document data.
The No link indicator is also set if a document has not yet been assigned
to the material.
If more than one document of the standard document type has been
assigned to the material, the Several links indicator is set on the Design
documents assigned sub screen. You can view these documents by
choosing Additional data -> Document data.

12. There are various possibilities for maintaining material code. It is
suggested to go for a single code instead of maintaining two different
codes for a material.
13. Materials shall be created as per the assignment to the organization
structure. Provision to define various storage locations as per the Walvoil
shall be considered and will be suggested.
14. MRP1 to MRP4 view allows to maintain data related to MPS. Suitable
fields shall be considered as per Walvoil Requirement.
15. MRP1 to MRP4 view allows to maintain data related to MPS. Suitable
fields shall be considered as per Walvoil Requirement.
MRO Items
Material specific texts can be maintained in the materials texts in
material masters
Material Description logic depends on Walvoil policy.
Walvoil responsibility to assign roles for maintaining material master
data. A detailed training shall be provided by CVSIT.
It is possible to maintain specifications, Drawings etc in the material
master records Material master view provides a filed to maintain OEM
Information.
Suggested Business Process :
The material master contains information on all the materials that a
company procures or produces, stores, and sells. It is the company's
central source for retrieving material-specific data. This information is
stored in individual material master records.
Integration
The material master is used by all components in the SAP Logistics
System. The integration of all material data in a single database object
eliminates redundant data storage. In the SAP Logistics System, the
data contained in the material master is required, for example, for the
following functions:
In Purchasing for ordering
In Inventory Management for goods movement postings and physical
inventory
In Invoice Verification for posting invoices

In Sales and Distribution for sales order processing
In Production Planning and Control for material requirements planning,
scheduling, and work scheduling
Material Master Records
All the information Walvoil needs to manage a material is stored in a
data record in the material master, sorted by various different criteria.
Walvoil can enter and change most of the data in a material master
record. However, some information can only be updated by the system.
For example, the system updates the administrative data when you
process a material master record, and stock balances when goods
receipts or goods issues are posted.
The data in a material master record can be divided into two categories:
Data of a purely descriptive nature
This is data with information content such as name, size, or dimension.
Data that the system uses to perform a control function
This is data such as MRP type and price control.
Since different departments in Walvoil work with the same material, but
each department uses different information on the material, the data in
a material master record is subdivided by user department.
User Departments at Walvoil using one material record
Since several departments of Walvoil work with one material and each
department uses different information for the material, the data is
structured in a material master record, according to user departments.
This is portrayed in the following graphic:
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.
Use
You can use material groups to:
Restrict the scope of analyses
Search specifically for material master records via search helps
Gaps :
4.1.2 Service Master Maintenance

Not following Service master data Service activities process shall be carried in SAP System as per the
requirement.
Business Requirement: Service Request/Material Request/ Capex Request shall be through the
SAP System (Purchase requisition – RFQ – Quotation- Price Comparison-
Purchase Order-Service entry sheet-Invoice Verification and Payment).
suits to Walvoil requirement Purchase Requisition shall be based on the material group but Standard
system also provides features to create PR’s on Material, Account
Assignment, Item category, plant etc.,
Suggested Business Process:
The service master record counts as part of the master data within
External Services Management and serves as a source of data for you to
draw upon when creating service specifications. This enables you to save
time and reduces the frequency of errors, since you need only enter the
complete service descriptions in the service master record once.
Structure
A service master record contains the following principal information for
the unique description of a service:
Service number
Service category
Descriptive texts (short and long text)
Base unit of measure
Material group
Valuation class
Gaps:
4.1.3 Maintenance of Vendor Master
As Is Business Process : Requirement Analysis

Not following any separate vendor master data 1. Business partners have a number of different functions, described as
partner functions, in connection with your company. You use partner
Business Requirement: functions to define the rights and responsibilities of each partner type in
a business transaction. When you sell or order goods, for example, your
business partners can assume partner functions such as:
Vendor Partner functions:
a. Ordering address
b. Goods supplier
c. Invoice presented by
d. Alternative payee
Different business partners may carry out one or more partner functions.
For this reason, you can assign individual business partners a number of
partner functions.
You manage data on business partners in master records. Data on
partner functions is stored in these master records and used in Financial
Accounting and Logistics.
A business partner can be a customer and a vendor at the same time if,
for example, your customer also supplies goods to you or if a vendor is
also one of your customers. In this case, you must create a customer
master record and a vendor master record for the business partner. You
can create a link between the two master records by entering the vendor
number in the customer master record and the customer number in the
vendor master record.
2. Terms of payment are rules agreed with your business partners. They
apply to financial clearing for goods and services. Standard system
allows one to associate terms of payment at master data level and at
transaction level.
3. Your company does business with some business partners for a long
time. For example, you have special price agreements with long-term
customers and their deliveries get preferential treatment. At the end of
the fiscal year, you can honour the loyalty of these customers with
rebate payments. In other cases, you have only one contact with a
business partner. For example, you order merchandise from a different

vendor once, because your preferred vendor cannot deliver. In the R/3
System you can distinguish between:
Customers and vendors
You create a master record and assign partner functions for each
business partner.
One-time customers and one-time vendors
Business partners who have a business transaction with you only once
are called one-time customers and one-time vendors. You do not have to
create a master record for one-time customers or one-time vendors
because you do not need this master record after the business
transaction, and it uses space. You create collective master records for
one-time customers and one-time vendors.
4. Quotations and delivery reminders can be sent using features
available in Standard system.
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.
vendor master record contains:
Vendor’s name, address, language, and phone numbers
Tax numbers
Bank details
Account control data like the number of the G/L reconciliation account for
the vendor account
Payment methods and terms of payment set up with the vendor
Purchasing data
How the Data is organised

Master records are divided into the following areas so that each company
code and each purchasing organization can store its own information for
doing business with vendors.
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
9. Packing material supplier –imports

10. Employee vendors
11. Capital Purchases - Imports
Vendor Number Assignment

The vendor master record number can be assigned either internally or
externally. Internal numbers are assigned by the system, whereas you
enter external numbers yourself when you create the vendor master
record. External numbers can be alphanumeric.
The account group determines whether account numbers are internal or
external and what the valid number interval for a vendor master record
is.
The system ensures that the numbers assigned are always unique. With
Internal assignment, the system selects the next number from the
interval. With external assignment, the system prevents you from
entering the same number twice.
Access Authorisation
You can restrict access to master records in order to prevent
unauthorized changes. Depending on how you organize your master
data, you can assign authorizations for maintaining this data. For
example, one user may have authorization to maintain all master data,
while another may have authorization to maintain only accounting
master data.
You can even assign authorizations for different types of processing. All
users could have authorization to display master records while only a
limited group of users may be able to create and change master data.
Gaps:
4.1.4 Purchase info records

Not Following Info Record Price Versus PO Price
The net price in the info record and the net price in the purchase order
Business Requirement: are two different prices.

1.SAP Best Practises for IM & C to be implemented where ever The net price of an item in the info record is based on the conditions
suits to Walvoil requirement stipulated in the info record. If you change the conditions, the net price
in the info record is recalculated and the pricing date adjusted
accordingly.
In contrast, the price in the purchase order may reflect the deduction of
a quantity discount according to a price/quantity scale.
As a rule, the conditions from the info record are adopted in the PO.
However, if a price/quantity scale has been defined, the price for the
relevant order quantity is taken.
Suggested business process:
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).
Definition
Serves as a source of information for Purchasing. The purchasing info
record (also referred to in abbreviated form as the "info record")
contains information on a specific material and a vendor supplying the
material. For example, the vendor's current pricing is stored in the info
record.
The info record allows buyers to quickly determine:
Which materials have been previously offered or supplied by a specific
vendor
Which vendors have offered or supplied a specific material
The info record contains:
Data such as prices and conditions that you can store for the relevant
purchasing organization or plant
The number of the last purchase order
Tolerance limits for over deliveries and under deliveries
The planned delivery time (lead time required by the vendor to deliver
the material)
Vendor evaluation data
An indicator showing whether the vendor counts as the regular vendor
for the material

The vendor sub-range to which the material belongs
The availability period during which the vendor can supply the material
The info record contains quotation and ordering data. The data in the
info record (prices for example) is also used as default data for purchase
orders.
For instance, you can store the current and future quotation conditions
(discounts, fixed costs etc.) in the info record, in order to be able to copy
them into Pos. You can also maintain the vendor’s conditions directly in
the info record.
Organizational Levels
An info record can apply to the following organizational levels:
Purchasing organization
Plant
Procurement Types in Info Records
Standard
A standard info record contains information for standard purchase
orders. The info records can be created for materials and services with
and without master records.
Subcontracting
A subcontractor info record contains ordering information for subcontract
orders. For example, if you subcontract the assembly of a component,
the subcontractor info record would include the vendor's
(subcontractor’s) price for assembling the component.
Validity periods.
Consignment
A consignment info record contains information on a material that
vendors keep available at their own cost on the orderer’s premises. The
info record contains the vendor’s price for withdrawals by the ordered
from consignment stock. As in the case of the pipeline info record, you
can store prices for different validity periods.
Gaps:
4.1.5 Source list maintenance

Not Following Suggested Business Process :
The source list is used in the administration of sources of supply.
Business Requirement: It specifies the allowed (and disallowed) sources of a material for a
1.SAP Best Practises for IM & C to be implemented where ever certain plant within a predefined period. Each source is defined by
suits to Walvoil requirement means of a source list record.
The source list serves:
To define a source of supply as "fixed". Such sources count as
preferred sources over a certain period of time.
(For example, the fixed vendor for material 1 is Acme Corp. for the
first quarter and Zenith Co. for the second quarter of the year.)
To define a source of supply as "blocked".
(This means, for example, that contract 123 may not be used for a
certain period of time.)
As an aid in selecting the preferred source during the source
determination process.
(For example, the vendor Zenith Co. is determined as the source for an
item of a requisition dated 15th June relating to material 1.)
To block the external procurement of a material.
(For example, material 1 may not be ordered from 01.01.98 to
12.31.98.)
Gaps:
4.1.6 Maintain Vendor Evaluation Criteria

Not Following Suggested Business Process:
The Vendor Evaluation component supports you in optimizing your
Business Requirement: procurement processes in the case of both materials and services.

Elements of Vendor evaluation

The following sections introduce you to the concept of vendor
evaluation
Overall score
Main criterion
Sub criterion
Scoring Range
Weighting of scores
The following five main criteria are available in the standard system:
Price
Quality
Delivery
Gen. service/support
These four main criteria serve as a basis for evaluating vendors from
whom you procure materials.

External service provision
This main criterion serves as a basis for evaluating those vendors you
employ as external service providers.
Gaps:
4.1.7 Maintenance of Conditions for Procuring Materials
4.1.7.1 Prices As Is Business Process : Suggested Business Process:

All Inclusive prices (Net Price): It is a net This component enables you to store pricing stipulations agreed with
price for the merchandise. the vendor (such as applicable discounts or surcharges, or stipulations
1. Basic price: It is unit price. regarding the payment of freight costs) in the system. You can enter
2.Gross price: Basic + Duties and taxes also these conditions in quotations, outline purchase agreements, and info
net of discounts records. You also have the option of entering general conditions at
vendor level, for example. The system then applies the conditions in
3.Economy of price of supply should capture
determining the price in purchase orders (POs). You can enter further
vendors rejections
conditions in the PO itself.
There are three kinds of price in Purchasing:
Gross price
Price without taking any possible discounts and surcharges into
account.
Net price
Price taking any applicable discounts and surcharges into account.
Effective price
Net price after deduction of cash discount, with allowance for any
miscellaneous provisions, delivery costs, and non-deductible taxes.
Pricing conditions shall be maintained in the purchasing info records or
in the header or item level as applicable
4.1.7.2 Discounts 1.% Discount: Adholeram discount (Basic 1. Different discounts required by Walvoil are Discount before Tax and
Price) Discount after tax. The Discount condition records shall be maintained
2.Value Discounts: On the total value fixed with conditions and values associated with conditions. While processing
amount is a transaction system will search for valid record and as soon as it finds
3. Cash discounts: Discount given on the record matching the condition of sale it should return a discount
Immediate Payment (Basic Price). value.
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%
Customs Duty = “X” X () % = Y

Cess of CD = “Y” X () % = Z
CVD = (“X” X “Y”) X () % = A
Cess on CVD = (A + Y + Z) X () %
4.1.8 Payment Terms
As Is Business Process Requirement Analysis

There are various payment terms. Payment terms for procuring RM Suggested business process:
and PM, Payment terms for Procuring Assets, MRO Items are 1. Walvoil shall use the standard payment terms wherever possible.
different. 2. Wherever required, specific payment terms shall be defined in the
system like Payment with LC.
1.SAP Best Practises for IM & C to be implemented where ever Gaps:
4.2 Procurement Process
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

4.2.1 Purchase Requisition

Product code, Product description, required qty. . . . Now at Walvoil PR Shall be addressed as different Purchase requisition Document type
using Excel for creating the Purchase Requisition. and Number range
Approved vendor list shall be created in the system.
Business Requirement: Changes to Purchase requisition shall be made possible upon approval
from authorised person.
1.SAP Best Practises for IM & C to be implemented where ever SAP Standard Report is available
suits to Walvoil requirement Integration issue with PP module. To explore further
Recheck option like error messages and warnings can be thrown.
Requirement Analysis MRO Items
Each procurement document will have a unique number
Purchase requisition line item details like material code, plant, storage
location, material group details etc.,
Since Purchase requisition line items will have materials codes, the
specification attached to master data can be copied to document.
Previous supply details can be seen through a separate SAP Standard
report
Through source determination component Recommended supplier
details can be incorporated.
Purchase requisition line item will have all such details
Possible through Release procedure. Release procedure process is
explained in sub process 4.2.5
Changes to the approved purchase document shall be restricted
Purchase requisition document provides feature to capture costs on to
a cost centre or to G/L account.
Amendment to Purchase requisition shall be made possible before
release.
SAP Standard Report provides this feature
All the Purchase documents in Standard SAP System are linked.
SAP Standard Reports provides this feature
Purchase Requisitions are created under the following situations:

Purchase Requisitions shall be created - automatically on MRP Run or
manually by the requesting department. Manual creation of Purchase
Requisitions for Stock Items shall be restricted to the corresponding
MRP Controllers through authorization profiles.
Manual creation of Purchase Requisition for MRO items will be
controlled by authorization profiles.
Release Strategy shall be incorporated for release of Purchase
Requisition as defined in the requirements.
Gaps:
4.2.2 Request for Quotation

Using reference technique method provided by SAP One can copy the
MRO ITEMS contents for further processing.
For Capex items possible, electrical items (bulbs, fans etc) Sources Each indent will have separate enquiry.
are identified (Identification of Sources by past Purchases by Specification about materials shall be copied if they are maintained
Journals or Industrial Directory or by reference) and enquiry is Quantity shall be copied as per the reference technique method
floated over phone or by letter. It is possible to mention Quotation expected date
Technical/ Commercial Specifications are explained, Requirement is Provision for mentioning a bench mark price is possible.
emphasised and quotes are obtained.
Provision for mentioning tax and duty structure is possible.
Specification should include the individual characteristics of the
Mentioning of commercial terms is possible
item make material etc.,
SAP Standard Report General Analysis report
Tax and duty structures applicable for the company in respective of
the item on procurement
Other requirement of commercial terms should be explicitly Suggested Business Process :
mentioned. You use this component if you wish to manage and compare requests
Sending Enquires to vendors should be possible through direct for quotation (RFQs) issued to vendors and the quotations submitted
mailing, fax, Printout. by the latter in response to them.
In Purchasing, the RFQ and the quotation form a single document.
Prices and conditions quoted by vendors are entered in the original
RFQ. If you have issued an RFQ to several vendors, you can have the
Business Requirement : system determine the most favourable quotation submitted. You can
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

Standard SAP Report Price comparison list
Quotation received from the vendor will consist of quantity, price, Suggested Business Process:
Payment terms, CST and KST, ECC Number, Delivery terms. A quotation is an offer by a vendor to a purchasing organization
Quotations are compared based on price, Vendor has been regarding the supply of materials or performance of services subject to
finalised. specified conditions.
A quotation is legally binding on the vendor for a certain period. The
Business Requirement : quotation is the vendor’s response to a request for quotation issued by
a purchasing organization.
1. SAP Best Practises for IM & C to be implemented where ever A quotation consists of items in which the total quantity and delivery
suits to Walvoil requirement. date of an offered material or service are specified.
An item of a quotation may contain a delivery schedule made up of a
number of schedule lines in which the total quantity is broken down
into smaller quantities to be delivered on the specified dates over a
certain period.
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 quantities of the quotation are set
out in service lines, representing individual jobs or activities.
If services cannot be defined precisely, value limits are stipulated
instead of service lines. Value limits can be set for certain contracts.
Conditions can apply at various levels:
To the entire quotation
At item level, to the material to be supplied or to the planned
procurement in the case of services

At service line level for individual services (tasks or activities)
Processing of quotation shall be based on the Request for Quotation
where the Vendor specifies the rates and other details like the period
for which the rates will be valid.
The Vendors can be allowed to maintain the quotation.
Info records are updated for the validity period, which shall be copied
as conditions during the creation of the Purchase order.
Gaps:
4.2.4 Purchase Order - Local (RM, MRO Items)
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
no direct connection with the item procurement data. Additional data

includes, for example, account assignment data (such as cost center
and G/L account) and the PO history for an item, which contains
information on already recorded goods and invoice receipts relating to
the item.
Each item in a purchasing document represents a unit of procurement.
Purchasing operations (involving requisitioning, ordering and follow-up
processes) occur on an item-specific basis.
How does the SAP System Differentiate Between Purchasing
Documents?
In the SAP System, the different kinds of purchasing document are
distinguished from one another by means of the document type. The
later determines the relevant number range and the fields that are
offered to you for data maintenance purposes, for example. The
relevant document type appears as a default value when you create a
purchasing document.
Document types are defined for RFQs, purchase orders, and contracts,
for example. The standard SAP system includes certain document
types. However, your enterprise can also define its own.
How is Purchasing Documents Numbered?
Each document is assigned a unique number. (Note that the "number"
may also be an alphanumeric code: see below). This number can be
assigned internally or externally, depending on the policy of your
requirement. Internal number assignment means that the system
assigns the number. External number assignment means that the
person creating the document must supply it.
Alphanumeric assignment is only possible in the latter case.
A purchase order is a formal request or instruction from a purchasing
organization to a vendor or a plant to supply or provide a certain
quantity of goods or services at or by a certain point in time.
Structure
A purchase order (PO) consists of a document header and a number of
items.
The information shown in the header relates to the entire PO. For
example, the terms of payment and the delivery terms are defined in
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
The transactions following on from a purchase order are documented in

the PO history on an item-specific basis.
Partner Roles
Instead of the vendor as the order recipient, other business partners
can appear in various partner roles (e.g. goods supplier or invoicing
party).
Plant
In the purchase order, each item is destined for a certain plant. Each
plant belongs to a company code, to which the vendor’s (creditor’s)
invoice is directed.
Texts
You can enter text in a purchase order directly or change texts that are
suggested by the system. There are two kinds of text:
Header text: applies to the entire document
Item text: applies only to the relevant item
You define which texts appear in which order on printouts in
Customizing for Purchasing. You can enter several header or item
texts, which you can identify by your own codes.
Gaps :
4.2.5 Release Strategy
As Is Business Process: Suggested Business Process:

Walvoil shall use this component if it wishes to set up approval
Not following any release procedure procedures for purchase requisitions or other purchasing documents.
Under such a procedure, if a purchase requisition or external
purchasing document fulfils certain conditions (e.g. the total order
Business Requirement
value exceeds Rs10, 000), it has to be approved (by the cost center
manager, for instance) before it can be processed further. This process
1.SAP Best Practises for IM & C to be implemented where ever suits of approving (clearing, or giving the "green light" to) a proposed item
to Walvoil requirement of expenditure is replicated in the SAP System by the "release
procedure".
Which Documents Can be Released (Approved)?
Release procedures can be defined for the following documents:
Purchase Requisition
The external purchasing documents purchase order (PO), contract,
scheduling agreement, request for quotation (RFQ), and service entry
sheet
Gaps:
4.2.6 Purchase Order - Imports
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
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
airlines/steamer lines Cargo arrival advice is obtained. Immediately

after shipment of the goods the vendor sends one complete set of
shipping documents by fax.
Details of documents are as follows
Invoice
Packing list
Certificate of origin
A.W.B or BL (air way bill/bill of lading)
Insurance certificate.
Certificate of analysis
Such above set of advance documents are immediately faxed/sent
to the clearing agent for further customs clearance process.
Necessary copies if required and detailed write-up of the imported
item, End use certificate is also forwarded. Appropriate classification
of the item under import as well as previous import B/E is also send
to for easy clearance.
In case of LC related/Documents through bank shipments original
documents are forwarded through the bank and as and when such
documents are received by the bank, the bankers sends us an
advice for acceptance of shipment documents.
In this process we also follow up with bankers about the documents
arrival so that original documents in case of sea shipment can be
collected earliest to avoid demurrage and speedy clearance.
In the case of Air Consignments, the goods would have landed
much before the receipt of original documents with the bank hence
the cargo arrival notice, airway bill and invoice copies are forwarded
with the covering letter to the bank for issue of necessary release
order.
Once the cargo is arrived at the port/airport the will file necessary
bill of entry and other documents. After the assessment of the
goods by the customs authorities advises through fax the actual
customs duty and other duties with individual break up. The same
is checked for correctness and if necessary taken up with Customs.
Advice to accounts for obtaining DD for customs duty with break up
is forwarded along with necessary PO copy.
Customs duty payment by DD is sent to by courier or hand delivery.

Necessary follow-up are made about the status of clearance and
dispatch of material to the factory.
Upon receipt of the material at factory the material is in warded
against the system order. The submits his agency and other
charges bill along with B/E copies.
The exchange control copy of the B/E is forwarded to the bankers
as proof of import along with a covering letter giving details of
import, payment reference etc., and The same advice is copied to
accounts department with all relevant documents for reference and
action. The triplicate copy of the B/E is handed over to the excise
department for availing modvat of CVD amount.
The CHA’s (Clearing House Agent) Bill is passed for payment with a
cross reference to the GRN raised for the imported items and sent
to accounts through the manual register maintained for this
purpose. The Cost of Clearance and other charges are taken into
account for arriving at the landed cost of the RM and PM in the
costing calculations.
1.SAP Best Practises for IM & C to be implemented where ever suits

to Walvoil requirement
4.2.7 Outbound Service Orders / Job work
As Is Business Process : Suggested Business Process:

Not Following Service Purchase Orders are created for the external procurement of
Business Requirement: services from a vendor. These services can be account assigned to a
Cost center or a network or a Project.
1.SAP Best Practises for IM & C to be implemented where ever suits Separate pricing conditions are maintained for services.
to Walvoil requirement For PO items to be supplied by subcontractors, you can specify the
necessary input materials or components that are to be provided to the
subcontractor for assembly or processing in respect of each delivery
date stipulated.
Standard SAP Purchase requisition with a different number range shall
be used
Purchase requisition shall consist all the fields
Reminders can be maintained in Standard SAP PO.
This is addressed as Goods receipt against to PO. Provision to capture
excise entries shall be provided using CIN component.
Left over quantities at job work vendor can be seen using Standard SAP
System. Provision to receive unprocessed materials is possible with GR
Transactions
Subcontracting PO will have BOM; batch number can be specified to
each line item.
4.2.8 Purchase Order Services

Not Following The procurement of services shall involve the following steps:
Determination and recording of requirements
Business Requirement: Determination of possible sources
1.SAP Best Practises for IM & C to be implemented where ever suits Bid invitation procedure
to Walvoil requirement Entry of data from quotations submitted by bidders
Comparison of quotations
Award phase (order placement)
Monitoring of purchase orders
Entry of services actually performed

Acceptance of services performed
Verification of invoices for services
Services shall be maintained as master data in the standard SAP

system. Service master can be maintained with short description and
Long description.
Service Purchase requisition can be created for one line item or for
multiple line items.
Purchase requisitions can be subjected to release approval
Walvoil will create Service PO for the service providing Vendor as &
when they will get the Service from that Vendor they will go for Service
acceptance i.e. Service Entry sheet w.r.t. Service PO, like this Service
PO will get connected with Service Entry Sheet.
When Service Entry Sheet is entered in the System w.r.t. Service PO

then it will be open for Invoice Verification.
In Service PO itself we can mention the Service taken & Material used
for Services in 2 different Line Items against which we can show the
receipt of Service along with material in service sheet w.r.t. Service PO.
Accounting Entries gets generated as per Account Assignment given in
Service PO.
Invoice Verification for Service PO can be done after Service
acceptance.
Gaps:
4.2.9 Purchase Order Amendment

Not Following
Business Requirement: Purchase Orders can be amended before the Goods Receipt If the
purchase order is subjected to release strategy, the changes made to
1.SAP Best Practises for IM & C to be implemented where ever suits the Purchase order may reset the release strategy depending on what
to Walvoil requirement type of changes have been made to the order. If the release strategy
has value limits, the purchase order change in value or quantity, if it
violates the existing release already affected, will reset the release
strategy and a new strategy will be assigned.
The Purchase Order amendments can be reported for changes in
different fields.
Purchase order amendments shall be traced; Changes will be recorded
in the system as log.
Gaps:
4.2.10 Cash purchases

Currently purchase through cash payment is resorted for various
small value and consumable items as well as office maintenance Cash purchases can be carried out in the Standard SAP System through
items. Such purchases are also resorted in case of any emergency invoice verification and posting to relevant accounts.
requirements of specific items. 1. GR without reference to any order can be set to active.
The items of purchase are initiated by the departments through a 2.Indicator for cash purchase can be set at header level texts at the
formal material indent and sent to commercial department. As and time of GR
when such materials are received at the stores and necessary
3. A Separate report shall be developed using ABAP.
GRN’s made the relevant bills are submitted to accounts after due
approval by commercial head to square up the impreset advance. 5.PO History would fulfil this requirement
Business Requirement Gaps:

4.3 Goods Receipt
GRN at Stores – In general It is possible to capture through a separate field in GR screen. It is

Using Excel GRN at Stores is doing now. suggested as a solution that Each and every GR Transaction will have
GRN is prepared based on PO for all purchasing scenario. feature to capture excise invoice. Provision to capture excise invoice
separately apart from GR Transaction will be provided.
GRN for Misc items is prepared without PO. PO is prepared
manually. To print GR details like Document date, LR number (should be
mentioned in header text) shall be printed.
For all the materials Goods Receipted Note (GRN) Check List -
Which is to be filled before GRN is Prepared Consignment should accompany COA as per the requirement in QM
module and Inventory module of MM.
Supplier Name
Goods receipt in Standard system is based on with Reference to orders
Manufacturer name
basically (PO, Production order, etc.,) or without reference to any
Item Name document. GR Program will only refer to the documents. Hence at time
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
 G/L accounts for financial accounting via automatic account

assignment
The valuation area is the organizational level at which a material's
stock value is managed. The valuation area can be plant level or
company code level.
In Inventory Management, work is basically done at plant and storage
location levels. When you enter a goods movement, you only have to
enter the plant and the storage location of the goods. The system
derives the company code from the plant via the valuation area.
Planning, Entry, and Documentation of all Goods Movements

Goods movements include both "external" movements (goods receipts
from external procurement, goods issues for sales orders) and
"internal" movements (goods receipts from production, withdrawals of
material for internal purposes, stock transfers, and transfer postings).
For each goods movement a document is created which is used by the
system to update quantities and values and serves as proof of goods
movements.
You can print goods receipt/issue slips to facilitate physical movements
and monitor the individual stocks in the warehouse.
Integration of Inventory Management in the Logistics
System
Use
Inventory Management is part of the Materials Management module
and is fully integrated in the entire logistics system:
Material is procured from external or internal sources on the basis of

the requirements determined by Material Requirements Planning. The
delivery is entered in Inventory Management as a goods receipt. The
material is stored (and managed under Inventory Management) until it
is delivered to customers (Sales & Distribution), or is used for internal
purposes (for example, for production).
During all transactions, Inventory Management accesses both master
data (such as material master data) and transaction data (such as
purchasing documents) shared by all Logistics components.
Features
Integration in Materials Management
As a component of Materials Management, Inventory Management is
directly linked with Material Requirements Planning, Purchasing, and
Invoice Verification.
Inventory Management provides information for MRP, which takes into
account not only physical stocks but also planned movements
(requirements, receipts).
When a material is ordered from a vendor, Inventory Management
posts the delivery as a goods receipt with reference to the purchase
order. The vendor invoice is processed later by Invoice Verification.
Here, the quantities and values from the purchase order and the goods
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.
 It is possible to withdraw parts for maintenance orders.
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
Integration in the Logistics Information System

With the Inventory Controlling component, the Logistics Information
System offers a tool for collecting, compressing, and evaluating
inventory management data.

Gaps:
4.3.1 Quality Check
As Is Business Process : Suggested Business Process :

Not following
Goods Receipt When Quality Management (QM) is Active
Business Requirement: The SAP System differentiates between two different forms of quality
management:
1.SAP Best Practises for IM & C to be implemented where ever  Quality Management in Material Procurement
suits to Walvoil requirement  Quality Management in Material Inspection
Quality Management in Material Procurement
Quality management shall be active for procurement, Walvoil can
define in the material master record (Quality Management screen) that
a certificate is required for the material.
If a certificate is required, the system displays a box during goods
receipt for a purchase where you can confirm the receipt of a
certificate.
Quality Management in Material Inspection
If an inspection at the time of goods receipt has been defined for the
material, the system automatically creates an inspection lot when the
goods receipt is posted. Quality Management uses this inspection lot to
carry out the inspection.
Shall be considered, .QM module based on the sample drawing
procedure.
Gaps:
4.3.2 GRN due to Purchase of Assets

All the Capital Items, Furniture, Equipments etc. With Reference to 1.Goods receipt shall be with reference of PO. Subsequent functioning
Capex PO GR is done, Based on the User Certification Materials are like GR shall be with reference to PO
Accepted. GRN for Goods Receipt, GRN For Goods Acceptance This 2.Report to Distinguish GR Material group wise shall be addressed
Applies for all Items.

Business Requirement: You use this component to post the receipt of goods from an external
1.SAP Best Practises for IM & C to be implemented where ever vendor or from production. A goods receipt leads to an increase in
suits to Walvoil requirement 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
Gaps:
4.3.3 GRN due to Production

Not Following 1.Receiving material from Production order into finished goods stores
shall be taken care
Business Requirement: Suggested business process:
Deliveries from production are the result of orders used as a basis for
1.SAP Best Practises for IM & C to be implemented where ever manufacturing the materials required.
suits to Walvoil requirement The production order is not only the document on the basis of which a
material is manufactured; it is also an important planning and tracking
tool for the following departments: Materials Planning and Inventory
Management.
Features
Reference to an Order
When material resulting from a production order is delivered, it is
important for the departments involved that the goods receipt entry in
the system reference this order, for the following reasons:
Goods receiving can check whether the delivery actually corresponds to
what has been planned.
The system can propose data from the order during entry of the goods
receipt (for example, the material produced, its quantity, and so on).
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:
4.3.4 GRN due to Finished Goods Rejection
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

Not following This is addressed in the sub process: Purchase order.
Should be decided by the relevant department/Management of Walvoil.
Business Requirement: There are stock statement reports in SAP System. Indenter to run
1.SAP Best Practises for IM & C to be implemented where ever through those reports on certain intervals.
suits to Walvoil requirement Should be decided by the relevant department/Management of Walvoil.
Should be decided by the relevant department/Management of Walvoil.
SAP Standard report is available in the inventory management module,
sub module of materials management module.
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:
4.3.6 GRN into Blocked Stock
As Is Business Process: Suggested business process:

Not following Blocked Stock
Company's own stock that should not be used. It is not for
Business Requirement: unrestricted-use in Inventory Management.

1.SAP Best Practises for IM & C to be implemented where ever Posting a Goods receipt into Goods receipt blocked stock
suits to Walvoil requirement When you post a Goods receipt in goods receipt blocked stock one must
first determine the quantity of stock to be posted to blocked stock first.
Since the material is not to be added to the inventory yet, do not enter
a storage location.
Gaps:
4.3.7 GRN due to Outbound Service / Job Orders(Purchase Orders for Service)
As Is Business Process: Requirement Analysis:

Material sent to vendor shall be QC Passed if and only the material is
Not following issued for subcontracting from Walvoil location.
Business Requirement Suggested business process:

Purchase orders shall be created for services and Service entry sheets
1.SAP Best Practises for IM & C to be implemented where ever suits shall be created for the quantity of Service received. Part service of the
to Walvoil requirement total quantity of service mentioned in the PO can be received and
Invoice verification shall be done for the invoice raised by the service
vendor based on the service entry sheet created. If required a release
strategy can be used for control of the service entry sheets.
Gaps:
4.3.8 Excise Transactions
As Is Business Process : Requirement analysis:
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
a report
Assessable value shall be maintained as master data for trading

materials.
Addressed in SD Module, however this will be checked and reviewed as
per the requirement.
The general flow is part1 posting will be done along with the GR; Part2
posting will be done after the GR is and Part1 posting is finished.
Separate posting of excise duty and education shall be taken care. In
Standard report separate columns for Excise duty and education cess
shall also be provided.
This will be considered as purchase return scenario. Provision to
generate excise invoice and send back material is also possible after
reversal of excise duty.
Addressed in sales and distribution module.
Country Version India 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.
You can enter incoming excise invoices in the R/3 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
Definition
A business document, in India, that your vendor sends you when it
delivers excisable goods. It lists the goods and states how much excise
duty applies on them. Your use the excise invoice to claim back the
excise that you have paid from the excise authorities.
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
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
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
Download Register Data

Use
You use this report to download data from the registers listed below
onto your hard drive. The information is saved in flat file format and
can then be processed by non-SAP software to produce registers. This
solution is thus an alternative to that described under Creation of
Excise Registers.
Use
You use this report to download data from the registers listed below
onto your hard drive. The information is saved in flat file format and
can then be processed by non-SAP software to produce registers. This
solution is thus an alternative to that described under Creation of
Excise Registers.
This report covers the following registers:
 RG 1
 RG 23 A and RG 23 C (Parts I and II)
 PLA
 Plant excise details

 Monthly Return
Use
The central excise authorities have by vided notification no: 2000-(N.T)
dated 28th April, 2000, prescribed the form of monthly return under
rule 57AE of the central Excise Rules, 1944.
The SAP System offers you a report with which you can prepare the
necessary printouts. It covers both of the following:
Annexure
This is a list of all the invoices and bills of entry for which you have
made a Part II credit posting over the past month. For each document,
it shows the information required by the authorities.
Abstract
This is a summary of the excise information from the annexure.
Subcontracting Without Payment of Excise Duty
Purpose
When you issue materials to a subcontractor, you need to keep track of
what materials you have issued and when they have to be returned by.
The reason for this close monitoring has to do with India’s tax law.
Under excise law 57AC, when you send materials to a subcontractor for
processing, you are not required to pay any excise duty, even though
the materials have left your premises. However, if the materials have
not been returned to you within a given length of time specified by the
law (in 2000, 180 days), you will have to reverse any excise credit that
you posted when you purchased the materials. In the case of materials
that you have manufactured in-house, you will have to post credit
entries to the extent of the CENVAT rate of the assessable value of the
materials.
Subcontracting Under Full Payment of Duty
Purpose
This procedure illustrates how you use the R/3 System to send
materials to your subcontractors for processing using normal excise
invoices.
Capital Goods
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 :
4.3.9 Normal Rejections Handling

Not following
Based on the Usage Decision carried in QM module materials
Business Requirement: accepted/Rejected will be posted to relevant stock.
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:
4.3.10 Line Rejections Handling

Not following Line Rejections can be handled through Standard SAP
Transaction. If in case additional quantity is required to be
Business Requirement: issued to production shall also be addressed through work
around solution.
Gaps:
4.4 Goods Issue
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
Withdrawal, picking, and shipping of goods to customers are
carried out in the Sales & Distribution (SD) component and

are dealt with in detail in the document SD Shipping Guide.
They are not dealt with in this section.
The Inventory Management system provides two movement
types for posting goods issues to customers if your company
does not use the SD module. These are the movement types
"Consumption to sales order" and "Consumption to sales".
Material Withdrawals for Production Orders
Inventory Management provides for the staging of
components for production. You enter withdrawals for
production as goods issues with reference to the production
orders for which the components are required.
Other Types of Internal Staging of Material

Materials can be withdrawn not only for production but also
for other purposes (for example, for cost centre, CO order,
maintenance order, or asset).
Return Deliveries to Vendors
Return deliveries to vendors are entered with the function
Material document ® Return delivery or with the function
Goods receipt ® For purchase order.
Scrapping/Sampling
If a material is no longer usable, it must be scrapped.
Scrapping of a material is entered in the R/3 System as a
goods issue. The withdrawal of samples must also be entered
as a goods issue.
This section explains the following goods issues:
 Material withdrawals for production orders
 Other types of internal staging of material
 Scrapping/sampling
Process Flow
Entering a Goods Issue with/Without Reference
Document
Before entering a goods issue, you have to find out whether
any reference document or data exists in the system.

When you enter a goods receipt, you can reference:
 Reservations
 Production orders
 Bills of material
If a reference document (reservation/order) exists, it is
important to enter the goods issue with reference to this
document, for the following reasons:
 The goods issuing department can check whether
what was requested is actually issued.
 During entry of goods issue, the system can suggest
data from the reference document (for example,
account assignment, requested material, quantity,
etc.). This simplifies both data entry and checking
(over deliveries and under deliveries) when entering a
goods issue.
 After a withdrawal, the quantity withdrawn is updated
in the reference document and the reserved quantity
is reduced accordingly. Thus, Inventory Management
can monitor the withdrawal process and Materials
Planning can update the stock/requirements list.
If you do not reference the corresponding reference

document during the goods issue, the reservation remains
open and the requested quantity remains reserved, although
the request no longer really exists. Consequently, available
stock in Materials Planning no longer corresponds to the stock
actually available!
How do you find the reference document?

If you do not know the number of the reference document,
you can find it in the system using the material number or
the account assignment.
Gaps:
4.4.1 Goods Issue to Outgoing Service/Job Work Orders
As Is Business Process: Requirement analysis:

Not Following SAP Standard report will give output to users to view materials left out
at subcontract vendor
1.SAP Best Practises for IM & C to be implemented where ever Suggested business process:
suits to Walvoil requirement 1. The material to be produced by the vendor can be ordered as a
subcontract item in a purchase requisition, purchase order or
scheduling agreement. Each subcontract item has one or more sub-
items which contain the individual components the vendor needs to
perform the subcontract work or value-added service.
2. The components that are provided to the subcontractor are managed
as stock provided to vendor. Components in a subcontract order that
are consumed can only be debited from the stock of the material
provided to the particular vendor
Gaps :
4.4.2 Goods Issue To Scrap
W
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
Walvoil can scrap materials from the stock types below:
 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

Not following Goods Issue to production done with or without reservation. Whenever
Business Requirement: a production order is released, the reservation is automatically created
1. SAP Best Practises for IM & C to be implemented where ever and goods can be issued against the reservation. Where there is no
suits to Walvoil requirement reservation, issues shall be done against a production order.
Gaps:
4.4.4 Goods Issue to Sales Order
As Is Business Process: Requirement analysis:

Not following 1. Through reference technique method This feature is available in
standard SAP system.
Business Requirement: Suggested business process:
1.SAP Best Practises for IM & C to be implemented where ever Goods issues shall be based on the sales order, deliveries will have
suits to Walvoil requirement reference to the sales order. Goods issues will be based on the lot, qty,
Issuing plant and storage location
Gaps:
4.4.5 Goods issue to quality

Not Following Goods issues to quality will be through the automatic postings as per
Business Requirement: the settings in master data and setting from quality module. The
1.SAP Best Practises for IM & C to be implemented where ever procedure at various stages in production process is addressed in QM
suits to Walvoil requirement module.
Gaps :
4.4.6 Goods issues to Customer/Vendor/third party
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:
4.5 Logistics Invoice Verification

As Is Business Process: The Invoice verification involves the following processes :
It Will take some time to function completly 1.Invoice
Invoice verification is done at Walvoil under the following scenarios 2.Credit Memo
Invoice Verification against to PO 3.Subsequent Debit
Invoice verification against to PO (PO manually done for Misc and 4.Subsequent Credit
capital items) Invoice option is used when the payment is to be made to the vendor.
Invoice verification with out PO. (Reference is taken through GRN Credit memo is used for materials returned back to the vendor. During
for Invoice amount less than Rs 6000/-) invoice verification the system shall display the materials returned back
Invoice verification for transporters payment (Reference is to the vendor for which deductions will be made.
agreement) Subsequent debit shall be used for transactions where the Original
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

Local Vendor
It takes some time to function completely. Local vendor invoice shall be entered with reference to Purchase Order.
1.Invoice Verification against to PO (PO Generated through Excel More than one purchase order can also be processed at one time for
software for RM and other materials) one vendor. If required the vendor can be changed from the original
vendor to whom the payment is to be done. If any Invoice verification
has been done for any GR for a PO, the quantity for this GR will not
Under this scenario GRN and PO reference is taken, check for the
appear in the list. In case where the freight vendor is different, only
Excise or Non-excise, qty received, PO number, GRN Number,
those entries related to the delivery costs will be chosen for the
Accepted Qty. All the entries are done in Excel software as well as
payments to this vendor. It is also possible to raise credit memo
maintained in a register.
against the goods returned to the vendor. In case of Subsequent
2.Invoice verification against to PO (PO manually done for Misc and debit/credit to be made to the vendor account, (reasons can be change
capital items) of rates for previous supplies made, etc), the entries are made using
the Invoice Verification.
Under this scenario GRN and PO reference is taken, check for the Adjustments to other accounts like Insurance claims Account, etc. can
Excise or Non-excise, qty received, PO number, GRN Number, be entered with invoice verification.
Accepted Qty. All the entries are done in Excel software as well as Unplanned delivery costs are costs which are not known at the time of
maintained in a register. creation of purchase orders and these are charged in the invoice sent
3. Invoice verification with out PO. (Reference is taken through GRN by the vendor can also be entered during invoice verification.
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.

4.5.2 Parking of Vendor Invoice Sub Process S

Not following Invoice verification documents can be parked and later processed
Vendor invoices can be parked for later processing. In case there is
Business Requirement: some doubt about the invoice in hand, the document can be parked
and later processed for posting. The accounting entries get generated
only when the document is posted.
Gaps :
4.5.3 Cancelling Vendors Invoice Sub Process S

Not following Invoice Documents in Invoice Verification are either Invoices or Credit
Memos. If an invoice is cancelled, the system generates a credit memo
Business Requirement: and if a credit memo is cancelled the system generates an Invoice. The
system takes into account the quantity and amount in the credit memo
or invoice thus avoiding any differences between the original and the
cancelled documents.
The invoice can be cancelled only if
The document is invoice document
The document is not already cancelled
The document is not cancellation document of another document.
Gaps:
4.5.4 Material Valuation

Not following Material Valuation can be used for the following purposes :
Adjusting material prices to market price
Performing revaluations
Business Requirement: Executing balance sheet valuation.
1.SAP Best Practises for IM & C to be implemented where ever Material valuation can be used for maintaining future prices, release
suits to Walvoil requirement planned prices, change material prices, debit/ credit material.
 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).
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
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.
Gaps :
5.0 Reports
AS Is Business Process : Suggested Business Process :

No Reports are maintained
Standard SAP Reports are available :
1.SAP Best Practises for IM & C to be implemented where ever Purchase requisition : List
suits to Walvoil requirement Quotation
Purchase order : List
Purchase order History
Info Records
Vendor List
Stock Overview
Invoice Verification
Balance Display: Reports on the GR/IR clearing account.
Material Master
Material document list
Gaps :

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Walvoil Fluid Power India Pvt ltd

Steering Committee Steering Committee Steering Committee Steering Committee

Mr. Avinash Humbrey Mr. Narayana Rajan.N

Project Manager, Project Manager,

3 Sales & Distribution

5 Production & Planning

Status of To-Be Business

C-Possible with ABAP Can be implemented on mySAP through ABAP/4 development

State Excise Invoice:

State Excise Duty:

2. Enterprise Structure on SAP R/3 System

Current New Justification / Purpose of the

buyer or group of buyers responsible for certain

RM01 Raw materials Storage location

3. Business Processes scope:

4.3.6 GRN in to Blocked Stock

4. Business Process details:

Material/Services Coverage & Different Types of Procurement

Raw materials Not following any codes now

4.1 Master Data Maintenance

As Is Business Process: Requirement Analysis

As Is Business Process: Requirement Analysis

change management function or while you are processing a material

measure are referred to as alternative units of measure. The R/3 System

10. Search help control is an ActiveX component. It was developed to

11. A material may have various documents such as drawings and

choosing Additional data -> Document data.

In Invoice Verification for posting invoices

4.1.2 Service Master Maintenance

As Is Business Process: Requirement Analysis

4.1.3 Maintenance of Vendor Master

As Is Business Process : Requirement Analysis

business partner. For example, you order merchandise from a different

How the Data is organised

9. Packing material supplier –imports

Vendor Number Assignment

4.1.4 Purchase info records

As Is Business Process : Requirement Analysis

Business Requirement: are two different prices.

for the material

4.1.5 Source list maintenance

As Is Business Process : Requirement Analysis

4.1.6 Maintain Vendor Evaluation Criteria

As Is Business Process : Requirement Analysis

1.SAP Best Practises for IM & C to be implemented where ever

Elements of Vendor evaluation

whom you procure materials.

4.1.7 Maintenance of Conditions for Procuring Materials

4.1.7.1 Prices As Is Business Process : Suggested Business Process:

Customs Duty = “X” X () % = Y

4.1.8 Payment Terms

As Is Business Process Requirement Analysis

4.2 Procurement Process

1.SAP Best Practises for IM & C to be implemented where ever

4.2.1 Purchase Requisition

As Is Business Process : Requirement Analysis

Suggested Business Process:

Purchase Requisitions are created under the following situations:

4.2.2 Request for Quotation

As Is Business Process : Requirement Analysis

As Is Business Process: Requirement Analysis

procurement in the case of services

4.2.4 Purchase Order - Local (RM, MRO Items)