Contents

Topics Invoice Verification/Valuation Automatic Account Determination

Overview and Org. Structure Material Master Purchasing Master Data Procurement Inventory Management/ Valuation

Overview and Organizational Structure

Definition: Logistics
NCPDM (US National Committee on Physical Distribution Management) : "..physical distribution management .. is .. the integration of one or more activities for the purpose of planning, implementing and controlling the efficient flow of raw

materials, in-process inventory and infinished goods from point of origin to point of consumption..."

Resource Management in Logistics Capital Investment Expense/costs Cash

longlong-term

shortshort-term

Capital resources
Logistics chain Procurement
Purchase orders
 materials  services

Production
WareWarehouse

Sales
WareWarehouse Sales orders
 products  services

Distributions

Vendor

Material resources

Customer

Capacity resources

Overview of MM
Material requirements planning
External procurement Internal procurement

Purchasing

Production

Invoice verification Invoice receipt

Goods receipt Inventory management

Warehouse management

Master data
Material Batch Vendor G/L accounts Customer Storage bins . . .

Goods issue

Transfer posting

Internal and external accounting

Sales and distribution

Procurement Process
Order Invoice

MRP

?
7

Invoice verification

Requirement determination

MM
Goods receipt and 6 inventory management
Materials management

Source determination

Order

Order follow-up
5 4

Vendor selection

Order processing

Organizational structures in R/3

Organizational units
Company Controlling areas Sales organizations Purchasing organizations

Company codes Valuation areas Plants Storage locations/batches/special stocks

Invent. mgmt w/o warehouse mgmt

Company Code

Plants

0001

0002

0003

Storage locations

0001

0001

0002

Invent. mgmt with Warehouse mgmt

Company Code
Plants

0001

0002

Storage locations Warehouse numbers

0001

0088

0088

0002

001

Storage types

001

005

Storage bins

05-04-03

05-04-04

Valuation
Client

Company codes

0001

0002

Plants

0001

0002

0003

Example for Valuation

Company codes

RC

Plants
VAL. AT CO.CODE VAL. AT PLANT

Mumbai plant 125/ BAG 125/ BAG

Delhi depot 125/ BAG 150/ BAG

Accounting
Client

Company codes

0001

0002

0003

Business area 0001

Business area 0001

Business area 0002

Purchasing Organization
Company (Group)
0001

Company codes

0001

0002

Purchasing organizations

0001

0002

0003

Plants

0001

0002

0003

0004

Organizational Entities in Purchasing

Purchasing group 1

Purchasing group 2

Purchasing organization 1

Purchasing organization 2

Purchasing organization

Plant 1

Plant 2

Plant 2

Plant 10

Material Master

Material master record

General data Material number Description Units of measure Technical data

Plant-specific data

Valuation

Warehouse ManageManagement system data Unit of measure Palletting instruction

Sales-specific data Delivering plant Sales texts

Valuation price MRP/type Planned delivery time Valuation procedure Valuated quantity Purchasing group Batch indicator

Storage locationspecific data Storage time Stockfields

Forecast data Consumption data

Units of measure
Base unit: Piece

16

72

Box
(unit of issue)

Crate
(order unit)

Pallet
(sales unit)

Material data maintenance: accounting

Valuation class

MART ROH HALB HIBE

Allowed values 3000 3010 7920 3000

Maintenance of material data

Price control

Standardprice control: Valuation of standard price from the material master record

Moving average price control: Final delivered price (such as purchase order price) influences the valuation price

Purchasing Master Data

Purchasing Master Data

The Vendor

The vendor
Purchasing

purch ase order

Bank
DEUTSCHE MARK DEUTSCHE MARK

Payment

DEUTSCHE MARK

Material

Vendor
Invoice

order

account

? =
Goods receipt

Invoice verification

Organizational levels of vendor master record

General data

Purchasing organization data

Company code 001 data

Company code

Vendor master record

General data Address Communication Valid for the whole group

Purchasing data Order currency Incoterms Minimum order value

Valid for one purchasing organization

Accounting data Bank data Payment transactions Account management

Valid for the whole group or for one company code

Account group
One-time account Account group

Type of number assignment

Interval for number assignment

Field selection

Control account
Invoice

You Vendor
Invoice

Enter invoice

Accounts payable Vendor A "Parallel"

G/L accounting Payables Vendor

Purchasing Master Data

Info Record

Purchasing info records

Piece %
Conditions

USD

Material

Info record Vendor A Info record Stock material M1

Info record Consumable material M2 Info record

Vendor B

Info record

Service S1

Data in the purchasing info record

General data Vendor data Origin data Order unit Texts

Control data Delivery time Minimum quantity Tolerances

Prices and conditions Gross price Discounts Freight

Price history Purchasing statistics Changes

Pricing
1
Pricing procedure RM000 Purchase order Vendor 123 Purchasing organization 2000 Item 10 PB00 Price 120 pcs $99 1.Price 2.Discount PB00 RA00

Condition type: PB00 Access sequence: PB01 Access sequence: PB01 1. Outline agreement 2. Vendor/material/ organizational level 3. Vendor/material group/ organizational level Records for condition type No valid record exists Valid record exists

Scale
$100 for $99 for $98 for 1 pcs 100 pcs 200 pcs

Conditions
Pricing procedure Condition type

Gross price Discount % Net price: Fixed freight charge + Effective price:

PB00 RA01 FRA1

Calculation type Scale basis Price/quantity scale

Purchasing Master Data

Source List

Source list

1.1.95 - 30.6.95

1.7.95 - 31.12.95

Source list
Vendor 1 allowed Vendor 2 allowed Vendor 3 allowed Vendor 1 fixed

Material M1 Plant 0001

Procurement

Procurement
Procurement Environment

Source list

External procurement environment

Requirements determination Purchase requisition

RFQs

Quotations

Quota arrangement Source determination Vendor selection Purchase order history Piece % Conditions USD Info record

Outline agreement

Purchase order

Invoice receipt

Goods receipt

Purchasing documents
Purchase requisition RFQ

Purchase requisition

RFQ

?
Purch.order

Quotation

Quotation

Quotation

Purchase order

31. Contract

1.

Release order

Scheduling agreement

Purchasing document

Structure of a purchasing document ocument

Document header
General data statistics Messages Conditions

Item 1
General data Conditions Texts Schedule line

Additional data for item 1

Purchase order history ... Additional data for item 2 ...

Item 2
...

Item category
Purchasing document
A B C

Item Account assign. category category

Account assignment type

Purchasing document
A B C

Item type

Acct.assign. type

Procurement for stock

Purchasing document(s) Item: no account assignment category

Warehouse
Goods receipt

Goods issue

Material

Production

Vendor

Procurement for consumption

Purchasing document(s) Item: with account assignment category

Goods receipt

Production

Vendor
Material

Procurement
Consumption-driven MRP

Consumption-driven MRP
Requirements planning Net requirements calc.

Forecasting

Lot sizing Scheduling

A Material

Material master

Purchasing

Inventory management

Materials planning and control procedures Requirements

planning Consumption-based Deterministic MRP

VM, VB

VV

Reorder point procedure

Stock level

Stochastic
Consumption

Time

Time

Reorder Point Procedure

Stock Lot size

Reorder level

Safety stock

Reorder point

Delivery date

Time

Replenishment lead time

Net Requirements Calculation in the Reorder Point Procedure

Purchase order proposal to the amount of the lot size Purchase order Fixed planned orders Fixed purchase requisition Warehouse stock Shortage

Reorder level

Comparison

Safety Stock and Reorder Level

Stock

 Daily x Replenishment lead time

Reorder level

Safety stock Replenishment lead time Service level MAD Time

Replenishment lead time

Net Requirements Calculation in Forecast Based Plng.

Shortage Lot size Forecast requirements

Fixed inward movements e.g. purchase orders Purchase orders proposals Planned orders Purchase requisitions Comparison

Warehouse stock

Safety stock

Lotsizing procedures
Exact lot size Static procedure Fixed lot size Replenish to maximum stock level

Lot sizing procedures

Periodic procedure

Optimum procedure

Part period balancing

...

Groff procedure

Exact lot size

Static Lot-sizing Procedures

Quantity Inward movements Outward movements Time

Planned warehouse stock = Fixed lot size

Replenish to maximum stock level

Periodic Lot-sizing Procedures

Quantity

Time
Period length Period length

Inward movements Outward movements

Dynamic Planning Calculation

Req. x Price x Storage costs % x Time in storage Storage costs = 100 x 365 Price : Lot fixed costs: Storage costs percentage : Requirement date 06.07.1994 13.07.1994 20.07.1994 27.07.1994 Req. quantity 1000 1000 1000 1000 Lot size 1000 2000 3000 4000 $ 20 $ 100 10 % Fixed costs Storage costs 100 0 38.36 76.71 115.07

Optimum

Part Period Balancing

Req. x Price x Storage costs % x Time in storage Storage costs = 100 x 365 Price : Lot fixed costs: Storage costs percentage :
Requirement date 06.07.1994 13.07.1994 20.07.1994 27.07.1994 Req. quantity 1000 1000 1000 1000 Lot size 1000 2000 3000 4000 Fixed costs 100

$ 20 $ 100 10 %
Storage costs 0 38.36 76.71 115.07 Total storage costs 0 38.36 115.07 198.78

Optimum

Least Unit Cost Procedure

Req. x Price x Storage costs x Time in storage Storage costs = 100 x 365

Price : Lot fixed costs : Storage costs percentage :

Requirement date 06.07.1994 13.07.1994 20.07.1994 27.07.1994 Req. quantity 1000 1000 1000 1000 Lot size 1000 2000 3000 4000 Fixed costs 100

$ 20 $ 100 10 %
Storage costs 0 38.36 76.71 115.07 Total costs 100 138.36 215.07 330.14 Unit costs 0.10 0.07 0.11 0.08

Optimum

Scheduling in the case of external procurement Forward scheduling

1
Replenishment lead time GR processing time t

Today + 1

Purch. order delivery date

MRP delivery date

Backward scheduling
Replenishment lead time GR processing time

Start / release date

Purch.order delivery date

MRP delivery date

The requirements planning process

Planning mark-out
Process relevant to MRP
31. 1.
Order

Material requirements planning

MRP

Planned order
Opening period of materials planning/ control

Purchasing

Purchase requisition

Purpose of the forecast

A Material

MRP type

VM

VV

Forecast

Forecast

Reorder level Safety stock

Forecast requirements

Procurement
Processing Purchase Requisitions

Purchase requisition
Department MRP

Requisition

Requisition

Purchasing

Purchase requisition processing

MRP Direct entry Purchase requisition Determine source of supply Release

Vendor

o.k.
Allocate and process
RFQ Purchase order

Release order

Procurement
Processing Vendor Inquiry / Quotations

Request for quotation/ quotation

RFQ 1

RFQ 2

Requirements known. Procure from which source?

?
Vendor 1 Vendor 2

Quotation 1

Quotation 2

Price comparison list

Purchase order

Rejection

Entering an RFQ
1
Item list
Vendor 1
Inquiry 1

Vendor 2

Inquiry 2

Issuing output
Printer EDI

Purchasing document

Output
Fax

Reprint

Reminder

Rejection

Order acknowledgement check

Processing Quotations: Example Enter price and pricing conditions

Vendor A Quotation for RFQ 1 Item 10 Gross price: 400/t Discount: $50 Vendor B Quotation for RFQ 2 Item 10 Gross price: 400/t Surcharge: 50% Vendor C Quotation for RFQ 3 Item 10 Gross price: 400/t Fixed costs: $40

Compare quotations using price comparison list

Steel 2 t Price Quotation 1 Quotation 2 Quotation 3 Mean value quotation 350/t 480/t 520/t 450/t

Create info record or reject quotation

Vendor A - Order Mat. Qty Price Steel 2t 350/t Vendor C, B - RejectionThank you for your offer. Unfortunately, we cannot place an order at this time .....

Procurement
Processing Purchase Orders

Processing Purchase Orders

Purchase requisition RFQ Reference document

Contract

?
Vendor
Purchase order Order history

Pcs

%
Conditions

One-time vendor

$
Info record

Contract
Contract request Reference RFQ Reference contract Purchase requisition

Contract

Release order

1
Vendor

Scheduling Agreements
Purchase requisition RFQ Reference scheduling agreement Purchase requisition

Scheduling agreement

Einstellungen Einstellungen Schedule lines

Vendor

PROCUREMENT OF EXTERNAL SERVICES

Inventory Management/Valuation

Inventory Management
Goods Movements

Inventory management
Old system Vendor In-house production

Goods receipt

Transfer posting Warehouse 1 Warehouse 2

Goods issue

Scrapping

Consumption

Documents for goods movements

Warehouse
A Material

Goods movement

Material document

Accounting document

Material Valuation Levels

Material valuation levels

0001

Company code

Plant

Valuation area

Split Valuation: Structure

Plant Plant 0001 Material 1 Valuation Valuation area Material Valuation category Quantity Mvg. av. price 0001 1 H 100 5.20

Valuation type Italy Quantity 40 V - price 4.00 Storage location Stor. loc. 0001 Quantity 30 Stor. loc. 0002 Quantity 70

Valuation type France Quantity 60 S - price 6.00

Batch

Italy Quantity 10

France Quantity 20

Italy Quantity 30

France Quantity 40

Updating the stock situation

Stock situation On a quantity basis Material master Special stocks Stock fields per plant, storage location and special stock On a value basis G/L accounts

Debits and credits per company code, period and, possibly, business area

Entering material documents

Material document item

Account determination Consumption update Movement type Quantity update Indicator for printout Field selection

Analyses in inventory management

Analyses

Stocks overviews
Stock per material Plant stock availability Reqs./stock list Warehouse stock list

Material movement list

Inventory control
ABC-Analyses Stock value Range of coverage Slow-moving items/ inventory turnover Standard analyses

Inventory Management
Processing Goods Receipts with Purchase Order Reference

Purchase Order Views in Inventory Management

Purchase order Statistics
General Purchase order history Changes Header Vendor Texts Items $ Conditions Conditions Output 01/01/95 10/01/95 30/03/95 Schedule lines

Account assignment

Texts

Determining the purchase order during GR

Goods receipt for purchase order
Manual

Purchase Manuell order

Matchcode

List of open purchase orders by - vendor - material - delivery plant

Stock types for goods receipt Goods receipt blocked stock

Unrestricted-use stock Warehouse Vendor Stock in quality inspection Blocked stock

Account assignment object

Cost center Order ......

Posting procedure for goods receipt (example)

Stock account Stock value GR/IR clearing

Price differences

Update for goods receipt

Inventory Management
Processing Goods Receipt w/o Reference

GR w/o Reference to a Purch. Order or Production Order

Preplanning
Goods receipt Initial entry of stock balance Without purchase order Without production order Goods receipt of by-products Delivery free of charge Returns from customer

without purchase order without production order

Inventory Management
Processing Stock Transfer / Transfer Postings

Transfer posting
Transfer posting

Stock transfer

Miscellaneous transfer postings

From plant to plant

From storage location to storage location

From material to material

From QM to unrestricted use

From consignm. stores to warehouse

Valuation in the Case of Stock Transfer

Issuing plant 100 pcs Receiving plant

Standardprice 2.00 Moving average price 2.00

(a) (a) (b) (b)

Standardprice 3.00 Any moving average price

Stock plant 01 (a) (b) 200.00 200.00

Expense / revenue from stock transfer 100.00

Stock plant 02 300.00 200.00

Inventory Management
Processing Goods Issues

Goods issues
From warehouse
Goods issue

From consignment stores Issue

Consumption Cost center Asset Sales Order Sampling Scrap

Effects of goods issue

Material document Accounting document Stock quantity Consumption statistics ... Point of consumption: Cost center Order ... Goods issue Reservation Order Warehouse mgmt: Transfer order Quality management: Inspection lot

G/L account. Stock account Consumption account ...

Posting method for goods issue

Stock account Stock value Consumption account

Update on goods issue

Special Stocks and Special Procurement Types

        Consignment Subcontracting Stock Transfer with Stock Transport Order Third party processing Returnable Transport Packaging Pipeline handling Sales order stock Project Stock

Companys Own Special Stock

 Stock of material provided to Vendor  Consignment stock at Customer  Returnable packaging stock at Customer

Companys Own Special Stock

Managed at plant level Stock types  Unrestricted use stock  Quality inspection stock

Externally-Owned Special Stocks

    Vendor Consignment Returnable Transport Packaging Sales order stock Project Stock

Externally-Owned Special Stocks

Managed at Storage location level Stock Types  Unrestricted Use stock  Quality inspection Stock  Blocked stock

Inventory Management
Physical Inventory

Physical Inventory Procedures

    Periodic inventory Continuous inventory Cycle counting Inventory sampling

Physical Inventory
 Can be carried out for Companys own stock and Special Stock  Inventory for Companys own stock and Special stock must be taken separately in different physical documents  Physical inventory can be taken for Unrestricted-use stock in the warehouse Quality inspection stock Blocked stock

Physical inventory procedure Batch-Input Create physical 1 inventory document

Set blocking indicator 3 2 Batch-Input

Print physical inventory document

4 Physical inventory document 5

List of differences

Arrange recount Change count 6

5a

5b

Post differences

Invoice Verification / Valuation

Purchase order Purchase order

Types of invoice verification or

Goods receipt

or
Vendor invoice

Invoice verification

Purchase order

Invoice verification environment

G/L accounts

Assets

---Goods receipt Material master

Invoice verification

Invoice document

Cost centers

Purchase order

Vendor master

Material master

Conditions

Posting an invoice
Invoice relating to purchase order Post
A XX B XX

GR/R account Vendor account

Doc. No. 51000123

Vendor GR/R 100100+

Material master
Moving average price Value

Purch. order history

Goods receipts Down payments Invoices

Variances
Invoice WE 40
Goods receipt

Quantity

50 pieces Invoice

Purchase order $5

Price

at $6 Invoice 10 pieces = 250 g

Goods receipt 10 pcs = 200g

Order price quantity Invoice 10 pieces Invoice Date 26/11/95 = 2.5 kg

Purchase order = 2 kg 10 pieces at $20/kg Purchase order Planned delivery date 04/12/95

Tax
Material value + input tax

Company

Material value +Tax on sales/ Purchases

A A A

Vendor

Customer

Tax payable

Tax office

Invoice receipt postings

GR/R clearing Input VAT Vendor (control acct.)

Stock account Stock value

Price differences

) (

) (

Postings at Standard Price

Stock account (2) 200.00 GR / IR clearing account (3) 240.00 240.00(2)

Exp. / revenue Price difference (2) 40.00 20.00 (3)

Vendor / general ledger 220.00 ( 3)

Event

Stock

Total value

Standard price 2.00 2.00 2.00

Moving av. price 2.00 2.20 2.10

(1) (2) (3)

Initial situation GR for purch. order: 100 @ 2.40 IR for purch. order: 100 @ 2.20
2.40 / pc 2.20 / pc

100 200 200

200.00 400.00 400.00

Purchase order price Invoice price

Stock account (2) (4) 240.00 240.00

Postings at Moving Average Price

20.00 ( 3 ) 550.00 ( 5 ) 10.00 ( 6 ) (3) ( 6) 240.00 240.00 Vendor / general ledger

GR / IR clearing account 240.00 ( 2 ) 240.00 ( 4 ) Raw material consumption ( 5 ) 550.00 220.00 ( 3 ) 220.00 ( 6 )

Exp.. / revenue Price difference 10.00 ( 6 )

Event (1) (2) (3) (4) (5) (6) Initial situation GR for purch. order: 100 @ 2.40 IR for purch. order: 100 @ 2.20 GR for purch. order: 100 @ 2.40 Goods issue: 250 @ 2.20 IR for purch. order: 100 @ 2.20

Stock 100 200 200 300 50 50

Total value 200.00 440.00 420.00 660.00 110.00 100.00

Moving av. price 2.00 2.20 2.10 2.20 2.20 2.00

INVOICING PLANS

Facility to schedule Invoicing dates for planned procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan

Account Determination Procedures for Automatic Postings in MM

Types of Account Determinations

SD MM PP FI CO

R/3AM Client/Server QA ABAP/4 WF PS PM

HR IS

MM

SD

Movement Type based Transactions Non-Movement Type based Transactions

Cond. Technique

Grouping Organizational Levels forCase: valuation area = plant Account Determination

Valuation grouping code Plant Company code Chart of accounts

0001

0001 0002

0001 0002 0003 GKR

0002

0003 0004

0003

0005

0004

IKR

Grouping of Material Type Valuation Class

Material type Account category reference Valuation class FERT 0001 HALB HAWA . . . ROH1 ROH2 0004 ROH3 ... 3200 0002 3000 3010 3020 3030 3040 3100 7900

0003

Grouping of Materials for Account Determination Option 1: Option 2

ROH
Mat 1 Mat 2 Acct. 1

Option 3 ROH
Mat 1 Acct. 1 Acct. 2

ROH
Mat 1 Mat 2 Acct. 1

Mat 2

HIBE
Mat 3 Mat 4 Acct. 2

HIBE
Mat 3 Mat 4

FERT
Mat 5 Mat 6 Acct. 3

FERT
Mat 5 Mat 6 Acct. 3

Procedure Part 1: Value String - Processing Keys

Inventory Management
Material

Invoice verification

Transaction
Value String (Generalized posting record)

Invoice verification ? =

BSX

WRX

Processing keys

KBS

300100

191100

G/L account number

425000

Procedure Part 2: Processing Key - Rules

1
Transaction Processing keys for debit/credit posting

Processing Key (Transaction) Chart of accounts

Rules

Parameters on which account allocation depends

Procedure Part 3: Rules Account Allocation

Processing Key (Selection of transaction) Selection of chart of accounts (Valuation grouping code) (Account grouping code) (Valuation class) Account number

Rules specify account determination key

Account Determination Procedure: Overview

Type of Transaction
Movement type based Transaction Non-movement type based Transaction

Material Master "Type of Material" Material Type Qty. Posting String

Account Categ. Reference

Plant

Step 1 or 2 Value Posting String

Company Code

Step 3

Rules
Processing Key (GBB) Account modification Valuation Class Val. Grouping Code

Processing Key (AUF) Step 4 Chart of Account

Legend
Information derived from Transaction type Information derived from Material Master Information derived from the organiz. Structure Main Customizing area

G/L Account

Automatic Posting: Maintenance of the Settings

1
Selection of the valuation grouping code

2
Selection of the posting transaction

Allocation of the G/L account number(s) per valuation class (and account grouping code)