1.  TATA CONSULTANCY SERVICES MM - PURCHASING

2.  TATA CONSULTANCY SERVICES Target Group Purchase department

3.  TATA CONSULTANCY SERVICES Introduction Contents  Creating POs  Printing of POs  Printing Remainders  Changing or canceling POs  Purchasing information Exercises Solutions

4.  TATA CONSULTANCY SERVICES Course Objectives Create a new PO Make changes to existing PO Printing a PO To navigate through purchasing information system At the conclusion of this course, you will be able to:

5.  TATA CONSULTANCY SERVICES Purchase order Definition 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 Header items Additional data

6.  TATA CONSULTANCY SERVICES Creating a Purchase order Automatically from PR Set automatic PO indicator for material and vendor Maintain Purchasing info record Maintain source list Fixed vendor PR from MRP or Manually created PR Assign manually or automatically Process the assigned PR to create PO

7.  TATA CONSULTANCY SERVICES Create PO - Manually Manually creating a PO With reference to PR  Select the PRs  Select the items from PR  Copy the items in to PO  Enter the vendor  Enter the prices and pricing conditions  Requirement tracking number  Update the info record if reqd

8.  TATA CONSULTANCY SERVICES Create PO With reference to RFQ  Select RFQ  Select the items  Copy the selected items in to PO  Enter the Price and pricing conditions  Update the info record if reqd.  Acknowledgement and confirmations

9.  TATA CONSULTANCY SERVICES Create PO With out any reference  In this case you need to enter Vendor code Delivery date Item category Account assignment category (if reqd) Requirement tracking number Order type ( NB For std purchase order) Plant ( 4000 - default plant ) Storage location

10.  TATA CONSULTANCY SERVICES Creating a PO (contd…) Important terms in PO Vendor  For creating a PO you need to enter vendor code  Vendor master should exist for this purpose  if you don’t want to maintain all the details for a vendor you can create a one time vendor Item category  Standard  Subcontracting  service

11.  TATA CONSULTANCY SERVICES Create PO (Contd…) Account assignment category  Specification of the account assignment objects that are charged in the case of a purchase order for a material that is intended for direct usage or consumption.  Examples Asset Sales order Production order Cost center  Types of account assignment Single account assignment Multiple account assignment

12.  TATA CONSULTANCY SERVICES Create PO (contd…) Delivery date  Date format Day format Week format Month format  Delivery date entered here is only expected delivery date  You can also specify a statistical delivery date

13.  TATA CONSULTANCY SERVICES Create PO (contd…) Units of measure in PO  The order unit  This is the unit you specify in connection with the order quantity.  The order price unit  This is the unit that applies in connection with the net price and which is taken as the basis for invoice verification.  If the order price unit does not correspond to the order unit, and if no conversion factor is specified in the system, you must enter a conversion factor on the item detail screen.

14.  TATA CONSULTANCY SERVICES Create PO (Contd…) Example for units of measure in PO Order quantity 24 Order unit Box Gross price per unit $10 Order price unit (number) 1 Order price unit (of measure) kg Conversion factor24 boxes 1 kg

15.  TATA CONSULTANCY SERVICES Create PO (Contd…) Conditions  This component enables you to store pricing stipulations agreed with the vendor  Examples are applicable discounts or surcharges, or stipulations regarding the payment of freight costs in the system.  There are three kinds of price in Purchasing:  Gross price  Price without taking any possible discounts and surcharges into account

16.  TATA CONSULTANCY SERVICES Create PO (Contd…)  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. Terms of Payment  Example Within 14 days 2% discount Within 30 days due net

17.  TATA CONSULTANCY SERVICES Create PO (Contd…) Inco terms  Incoterms are internationally-recognized terms of delivery reflecting the standards set by the International Chamber of Commerce (ICC).  Example FOB - Free On Board. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. You can specify Incoterms for an order item that differ from those in the PO header.

18.  TATA CONSULTANCY SERVICES Creating PO from outline agreement In the initial screen for Create PO, Select the Outline agreement and items Copy the items in PO In the item overview screen Enter the quantity If the quantity exceeds the target quantity system gives a warning

19.  TATA CONSULTANCY SERVICES Texts in PO Header texts Header note Pricing types Dead lines Terms of delivery Shipping instructions Terms of payments warranties Penalties for breach of contract

20.  TATA CONSULTANCY SERVICES Confirmations Purpose This component can be used, if you wish to have your vendor provide you with various kinds of confirmation regarding delivery dates and quantities It enables you to base your materials planning and control activities on more up-to-date data than that contained in purchase orders. Confirmation control key Shipping notification Order acknowledgement

21.  TATA CONSULTANCY SERVICES Shipping notification Shipping Notification Definition A vendor’s confirmation to a purchasing organization of the delivery date for a certain quantity of ordered materials It can be for the date of performance of ordered services also. Structure A shipping notification consists of several items in which the notified (confirmed) quantity of the material or service is specified.

22.  TATA CONSULTANCY SERVICES Confirmations from the Viewpoint of IM When you post goods receipts, there are several ways of finding the associated purchase orders.  Enter the PO number  Enter the shipping notification number  Enter the transport identification code If you establish a link via the PO number itself, the relationship is unique i.e. one goods receipt (GR) against one purchase order

23.  TATA CONSULTANCY SERVICES Confirmations from the Viewpoint of IM If you enter the number of the shipping notification The system selects all purchase orders containing this number System suggests the notified quantities for the GR document. Prerequisites If you wish to match up GRs against POs via the shipping notification number,  shipping notification must exist as a separate document.

24.  TATA CONSULTANCY SERVICES Releasing the PO Release Procedure for External Purchasing Documents External purchasing documents (i.e. purchasing documents other than requisitions) are released at header level. Item-by-item release is not possible. These documents can only be released using the release procedure with classification. Release Conditions The release conditions determine the release strategy in accordance with which a PO is to be released. If a PO does not meet the conditions for a release strategy, it is automatically released for further processing.

25.  TATA CONSULTANCY SERVICES Release procedure Release Strategy The release strategy defines the approval process for purchasing documents. The strategy specifies the release codes necessary and the sequence in which releases have to be effected. A maximum of eight release codes can be defined. The assignment of the release strategy to a purchasing document is based on the release conditions.

26.  TATA CONSULTANCY SERVICES Release procedure Release Code Definition  The release code is a two-character ID allowing a person to release (clear, or approve) an external purchasing document.  Who may work with which release codes is basically controlled via a system of authorizations. Release Prerequisites The release prerequisites indicate the sequence in which PO must be approved via the release codes.

27.  TATA CONSULTANCY SERVICES Printing a PO Menu path Purchase order -> Header -> Messages Data required Output type Medium Communication method  Select the printer Further Data Repeat output Change output

28.  TATA CONSULTANCY SERVICES Printing the remainders Types of expediting letters Remainders  A negative number of days means that a reminder is to be issued to the vendor n days prior to the delivery date Urging letters  A positive number of days means that a letter or message urging delivery is to be issued n days after the due date. Message type - MAHN (Dunning letter)

29.  TATA CONSULTANCY SERVICES Changing and blocking POs If you change a PO after it has been sent to the vendor, a change document is generated that can be sent to the vendor. This tells the vendor what you have changed. If the goods have already been delivered, then the changes you can make to the PO are limited. For example, you cannot change the quantity to one that is less than the quantity delivered. If the invoice has been received or the goods have been paid for, and your intended change affects the price, the change will be ineffective. You can display the PO history for an item to determine whether deliveries have been received or the item has been invoiced.

30.  TATA CONSULTANCY SERVICES Purchasing information List displays List of POs for a vendor or for a range of vendors  This gives the details of the purchase order like still to be delivered, still to be invoiced etc. List of POs for a material or for a range of materials List of POs for a account assignment List of POs for a requirement tracking number Reporting General analyses Order value analyses Subcontracting stocks per vendor

31.  TATA CONSULTANCY SERVICES Purchasing information Material Purchasing values Purchasing quantities On time delivery Qty reliability Frequencies Vendor Material group Purchasing group