1.  XX Consulting 2000 1 MM04 - Goods Receipt & Invoice Verification November, 2000

2.  XX Consulting 2000 2 Topic One: Goods Receipt Topic Two: Invoice Verification Topic Three:Material Valuation Topic Four: Procurement Topic Five: Reporting and Analysis Schedule

3.  XX Consulting 2000 3 General Concept Goods receipt with reference to a purchase order allows: Data to be copied from the purchase order to the goods receipt document. Delivery notification. Invoice verification based on quantity received. Purchase order history update. Inventory quantity and value update. Automatic update to G/L accounts. If a goods receipt does not contain a purchase order number on the delivery slip, a search for the correct purchase order number can be performed using the material number or the vendor number.

4.  XX Consulting 2000 4 Goods Receipt Goods receipt For purchase order For delivery note For order Other Purchase order Delivery note Order

5.  XX Consulting 2000 5 Goods Receipt Destinations Stock: Material destined for the warehouse is given a storage location. Goods receipts for the warehouse can be posted to three different stock types: Unrestricted-use Quality inspection Blocked stock (valuated) Consumption: Material intended for consumption (e.g., charged to a cost center or a project) can be assigned a recipient or unloading point. Goods Receipt Blocked Stock: Conditionally accepted material is usually recorded into GR blocked stock. In the stock overview, there is a separate column for blocked stock. The material is not valuated until released from blocked stock but the inventory quantity is updated immediately.

6.  XX Consulting 2000 6 Stock-type Related Destinations Stock in quality inspection Blocked stock (valuated) Non-stock purchases Cost center Project Other Conditional Stock Vendor Consumption Goods receipt blocked stock Unrestricted-use stock

7.  XX Consulting 2000 7 Goods Receipt for Stock Material Goods receipt Goods receipt Purchasing document(s) Item: 1 2 3 Entering the goods receipt increases the inventory level of a material that is procured for stock. Warehouse/stores Vendor

8.  XX Consulting 2000 8 Goods receipt Consumption 2 swivel chairs for cost center 1 Purchase order Goods Receipt To Point Of Usage (Not To Stock) Goods Receipt for Consumption Material

9.  XX Consulting 2000 9 Goods Receipt via GR Blocked Stock GR blocked stock A A A A Vendor Warehouse Movement 104 (Blocked Stock To PO) Movement 103 (PO to Blocked Stock) 102 101 Movement 105 (Blocked Stock to Warehouse) Movement 106 (Warehouse to Blocked Stock)

10.  XX Consulting 2000 10 Movement Type Concept Movement types differentiate among the following stock transactions: Goods receipt Goods issue Stock transfer Movement type determines which: Quantity fields are updated. Stock types are updated. General ledger stock or consumption accounts are updated. Fields are displayed during document entry. A three-digit code identifies the particular movement to be performed (e.g., 101 = purchase order receipt).

11.  XX Consulting 2000 11 Three-digit movement type is required when entering a goods receipt. Movement Type Example

12.  XX Consulting 2000 12 Storage Location 1 6 pieces Storage Location 2 4 pieces GR document Item 1 6 pcs, Storage Location 1 Item 1 4 pcs, Storage Location 2 Several goods receipts can be entered for a single order item at one time. This occurs if the material is kept in batches or in multiple storage locations. The entries are recorded in one material document. Vendor Purchase Order Item 1 10 pcs Item 2 25 pcs Item 3 15 pcs Several Goods Receipt Items

13.  XX Consulting 2000 13 WM Notification of goods receipt (optional) Material/Financial details Goods Receipt Slip Stock and consumption accounts updated Transfer request to the Warehouse Management system (if active) Stock and value updated Financial Material document Hard copy (optional) Inspection notification to Quality Management system Post receipt to Quality Inspection (if active) QM Material Master PO history and PO updated Goods Receipt Material delivery Effects of a Goods Receipt

14.  XX Consulting 2000 14 Account Postings Goods receipt 10 pieces Purchase order 10 pieces at $60 piece Stock account GR/IR account Price differences Material Master Record Standard Cost= $50/piece Goods receipt  Inventory account is debited at standard price.  GR/IR clearing account is credited at purchase order price.  Price difference account debited with difference between standard and purchase order price. 500 + 600 - 100 +

15.  XX Consulting 2000 15 The Document Concept A document is proof that a business transaction or posting occurred. In the SAP R/3 System, documents are generated and stored for every goods movement. There are two types of documents: Material documents record inventory impacts and changes. Accounting documentsrecord the financial impact of a goods movement. Once a goods movement has been posted, quantities, materials, movement types and organizational levels cannot be changed. Only data such as text can be changed. Mistakes are corrected with a new document. Documents can be canceled or reversed.

16.  XX Consulting 2000 16 Records movements that affect valuation of inventory. Records movements that affect inventory balances. Goods movement Warehouse Material document Accounting document IssuesReceipts Documents for Goods Movement

17.  XX Consulting 2000 17 Accounting Document The material and accounting documents for a goods movement are created simultaneously for each inventory transaction. 001 002 Line Items Header Material document 490000757 Quantity Date 04/06 Material 10 liter 25 each paint mirror Plant 3000 001 002 003 Line Items Header Accounting document 5000642 Account Date 04/06 Description 300000 191000 inventory liability $ $ 75 400 475 Material Document Material and Accounting Documents

18.  XX Consulting 2000 18 The material document is a record of an inventory transaction showing the date, quantity, material, plant, and other important data. Display Material Document: Overview Material Document

19.  XX Consulting 2000 19 By clicking theFollow-on documents button from the material document, a list of accounting documents is displayed for the goods movement. You can easily access any of the accounting documents by double-clicking on that document type. Display Material Document: Overview Accounting Document Drill-down

20.  XX Consulting 2000 20 The accounting document shows the G/L effect of each material transaction. In this example, a goods receipt was made for a standard price material. Inventory, accrued payables, and the price variance account were updated. Display Document Overview Accounting Document

21.  XX Consulting 2000 21 Summary Material document and accounting document are created after goods receipt.

22.  XX Consulting 2000 22 Exercise for Goods Receipt Now it’s time for you to do: MM04 - Exercise 10 30 minutes

23.  XX Consulting 2000 23 Topic One: Goods Receipt Topic Two: Invoice Verification Vendor Invoice Processing Invoice Variance Topic Three:Material Valuation Topic Four: Procurement Topic Five: Reports Schedule

24.  XX Consulting 2000 24 Material master Vendor master Conditions Invoice Verification G/L accounts Assets Cost centers Projects Orders Invoice verification accesses data from purchasing, inventory management, material master and vendor master files. Posting an invoice in the R/3 System updates purchasing and accounting data. Purchase order Goods receipt Vendor Invoice Invoice Verification Environment

25.  XX Consulting 2000 25 Purchase order-based: All purchase order items may be settled regardless of partial deliveries. Goods receipt-based: Goods receipt must already have been entered for the quantity invoiced. Each receipt is entered and settled individually. Invoices for quantities greater than receipt quantities cannot be posted. This type of invoice verification must be specified in the purchase order. Vendor invoice-based: Invoice is directly posted to a material, general ledger, or a fixed asset account if a purchase order or a goods receipt does not exist in the R/3 System. Evaluated Receipt Settlement (pay on receipt): Invoice is automatically created upon goods receipt based on purchase order terms and receipt quantity. Types of Invoice Verification

26.  XX Consulting 2000 26 ? Invoice verification Invoice items can be posted with reference to a purchase order, a goods receipt, or a vendor’s invoice. Relevant account postings are made automatically. Posted items appear as open items to be paid on the vendor account. or Purchase order Purchase order Goods receipt Vendor invoice Types of Invoice Verification

27.  XX Consulting 2000 27 Referencing Purchase Order

28.  XX Consulting 2000 28 Goods receipt Access via purchase order GR1 50 Goods receipt GR 3 10 Vendor invoice Selection screen X 4500012345 50 X 4500012345 40 X 4500012345 10 Purchase order Purchase Order No. 4500012345 Upon invoice entry, the goods receipt number must be entered on the initial screen. Only invoiced items backed by actual goods receipts can be entered. Multiple goods receipts from multiple purchase orders can be entered in the same invoice. Goods receipt-based invoice verification (GR-IV) indicator must be set in the purchase order. Purchase order 100 pieces GR-IV x GR 2 40 Goods-receipt Based Invoicing

29.  XX Consulting 2000 29 Goods receipt GR1 50 Generate vendor invoice Purchase Order No. 4500012345 Purchase order 100 pieces ERS X ERS indicator is defaulted to the purchase order from the vendor record. Vendor invoice creation triggered from goods receipt posting using purchase order, goods receipt and vendor data. Vendor payment made through accounts payable according to the terms and conditions of the invoice. Evaluated Receipt Settlement

30.  XX Consulting 2000 30 Thompson & Sons 39 Second St. Tampa, Fl 24973 Motor Sports International 672 Lancaster Ave. Radnor, PA 19010 04/03/96 Concerning your purchase order 45000895 of 02/03/96, we delivered the following goods: VGE-raw 110,000 pcs.$ 2,500 VGE-sem 1 300 kg$ 1,500 _________ $ 4,000 plus 14% TAX $ 560 _________ $4,560_ _ Payable within a period of 20 days from date of invoice. 2% cash discount for payment within 10 days. Account no. 11223344 Nord Lb (code 300 210 55). Purchase order Invoice items Material Unit of measure Terms of payment Amount per item Tax amount Invoiced amount Tax rate Bank data Vendor Some invoice data is entered by the user, while other information is copied from the purchase order, purchase order history, and tax configuration. Quantities Document date Vendor Invoice Information

31.  XX Consulting 2000 31 Purchase order: 50 pieces at $2 / piece Goods receipt for purchase order: 50 pieces Invoice: 50 pieces at $2 / piece Stock account GR/IR account Vendor 100 + 100 - 100 + 100 - Goods receipt Invoice Vendor invoice $100.00 The Goods Receipt/Invoice Receipt (GR/IR) clearing account is an accrued liability that reflects the obligation to the vendor until the receipt of the vendor’s invoice clears to the vendor’s account. Account Postings

32.  XX Consulting 2000 32 Invoice (relating to purchase order) Post A XX B Purch. order history Goods receipts Down payments Invoices Doc. No. 51000123 Vendor100 - GR/IR100 + When an invoice is posted, an accounting document is created. Appropriate transactions are posted to the general ledger. The material master record and purchase order history are updated when the invoice is posted. Material Master Record Moving average price Value Posting an Invoice

33.  XX Consulting 2000 33 Stock account GR/IR account Vendor 100 + 100 -100 + 100 - Bank Accounts - Clearing - Company (Cash) Goods receipt Invoice Payment Bank Statement 100 + 100 - 100 + 100 - After a vendor is paid, an increase in stock account is matched by a decrease in the company cash account. Purchase order: 50 pieces at $2 / piece Goods receipt for purchase order: 50 pieces Invoice: 50 pieces at $2 / piece Vendor Payment

34.  XX Consulting 2000 34 Topic One: Goods Receipt Topic Two: Invoice Verification Vendor Invoice Processing Invoice Variance Topic Three:Material Valuation Topic Four: Procurement Topic Five: Reporting and Analysis Schedule

35.  XX Consulting 2000 35 Invoice Price Tolerances 10% Goods receipt Variance ! Document number: 5100012345 created Blocked for payment Post Each vendor’s invoice is checked against various tolerance limits set in the R/3 System. Invoices that exceed the tolerance limit are blocked for payment and are released in a separate step. $5 each Purchase order Invoice $6 each Checking Invoice Variance

36.  XX Consulting 2000 36 There are several types of variances that can be checked by the SAP R/3 System during invoice verification: Quantity: Delivered quantity differs from the invoiced quantity. Price:Purchase order price differs from the invoice price. Order price quantity: Goods receipt (or purchase order) order price quantity differs from invoice order price quantity. Date:Invoice receipt date is before planned delivery date. Any one purchase order line item may have one or more variances that would cause the invoice to be blocked for payment by the R/3 System. Types of Invoice Variance

37.  XX Consulting 2000 37 Types of Invoice Variance Goods receipt Quantity Invoice 50 pcs 40 pcs Quality Price Purchase order Invoice $6/pc Date 04/02 Invoice Purchase order Planned delivery date Order price quantity Invoice Purchase order 10 pcs x 20 g/pc = 200 g cost $2.00/g 200 g x $2.00/g = $400 Goods Receipt 10 pcs x 20 g/pc = 200 g 200 g x $2.00/g = $400 250 g x $2.00/g = $500 (10 pcs x 25 g/pc = 250 g) 04/05 $5/pc

38.  XX Consulting 2000 38 Goods receipt Purchase order Goods receipt Invoice 130 + 130 - 130 + 124 - 6 - 100 pieces 100 pcs at $1.30/pc Invoice 100 pcs at $1.24/pc = $124 If the invoice contains a price variance, the account postings are dependent on the material’s price control. Stock account GR/IR account Vendor account Price differences A price variance for a material with a standard price is posted to a price variance account. Example shows standard price control. Price Variance (Standard Cost Stock)

39.  XX Consulting 2000 39 Price Variance (Moving Average Stock) Goods receipt Invoice 130 + 130 - 6 - 130 + 124 - 100 pieces Purchase order 100 pcs at $1.30/pc Invoice 100 pcs at $1.24/pc = $124 If the invoice contains a price variance, the account postings are dependent on the material’s price control. Stock account GR/IR account Vendor account A price variance for a material with a moving average price is posted to a stock account. Example shows moving average price control.

40.  XX Consulting 2000 40 Price Variance for Consumables Goods receipt Purchase order Goods receipt Invoice Consumption account GR/IR account Vendor account 130 + 130 - 6 - 130 + 124 - 100 pieces 100 pcs at $1.30/pc If the invoice contains a price variance, the variance will be posted to the consumption account. 130 - 130 + Consumption account is dependent upon the account assignment category (e.g., cost center, asset, project). Invoice 100 pcs at $1.24/pc = $124

41.  XX Consulting 2000 41 Invoice Quantity Variance Goods receipt Good receipt Invoice Subsequent goods receipt Stock account GR/IR account Vendor 800 - 300 + 300 - 50 pieces 100 pieces at $10/pc Goods receipt Purchase order If goods receipt-based invoicing is specified during ordering, the invoice quantity is limited to no more than the goods receipt quantity. Variance ! 300 - 500 + 500 - 800 + 800 - Invoice 80 pcs at $10/pc = $800

42.  XX Consulting 2000 42  Tolerances can be set to check for quantity, price, order price quantity, and date variances.  The R/3 System can be configured not to check invoice tolerances or to permit variances within upper and lower limits.  Tolerances can be in absolute or percentage amounts. If both are specified, the R/3 System will apply the more restrictive choice. Setting Invoice Tolerance Limits

43.  XX Consulting 2000 43 Financial accounting Invoice verification Invoice Accounting document created GR/IR 100 Vendor 100 Invoice blocked for payment Vendor 100 Payment program Blocked ! Bank 100 ? = An invoice is NOT blocked for payment if all of its items are within configured tolerances for variances. Accounts Payable cannot pay an invoice containing a “payment block” caused by excessive variances in one or more items. An authorized person must first release each blocked item before a payment block is removed for the invoice. Variance ! Post Blocking Invoices

44.  XX Consulting 2000 44 One or several excessive variances in any one invoice line item will cause a payment block of the entire invoice. The SAP R/3 System will automatically calculate blocking reasons for: Quantity Price Order Price Quantity Date An invoice may be blocked manually at the time of posting. Invoice Blocking Reasons

45.  XX Consulting 2000 45 Select Option Release Mode Blocked Invoice List AutomaticManual No Yes Will cash discount date be missed? Reset baseline date and claim discount anyway. Which ?: - companies - vendors - reasons Release occurs when reasons no longer apply. Release one by one or collectively. Releasing Blocked Invoices

46.  XX Consulting 2000 46 Automatic Release The Automatic release function will release all invoices blocked for quantity, price or date reasons that are no longer valid. For example: An invoice, blocked because the invoice quantity exceeded the receipt quantity, can be automatically released after a subsequent delivery because the quantity variance will no longer exist. An invoice, which arrived early and was blocked for date variance, can be automatically released for payment upon reaching the planned delivery date. An invoice, blocked because the invoice price was greater than the purchase order price, can be automatically released for payment if the purchase order price was changed to equal the invoice price. The user must initiate the release of the range of invoices in the R/3 System even though the blocking reasons are no longer valid.

47.  XX Consulting 2000 47 Automatic Release Invoice 80 pcs Quantity Invoice > Receipt Invoice blocked for payment 1st goods receipt: 60 pieces Here the invoice will be blocked due to quantity variance. Purchase Order 100 pcs

48.  XX Consulting 2000 48 Automatic Release Invoice 80 pcs Quantity Invoice > Receipt Invoice blocked for payment Blocking reason no longer valid 2nd goods receipt: 40 pieces 1st goods receipt: 60 pieces Here the invoice will be blocked due to quantity variance. Additional delivery makes quantity variance blocking reason invalid. Purchase Order 100 pcs

49.  XX Consulting 2000 49 Automatic Release Invoice 80 pcs Quantity Invoice > Receipt Invoice blocked for payment X Automatic release Payment program settles the invoice Blocking reason no longer valid 2nd goods receipt: 40 pieces 1st goods receipt: 60 pieces Here the invoice will be blocked due to quantity variance. If automatic release is active, certain blocked invoices may be automatically released. Accounts payable will pay the invoices according to payment terms. Additional delivery makes quantity variance blocking reason invalid. Purchase Order 100 pcs

50.  XX Consulting 2000 50 Manual Release Manual release allows blocking reason(s) for an invoice item to be selected individually and deleted. When the last blocking reason is deleted for all line items in an invoice, the entire invoice is then released for payment. Manual release of invoices can be done through: Individual release:Cursor is placed on an individual invoice line item blocking reason and that reason is deleted. Collective release: Cursor is placed on range of invoice items which are to be released for payment. When invoices are released, the document number remains on the screen until the transaction is completed. Items can only be reblocked by A/P.

51.  XX Consulting 2000 51 Manual Release Invoice DocumentItemQPDOrMOQty diff. 510001234003x20 510007477005xx 5- 510008784002xx 510008784006xx10 Release Individual release Position cursor on item blocking reason Collective release Activate range of items Invoice blocking reason codes

52.  XX Consulting 2000 52 Summary When you enter an invoice referencing a purchase order, the system suggests almost all of the required information. You only have to enter a small amount of information manually. The R/3 system checks every invoice item for variances on the basis of content and price.

53.  XX Consulting 2000 53 Exercise for Invoice Verification Now it’s time for you to do: MM04 - Exercise 11 45 minutes

54.  XX Consulting 2000 54 Topic One: Goods Receipt Topic Two: Invoice Verification Vendor Invoice Processing Invoice Variance Topic Three:Material Valuation Topic Four: Procurement Topic Five: Reporting and Analysis Schedule

55.  XX Consulting 2000 55 General Concepts Material valuation determines and records the value of stock material. Unit price, stock quantity, and total value are maintained in the material master. Valuation: Links Materials Management with Financial Accounting by updating the General Ledger. Occurs automatically whenever a goods movement transaction (quantity change) or invoice is posted. Can be performed manually by:  Changing standard or moving average prices.  Posting subsequent debits and credits in invoice verification.

56.  XX Consulting 2000 56 Processes Affecting Valuation MM External procurement: Purchasing Accounting Invoice Verification - Price change - Balance sheet valuation - Account maintenance Inventory Management

57.  XX Consulting 2000 57 Standard vs. Moving Average Price Materials are valuated using two types of price control: Standard price Moving average price Standard price requires that all postings be carried out at one price for a set period of time. All variances are posted to price difference accounts. Moving average price requires that materials be valuated at goods receipt value. Moving average prices are automatically adjusted in the material master when variances occur. Price control should be set in the material master (accounting view) when a material is created.

58.  XX Consulting 2000 58 Material Valuation Material valuation Setting price control in material master "S" Standard price "V" Moving average price If a material is assigned a standard price, the value of the material is always calculated at this price. If a material is assigned a moving average price, receipts are posted using the purchase order price and issues are posted using the current moving average price.

59.  XX Consulting 2000 59 Valuation Class Material type determines the valuation class that can be assigned to a material. Valuation class groups different materials with similar properties so separate stock accounts do not have to be maintained for every material. The R/3 System uses valuation class for automatic account determination. This class is used to determine which stock account should be posted to when an inventory transaction occurs.

60.  XX Consulting 2000 60 Valuation Class Material type determines the valuation class that can be assigned to a material. Valuation class groups different materials with similar properties so separate stock accounts do not have to be maintained for every material. The R/3 System uses valuation class for automatic account determination. This class is used to determine which stock account should be posted to when an inventory transaction occurs.

61.  XX Consulting 2000 61 Valuation Class Valuation class 2 Material type Material 002 Material 001 Material 003 General Ledger Accounts 300100 300000 Valuation class and other factors, such as movement type, determine the automatic G/L account assignment used to post inventory transactions. Valuation class 1

62.  XX Consulting 2000 62 Posting at Standard Price  Starting inventory balances and value are indicated in the initial situation.  Moving average price is maintained for materials valuated using standard price for statistical purposes only. Price difference accountVendor payables account Stock account (1) 200.00 GR/IR clearing account EventStockTotal stockStandardMoving quantity valuepriceaverage price ( ( 1 )Initial situation100200.002.00

63.  XX Consulting 2000 63 Posting at Standard Price EventStockTotal stockStandardMoving quantity valuepriceaverage price  Stock value and stock account are updated at standard price.  Goods Receipt/Invoice Receipt clearing account is updated at purchase order price.  Difference between purchase order price and standard price is posted to the price difference account. Price difference account ( 2 ) 40.00 Vendor payables account Stock account (1) 200.00 (2) 200.00 GR/IR clearing account 240.00 ( 2 ) ( 1 )Initial situation100200.002.00 ( 2 )GR for PO: 100 @ 2.40200400.002.002.20

64.  XX Consulting 2000 64 Posting at Standard Price EventStockTotal stockStandardMoving quantity valuepriceaverage price Price difference account ( 2 ) 40.0020.00 ( 3 ) Vendor payables account 220.00 ( 3) Stock account (1) 200.00 (2) 200.00 GR/IR clearing account ( 3 ) 240.00 240.00(2) ( 1 )Initial situation100200.002.00 ( 2 )GR for PO: 100 @ 2.40200400.002.002.20 ( 3 )IR for PO order: 100 @ 2.20200400.002.002.10  GR/IR clearing account is cleared at purchase order price.  Vendor payables account is updated at invoice price.  Difference between purchase order price and invoice price is posted to price difference account. No change to total stock value.

65.  XX Consulting 2000 65 Posting at Moving Average Price  Starting inventory balances and value are indicated in the initial situation.  Standard price is not maintained for materials valuated at moving average price. EventStockTotal stockMoving quantity valueaverage price ( 1 )Initial situation100200.002.00 Stock account ( 1 ) 200.00 Vendor payables account GR/IR clearing account

66.  XX Consulting 2000 66 Posting at Moving Average Price EventStockTotal stockMoving quantity valueaverage price  Stock value, stock account, and GR/IR clearing account are updated at purchase order price.  Moving average price is recalculated using new stock value. ( 1 )Initial situation100200.002.00 ( 2 )GR for PO: 100 @ 2.40200440.002.20 Stock account ( 1 ) 200.00 ( 2 ) 240.00 Vendor payables account GR/IR clearing account 240.00(2)

67.  XX Consulting 2000 67 Posting at Moving Average Price EventStockTotal stockMoving quantity valueaverage price ( 1 )Initial situation100200.002.00 ( 2 )GR for PO: 100 @ 2.40200440.002.20 ( 3 )IR for PO order: 100 @ 2.20200420.002.10 Stock account ( 1 ) 200.0020.00 (3) ( 2 ) 240.00 Vendor payables account 220.00 ( 3) GR/IR clearing account ( 3 ) 240.00 240.00(2)  GR/IR clearing account cleared at purchase order price. Vendor payables account is updated at invoice price. Difference between purchase order and invoice price is posted to stock account. Stock value is recalculated using invoice price.  Moving average price is recalculated using new stock value.  If stock quantity on-hand is below invoice quantity, part of the difference will be posted to the expense/revenue: price difference account instead of the stock account.

68.  XX Consulting 2000 68 Valuation Area Valuation area specifies the level at which a material is valuated. Valuation levels: Company code Plant If stock is valuated at the company code level, all stocks of a material in the company are valuated together at the same price. If stock is valuated at the plant level, all stocks of a material in an individual plant are valuated together at one price. Stocks in other plants are not included in the valuation area and can be valuated at a different price.

69.  XX Consulting 2000 69 Valuation Area Company code 3000 Price control and price are uniform for all plants within the company code. Plant Price control and price are plant-specific. Valuation areas

70.  XX Consulting 2000 70 Exercise for Material Valuation Now it’s time for you to do exercise: No exercise!

71.  XX Consulting 2000 71 Topic One: Goods Receipt Topic Two: Invoice Verification Vendor Invoice Processing Invoice Variance Topic Three: Material Valuation Topic Four: Procurement Topic Five: Reporting and Analysis Schedule

72.  XX Consulting 2000 72 Material Requirements Planning (MRP) is often the source of demand for purchased materials in an organization. Depending on material master settings and parameters selected when running MRP, demand from MRP can generate: Planned orders:Can be converted to purchase requisitions or purchase orders. Purchase requisitions:Can be converted to purchase orders. Stock transport orders: Orders between plants. Schedule releases:Orders against scheduling agreements, are also called delivery plans. Note: MRP is covered in detail in the Manufacturing Planning course. General Concepts

73.  XX Consulting 2000 73 MRP Procedures Materials planning Automatic reorder point Manual reorder point MRP Consumption based Reorder point procedure Stochastic MRP

74.  XX Consulting 2000 74 Outputs of MRP in Procurement Material Requirements Planning Purchase Requisition Material Quantity Due Date Planned Order Material Quantity Due Date Schedule Release Material Quantity Due Date

75.  XX Consulting 2000 75 Material Master MRP Views Material Requirements Planning (MRP) data is maintained in three separate views of the material master record:  MRP 1 view contains cross-departmental and MRP procedure data.  MRP 2 view contains basic data, forecast processing data, and requirements explosion data.  MRP 3 view contains repetitive manufacturing, consumption, discontinued materials, and storage location data.

76.  XX Consulting 2000 76 MRP View Selection Enter the appropriate plant in the Organizational Levels/Profiles dialog box because material is planned at plant level.

77.  XX Consulting 2000 77 Material Master - MRP 1 View Reorder point planned materials If the on-hand stock falls below the reorder point quantity, MRP will create a replenishment based on lot size rules and values defined in the material master record.

78.  XX Consulting 2000 78 MRP Type  The MRP type determines whether the material will be planned, and if so, how it will be planned.  Planning options include MPS, MRP, reorder point, or forecast.

79.  XX Consulting 2000 79 Exercise for Procurement Now it’s time for you to do exercise: No exercise!

80.  XX Consulting 2000 80 Topic One: Goods Receipt Topic Two: Invoice Verification Vendor Invoice Processing Invoice Variance Topic Three: Material Valuation Topic Four: Procurement Topic Five: Reporting and Analysis Schedule

81.  XX Consulting 2000 81 Logistics Information Library Inventory Controlling Shop Floor Information System Sales Information System Purchasing Information System... Logistics processing systems Logistics information systems PPPMSDMMQM R/3 Logistics Information System (LIS)

82.  XX Consulting 2000 82 Standard purchasing reports and analyses provide an overview of purchasing transaction data. Transaction-level detail and summary-level analyses can be completed quickly and efficiently using the tools available in the R/3 System. Examples of standard reports and analyses include: Order values by vendor Number of purchase orders by material Average value of purchase orders by purchasing group General Concepts

83.  XX Consulting 2000 83 Types of Report and Analysis List displays by: Vendor Material Account assignment Material group Purchase order number Tracking number General Analyses Order Value Analyses Inventory Transaction Analyses List Display

84.  XX Consulting 2000 84 General Concepts A list is the output of a report program. Lists can be used to manage daily functions and report on routine activities. Purchasing examples include lists of: Purchasing requisitions that must be converted into purchase orders. Purchase orders without receipts. Lists can be tailored to the specific requirements of the user. Selection criteria and data ranges are entered to specify the amount of information displayed in the list. Presentation of data may be modified using sorts and total displays.

85.  XX Consulting 2000 85 List Display Selection Purchasing Documents for Vendor Ranges, selection options, and inclusions tailor the list display to the exact specifications of the user. Scope of list and selection parameters specify types of information to display.

86.  XX Consulting 2000 86 Scope of List Scope of list determines what data is displayed in a report or analysis. The following types of information can be displayed: Open purchase order quantity Open purchase order value Validity period of outline agreements Purchase order history Release order documentation

87.  XX Consulting 2000 87 Selection Parameters Selection parameters allow the user to determine which purchasing documents the system analyzes. Reports can be generated for: Open orders Open goods receipts Open invoices, etc. Selection parameters are maintained by the systems administrator.

88.  XX Consulting 2000 88 List Display Example Purchasing Documents for Vendor Purchasing and Inventory management information In this example, a list display was generated for purchase orders from vendors 1500-01 through 1500-20 within purchasing organization 3000.

89.  XX Consulting 2000 89 General Concepts of Variant Variants are groups of user-defined selection criteria that have been saved for later use when calling up frequently generated reports and analyses. Variants reduce data-entry time and allow users to easily access only the information that is relevant to their area, department, plant, etc. A report may have any number of variants attached.

90.  XX Consulting 2000 90 Establishing Variants  SAP AG R Purchasing Documents for Vendor  From the selection screen of any report, selection parameters can be entered and saved as a variant.  In this example, the variant will display all purchasing documents for purchasing group 001 in purchasing organization 3000 for materials in plant 3000.

91.  XX Consulting 2000 91 Saving Variants The variant name and description must be entered when the variant is saved. Purchasing Documents for Vendor

92.  XX Consulting 2000 92 General Concepts General analyses allow you to review purchase orders, contracts, scheduling agreements, or requests for quotations by: Vendor Material Material group Purchasing group Selection criteria and settings allow you to modify the content and layout of the analysis.

93.  XX Consulting 2000 93 General Analyses In this example, a list of purchase orders within the date range will be generated for purchasing organization 3000, vendor 1500-00. Selection options must be specified when creating a general analysis. Purchasing Documents

94.  XX Consulting 2000 94 General Analyses - Example Purchasing Documents By Vendor Display options allow you to present data according to your needs. Selection information Double-clicking on a line item allows the user to drill down into the purchasing line item history for the purchasing document.

95.  XX Consulting 2000 95 General Concepts Order value analyses allow you to analyze purchasing patterns using one or several of the following options: Totals analysis ABC analysis Analyses with comparison periods Frequency analysis Purchasing data may be totaled by: Purchasing organization Purchasing group Vendor Plant Material group Material

96.  XX Consulting 2000 96 Order Value Analysis - Options Analysis of Order Values ABC analysis options Totals analysis options

97.  XX Consulting 2000 97 Order Value Analysis - Options Analysis of Order Values Frequency analysis options Comparison periods must be specified during comparison analysis.

98.  XX Consulting 2000 98 Order Value Analysis - Example Analysis of Order Values Selection parameters Currency information must be specified on the initial selection screen for order value analysis. In this example, an order value analysis will be generated in US dollars for vendors 1500-01 through 1500-20 within purchasing organization 3000.

99.  XX Consulting 2000 99 Order Value Analysis - Example Analysis of Order Values Sort sequence determines how information is sorted on the analysis. Output values determine which values appear and in what order. In this example, a totals analysis, including the net order value, average value per PO, and number of purchase orders, will be created using the selection criteria specified on the previous screen.

100.  XX Consulting 2000 100 Order Value Analysis - Example PO Value Analysis in USD: Totals Totals for vendors in purchasing organization Columns are arranged according to output sequence indicated on the previous screen. The list is sorted according to values established within selection criteria (vendors 1500-01 to 1500- 20 within purchasing organization 3000).

101.  XX Consulting 2000 101 General Concepts Inventory Transaction Analyses display information about: Material movements Material stocks Inventory Transaction Analyses can be used to: Review the transaction history for a material Determine the current stock balance for a material Inventory list displays may be created for all types of material transactions.

102.  XX Consulting 2000 102 Inventory Transaction Analysis Display Material Documents for Material In this example, a report will be created listing all material movements for materials 1500-100-00 through 1500-100-20 in plant 3000, storage location 001.

103.  XX Consulting 2000 103 Inventory Transaction Analysis Inventory Documents By Material Inventory transaction selection criteria Account assignment information Inventory transaction dates Inventory transactions by movement type

104.  XX Consulting 2000 104 Exercise for Reporting and Analysis Now it’s time for you to do exercise: MM04 - Exercise 12 30 Minutes

105.  XX Consulting 2000 105 Your input in course evaluation form is appreciated. Please take the quiz. Course Evaluation and Quiz

106.  XX Consulting 2000 106 Congratulations !