Standard Business Processes in SAP MM

Standard Business Processes in SAP MM

Prepared By
Subhrajyoti Bhattacharjee

PMP®, Certified SAP EAM/PM, Certified ITIL V3

SAP EAM/PTP/PS Systems Analyst

Perth, Australia.

E-mail: subhrajyoti.b@gmail.com

Contents

1. STOCK PURCHASE – NON ERS VENDORS ................................................................................................. 3

2. STOCK PURCHASE – ERS VENDOR ............................................................................................................ 17

3. DIRECT CHARGE PURCHASE – NON – STOCK ITEM ........................................................................... 23

4. DIRECT CHARGE PURCHASE – SERVICE ................................................................................................. 28

5. STOCK TRANSPORT BETWEEN PLANTS ................................................................................................. 36

6. CONSIGNMENT PURCHASE ........................................................................................................................... 48

7. RECURRING PAYMENTS USING INVOICING PLAN ............................................................................. 55

8. MISCELLANEOUS PURCHASING ................................................................................................................. 59

9. INVENTORY MANAGEMENT .......................................................................................................................... 63

1. Stock Purchase – Non ERS Vendors

Scenario brief: In this scenario, material stock relevant for MRP Planning are
planned and procured. Depending on MRP Type, Lot sizing procedure,
Availability Check and other parameters as set in material master and MRP
configuration, a daily MRP batch job determines within the defined planning
horizon, which are the parts that have fallen below reorder point (based on
Requirements vs. Planned receipts). An entry is made against the material in
MRP Planning File, and Planned Order/Purchase requisition is generated (as
per MRP parameters).

Purchase requisitions are automatically converted to Purchase Orders,
against which Goods receipt to relevant Plant/Storage Location is
performed. Finally vendor invoice is created, blocked invoices, if any, are
cleared by relevant authority and Vendor payments are executed.

Pre-requisites:

 Material master with all relevant field details including MRP and Purchasing
data fields. Refer document “PTP_Current State Document_PTP Master
Data_v0” for details on relevant fields in material master.

 Source assignment records should exist for the material for auto PO creation
from PR. This would include Outline agreement (Contract)/Source
List/Purchasing Info records.

 Configurations and master data associated with all process objects including
Purchase requisition, Purchase Order, Goods Receipt, Invoice Receipt,
Material movements and Accounts postings should be complete and valid.

Process Flow in SAP:

Step 1.Requirements for usage of stock material are generated in the
system for the material. Requirements can be generated through manually
created reservations or Reservations automatically generated through
planned requirement for stock material in transactions such as Maintenance
Order –component planning.

Manually created reservations

Transaction code: MB21

EnterBase Date(Date on which material consumption/movement) is expected,
Movement Type(where the material would be consumed),Plant(Plant issuing or
receiving the material)

The relevant movement types for manual creation consumption requirement of
the material at ABCwould include 201 –Consumption for Cost centre, 221 –
Consumption for Project.

In main screen, select Consumption object based on Movement type (for
example. Cost Centre), Material ID, Quantity and save the reservation

Auto created reservations – Maintenance Order Planning

Transaction code: IW31 (Create Order)/ IW32 (Change Order)

In Maintenance Order –> Component planning, whenever a stock material is
planned as a requirement, a Reservation for the same is created inside the
maintenance order. The time of creation of the reservation may be on Save or
during Release of maintenance order based on configuration setup or in Order.

Check in Gen. Data tab where Reservation No. for the item will be displayed.

Step 2. Create PR via MRP Run

Transaction code: MD01 (MRP Run for a Plant), MD03 (Single-item, Single-Level),
MDBT (Batch mode - Daily batch run, automated)

Auto Batch is set for Daily run at ABC.

MD03 (Single-item, Single-Level)

Step 3. Create Automatic Purchase Order

Transaction code: ME59 (Automatic creation of Purchase Order from
Requisitions)

Enter selection parameters such as Plant, Material ID,Purchase Requisition No.
etc. and execute the transaction

Purchase Order created can be searched in PO List Report transactions like
ME2L (By Vendor), ME2M (By Material), ME2K (General) and so on.

Step 4. Receive Stock

Transaction code: MIGO_GR

Transaction MIGO is mostly used for Goods Receipt but as per Executable
actions configured on MIGO transaction, A01 Goods has not been set. It is set
in transaction MIGO_GR

Material document posted can be displayed in Transaction MB03.

On Goods receipt for Stock material, the following Accounting entries are
posted, if material has Moving Average Pricing set:

Stock A/c Dr
GR/IR A/c Cr

In case of Material with Standard pricing, and in case Purchase price is
different from Material standard price,

Stock A/c Dr
Price Difference A/c Dr
GR/IR A/c Cr

Cancellation of the Goods receipt movement can be done through transaction
MBST

Note: As per print output setting and Printer assignment setting for output condition
type in configuration transaction OMJ3, at ABC, GR of stock items against a

Plant/Storage Location would generate a GR Note being printed to the
respective Printer mapped in OMJ3.

Step 5. Create Vendor Invoice

Transaction code: MIRO

In case of PO being marked for GR-Based IV (PO -> Item details -> Invoice
tab), Invoice can be created against Goods receipt postings only, whereas if it is
marked as Invoice receipt, Invoice can be created against the Purchase Order
as a whole.

Basic Data Section:

Invoicing date, Posting date, Reference, Reference Document category (Ex.
Purchase Order/Bill of Lading/Delivery Note etc.) and Reference Document No
are entered.

Tick on Calculate Tax option to calculate Tax if any. Enter the Net amount in
the Amount field, till the Balance is 0.00

Payment section:

Payment terms, Payment method, Payment Block, Overall discount (if any) can
be set in this section

Other sections of the Invoice which can be maintained include Details section(for
Unplanned Delivery Cost, Planning Level – XA: Blocked for payment etc), Tax,
Amount Split (to split total amount as per payment terms), Contacts,Note (for
maintaining a detailed note on Invoice)

Simulate and Save the invoice document. As by default Invoice documents may be
marked for Payment block, it gets blocked for further clearance.

Step 6. Release Blocked Invoice

Transaction code: MRBR

Enter selection details in initial screen and execute the report.

Select Invoice and click on the Green Flag to release the Invoice, and save to
release.

On Invoice Posting, the following Accounting entries are posted:

GR/IR A/c Dr
Tax Account Dr (if taxes are applicable)
Vendor reconciliation A/c Cr

Step 7. Execute Payment Run

Transaction code: F110

Payment run is executed by the Accounts payable department. A brief of the
transaction is provided below.

In initial screen, Run date and Identification is entered for the payment
proposal.

Under the Parameter tab, enter Company code, Payment method (as
relevant),Next payment date, Vendor Accounts (if specific vendors are to be
paid), Exchange rate type (in case of payment in Foreign currency)

In Free selection section, Field Name (for example – Invoice Document No or a
List of them) can be specifically selected or excluded

In Additional Log section, Log types and Vendor/Customer account range can
be maintained

In Printout/Data Medium section, relevant Program variants can be set

On Save, parameters for Payment Program run for Payment Run date is saved.

The Next steps are to Schedule the proposal and Execute the Payment Run in
the initial screen of the Transaction

The Next steps are to Schedule the proposal.

On entering Start Date/Time, etc. and clicking on Green Tick, it will give a
message “Proposal has been released”

The payment run will be executed by the system as per scheduled Date/Time

Post Payment, the following Accounting entries are posted:

Vendor Reconciliation A/c Cr
Bank A/c Dr

2. Stock Purchase – ERS Vendor

Scenario brief: ERS or Evaluated Receipt Settlement is applicable for
Vendors which are marked for Auto ERS settlementin Vendor master –>
Purchasing Data -> Control Data section.

In this scenario, post Goods receipt, Auto ERS Invoices are created, which
are then subject to Payment run. This scenario generally applies for
regular/periodic purchases from established vendors.

Pre-requisites:

 Vendor Master should be setup with checkbox for Auto ERS settlement and
GR Based IV.Details of Vendor master setting is elaborated in document
“PTP_Current State Document_PTP Master Data_v0”.

 In the Purchasing Info record, for the Vendor – Material – Purchasing
Organization combination, No ERS checkbox should not be set.Details of
Purchasing Info record setting is elaborated in document “PTP_Current
State Document_PTP Master Data_v0

 Configurations and master data associated with all process objects including
Purchase requisition, Purchase Order, Goods Receipt, Invoice Receipt,
Material movements and Accounts postings should be complete and valid.


Step 1.Purchase requisition for the material is generated based on
automated MRP run as detailed in previous section of this document

Step 2.Purchase requisition is Source assigned and converted to Purchase
Order

Transaction code: ME57

This Transaction is subject to the fact that the Material does not have already
have a source assigned to it, say through a Fixed vendor or single Purchase
Info record within the current validity period etc. In such cases transaction
ME59 as detailed in previous section can be used.

Enter relevant details in the selection screen like Purchase Requisition No (if
known), Purchasing Group, Material ID, Material Group etc. as relevant and
execute the transaction

Select the displayed Purchase requisition and click on Assign automatically or
assign manually. In case of multiple available sources, users would have to
choose from the available sources. Save once after assigning the Source.

Next stage is to process assignment and convert the Purchase requisition to a
Purchase Order. Select the Purchase requisition line and click on Assignments
tab

Select the Assignment line and click on tab Process Assignment.

The system automatically proposes the Purchase Order Type, Purchase Order
Date, Purchasing Group, Purchasing Organization. Click to continue, Edit and
save the Purchase Order.

Ensure that ERS ,GR Based IVand Invoice Receipt indicators are ticked in
Purchase Order -> Item ->Invoice section. Inv. Receipt should be unchecked.
Also, under Delivery tab, Goods Receipt indicator should be ticked.

Message Output set for Order can be checked by clicking on Messages tab

Generated messages can be displayed in ME9F Transaction

Step 3.Goods receipt is carried out against the Purchase Order – as
detailed in previous process section of this document

Step 4.Creation of ERS Invoice

Transaction code: MRRL

Enter selection parameters in initial screen. It is usually recommended to first
run it in a Test run mode and then perform an actual run. In the field Doc.
Selection, if Purchase Order No. is known it can be directly on Purchase Order,
else it can be set on Vendor, if vendor is known.

There is also a checkbox for Settle Goods – Item + Planned Delivery cost,
which must be checked for settling Item and Planned Delivery costs (if any).
Remove Test run check for actual run.

A List output screen with FI document no. (ERS Invoice) generated would
come up, if the transaction has not been run in Test mode.

Step 5.Vendor Payment would be performed using similar procedure as
documented in first process section.

3. Direct Charge Purchase – Non – stock item

Scenario brief: Direct Charge purchase refer to manually created Purchase
requisitions created for consumption of Non stock items directly to an account
assignment object such as K- Cost centre, P- Project, F- Maintenance Order
etc.

Manual creation of Purchase requisitions can take place directly in MM module,
through Purchase requisition creation transactions or in certain cases
automatically in other modules in relevant transaction. For example – when a
Non – stock item is planned directly inside a Maintenance Order (under
component section), system can be set to automatically generate a Purchase
requisition for the non-stock item with account assignment “F”. So when
Goods will be received, the goods and relevant costs will directly be posted to
the maintenance order.

Non stock Purchase requisitions with Account assignment are usually subject
to a Release procedure which is defined as per characteristics values of Class
PR_RELEASE in system. Details of Release Strategies and their defining
characteristics values can be checked for above class and class type 032 in
transaction code CL24N

Pre-requisites:

 Configurations, master data and inter-module integration associated with all
process objects including Purchase requisition, Purchase Order, Goods
Receipt, Invoice Receipt, Material movements and Accounts postings should
be complete and valid.


Step 1.Purchase requisitions are manually created with Account
assignments or created automatically through Non stock component
planning in Maintenance Order

ME51N – Manual PR Creation

All details are entered including Material ID (if known)/Text (if no material
ID is known), Material Group (as relevant), Purchasing Group (For Direct
Purchase), Quantity, Unit, Delivery Date, Plant (receiving plant) etc. and
Purchase requisition is saved.

Also Item details pertaining to Account assignment,Valuation, and other
mandatory fields should be filled. System will automatically point out to
required fields that are missing entries.

IW31/IW32 – Create/Change Maintenance Order

In the Component section of the Maintenance Order, the details of the Non-
stock components are entered

System will prompt user for entering mandatory details pertaining to Material
Group, Purchasing Group under the Purchasing Data tab against the Line item.
Other optional fields like Vendor, Planned Delivery Time etc. as relevant can
also be entered.

Based on setting on component line, system can be triggered to generate a
Purchase requisition for the Non stock item either After Order release or
Immediately or Never.

Details of Purchase Requisition, linked to the Maintenance Order can be
directly found inside Maintenance Order -> Purchasing Data section.

Step 2.Purchase requisitionis released by relevant authority based on Release
code identified by system based on Purchase requisition value etc., and
corresponding approving limits of approver

Transaction code: ME54

The Purchase Requisition is released and saved.

Step 3.Assignment of Source and Processing of assignment to create
Purchase Order from Purchase requisition.

Transaction: ME57

Process is same as detailed in previous process sections in this document.

Step 4.Goods receipt against the Purchase Order


Step 5.Invoice Receipt


Step 6.Vendor Payment


4. Direct Charge Purchase – Service

Scenario brief: Service Procurement is a major procurement activity at ABC.
Services procured may be segregated under several categories including
Contract Labour hire, Fleet Equipment hire, Consulting services, Project Based
services and Miscellaneous services among others. Further, services are
categorized from EH&S perspective as Onsite services, Offsite services etc. to
ensure that vendors comply as per Health and Safety norms. Ongoing CMIP
Project aims at building up an SAP based process to perform Health & Safety
related capabilities of vendors prior to assigning them work that would require
due compliance.

For details of Service master maintenance and categories of services, refer to
the document “PTP_Current State Document_PTP Master Data_v0”

Service entry sheets are filled up by external Service vendors in an application
called ICAPS which is a Portal based application built for that purpose and
accessible to authorized vendors. ICAPS functionalities have not been detailed
in this document owing to controlled and limited access to the application.

Pre-requisites:

 Configurations, Service master data and inter-module integration associated
with all process objects including Purchase requisition, Purchase Order,
Service Entry, Invoice Receipt, Material movements and Accounts postings
should be complete and valid.


Step 1.Creation of Service Purchase Requisition.

Transaction: ME51N (Manual Creation of Purchase Requisition)/ IW31
(Maintenance Order Creation with External Services)/ IW32 (Maintenance
Order Change with External Services)

ME51N (Manual Creation of Purchase Requisition)

Service Purchase requisitions can be directly created in this transaction.
Services are procured to an appropriate Account assignment category (such as
K – Cost Centre, P – Project, F – Order etc.). Item category for Service
procurement should be set as “D” in Purchase requisition line item.

The Material Group, and Purchasing Groups should be correctly assigned and
other relevant details like Quantity, Unit, Plant etc. should be filled up

Service item details like Service No, Quantity, Unit, Gross price should be
correctly filled.

Account assignment details and other required details ,if any, should be filled
up. Check and save Purchase requisition.

IW31/IW32 (Service Purchase Requisition – from Maintenance Order)

Service planning can be done inside a Maintenance order. Services are
External Service operations defined in maintenance order using an appropriate
Control Key. While selecting the Control key in the Operation from dropdown
list, users should ensure that “Service” checkbox is ticked for that control key
thus classifying it as a service

Services are planned under Operations tab of Maintenance order

All essential details including Material Group, Purchase Group, Operation
Quantity etc. should be filled in popup that comes up

Service details are to be maintained under the External tab at the bottom of
the Operation tab

Based on configuration setting on Maintenance Order type for field Operation
– Res/Preq creation, Service PR may be created on Save or on release or
Never for the maintenance Order type.

Purchase requisition pertaining to services created from Maintenance Order
can be checked in MM – Purchase Requisition List Reports (For example. ME5A

transaction, with Account assignment category set as F) or directly inside
Maintenance Order under Operation -> Act. Data tab

Step 2.Approval of Purchase Requisition by authorized person.

As detailed in previous process section of this document.

Step 3.Source Assignment and Conversion to Purchase Order.

As detailed in previous process section of this document.

Step 4.Service Entry sheet created against Purchase Order, and performed
Service quantity accepted for posting

Transaction: ML81N (In SAP)/ Service entries done through ICAPS not in
scope of this document. Separate documents may exist on the same in ABC
Portal.

The Purchase Order No is entered by clicking on Other Purchase Order tab.
Then click on Create entry sheet icon and enter values of Short
Text,Document Date,Posting Date and Reference

Click on Service selection tab

If Adopt Full Quantity is not ticked, system will propose for service entry Net
pending hours (Planned hours – Already entered hours), and if it is ticked,
system adopts full quantity as planned. It is better to be left unchecked.

In next screen select the service line and click on tab Services (Adopt Services)

The system automatically adapts the service line into the Service entry sheet
under Accept Data tab

Users should now update the Actual Quantity of service that has been
performed, to be accepted for posting.

To accept and Post the service entry, click on Green Flag on Task bar and save
the Service entry sheet.

Step 5.Invoice created for services performed and accepted

As detailed in previous process section of this document

Step 6.Vendor payments


5. Stock Transport between Plants

Scenario brief: This scenario refers to internal procurement of Stocks,
between Plants where one plant would be a supplier or vendor plant and
the other would be a receiver or customer plant. In this process the
customer plant would raise a STO Purchase Order for delivery of goods
against the supplying plant. The supplying plant would in turn create a sales
order against the requirement with recipient plant’s Customer ID.

The process would follow a 1-step procedure, if set in STO configuration
setting between a pair of plants and PO Typeor 2 –step stock Transfer with
supplying plant issuing out the stock from its Unrestricted use stock, stock
transferred to Stock in Transit and receiving plant finally receiving from
Stock in transit to Unrestricted use stock. In one step procedure as soon as
stocks are issued out of supplying plant, it would get posted to stock in
receiving plant.

In ABC process perspective there is no integration setup of PTP (SAP MM) with
SAP QM module. Ideally, as per SAP best practice guidelines, on receipt of
Goods at receiving plant, there should be check on Quality parameters of the
goods delivered and only on passing the parameters is the stock declared as

Unrestricted. For ex. In case of Finished product of Mining, Grade check with
factors such as Metal content, Moisture content etc. should ideally be checked
and recorded system. In such a scenario, stocks would get posted to Quality
Inspection stock, generating inspection Lots against which Result Recording
and Usage decision is recorded, based on which the stock gets transferred to
Blocked stock o5r Unrestricted use stock.

Pre-requisites:

 A Vendor master should exist and be assigned against the supplying plant
and a Customer master should exist and have been assigned in MM STO
configuration against the receiving plant.

 The material master should be active in both plants and should have at least
a Purchasing view in receiving plant and a Sales view in supplying plant

 For delivery relevant STO, all necessary delivery relevant configuration
settings should have been done on MM side

process objects including STO Purchase Order, Outbound Delivery/Goods
issue, Inbound delivery/Goods receipt, Sales billing (if relevant), Invoice
verification (if sales billing is relevant), Material movements and Accounts
postings should be complete and valid.


Step 1.Creation of STO Purchase Order (Type UB)

Transaction: ME21N

Enter Header details including Supplying Plant, Purchase Organization,
Company Code, Purchasing Group etc. as relevant

Enter Item detailsincluding Material ID, PO Quantity, Delivery Date, Recipient
Plant, Storage Location, Item Pricing Condition details, Confirmation controlkey
with Delivery details (under Confirmations to be set to Inbound delivery if
relevant to same)

Check and save the Stock Transport Order

Step 2.Creation of Sales Order at Supplying Plant

Transaction: VA01

A Standard Order “OR” is raised in SD against the supplying Plant

Enter relevant Header Level information like Sold to party (for recipient plant),
Ship to party (for recipient plant), Purchase Order No. etc.

Enter relevant Item level details including Material ID, Quantity, mandatory
Pricing conditions, Terms of payment,Incoterms etc.

Check document for completeness and save the document

Step 3.Creating an Outbound Delivery for Sales Order

Transaction: VL10

In the Sales Orders tab of the Transaction, enter the Sales Order No. and
execute. The Delivery date and CalcRuleDefltDlvCrDt fields for selecting the
Sales documents relevant for delivery should be correctly chosen.

Select the relevant Delivery item line and click on Create in Background

Step 4.Goods Issue against Outbound Delivery

Transaction: VL02N (Change Outbound Delivery)

Document Type: NL

Enter actual picked quantity, generate output docs (as relevant)

Confirm and save

Post Goods issue againstoutbound delivery by clicking on Post Goods Issue
tab.

Note – If Goods issue is simple inventory movement (without Outbound
delivery), Goods are issued through standard MIGO transaction

The entire document flow for Purchase Order -> Replenishment Delivery -
>Picking request -> Transfer to Stock in Transit and so on can be viewed
within the Document flow section of delivery

On posting Goods issue, movement type 641 is executed which results in

Stock in Transit at receiving plantDr
Inventory at supplying plant Cr

If there are Freight charges included, accounting document would show
following entries:

Inventory Transfer A/c Dr
Freight/Custom Clearing A/c Cr

This can be checked in Material movement document in transaction MB03

Also in MB5T transaction report, Stock in Transit can be checked

Step 5.Create Inbound delivery at Receiving plant

Transaction: VL31N (Create Inbound Delivery w.r.t PO)

Enter Vendor and PO Number and proceed

Partner Function “LF” should have been set under Goto –> Header – Partners

Save the Inbound delivery

Step 6.Post Goods receipt

Transaction: VL32N

Check under Item overview; enter Actual GR date, update Delivery
Quantityand Receiving plant and click on Post Goods Issue

The resulting goods movement results in transfer posting of stock:

Stock in Transit Cr
Unrestricted (UR) Stock at receiving plant Dr

Check against Stock in receiving plant in MMBE/MB52 transactions. The UR
stock value would go up.

Step 7.Sales order billing/Release to Accounting (Only applicable in case of
Intercompany billing – provided that there is a business process for same)

Transaction: VF01/VF02

Above scenario executed between Plants under same company code. Hence
no subsequent billing (at supply side) or invoice receipt (at recipient side) is
applicable. Invoice receipt, where applicable, would follow a similar process as
documented under previous process scenarios of this document.

6. Consignment Purchase

Scenario brief: Consignment process is based on the VMI (Vendor Managed
Inventory) concept of procurement. Vendor has physical and financial control
of the stock which is stored at customer premises unless customer withdraws
complete or part of stock from the designated vendor consignment stock for
personal usage. This would create a liability on the customer which is to be
paid/settled to vendor.

Purchasing Info records and Contracts for Consignment items are maintained
which is the basis of source assignment while conversion of a Purchase
requisition to a Purchase Order. On delivery of a Consignment item, Goods
receipt would result in stocks being stored in Vendor – Consignment stock
segment. On requirement of stock, Goods issue from consignment stock to
account assignment object (such as requesting Cost Centre, Project etc.) is
executed using the relevant movement type. Auto invoice for consignment
stock usage is created which is further subject to Payment run.

Pre-requisites:

process objects including Material movements and Accounts postings should


Step 1.Consignment Purchasing Info record creation & Consignment Contract
creation.

Details of above are provided in the document “PTP_Current State
Document_PTP Master Data_v0”

Step 2.Purchase requisition created for consignment item

Transaction: ME51N

Enter relevant Item level details, such as Item Category (= K for
Consignment), Material ID, Quantity, Recipient Plant, Delivery Date etc. as
relevant and save the Purchase requisition.

Step 3.Purchase requisition is released by designated authority

As detailed in previous process sections.

Step 4.Purchase requisition is Source assigned and converted to Purchase
Order

As detailed in previous process sections. Purchase order would be a price
suppressed purchase order.

Step 5.Goods are received against the Purchase order

Transaction: MIGO_GR

Goods receipt is executed via movement type 101 K. On receipt of
Consignment goods, a special segment of stock “Consignment stock” against
the Vendor gets posted. Material document does not have an associated
Accounting document.

In MMBE Report, the stock received of Consignment material at recipient
Plant/Storage Location would be displayed under Vendor Consignment stock.

Step 5.Goods issue for consumption from Vendor Consignment stock

Transaction: MB11/MB1A/MIGO_GI

Goods from Consignment stock can be issued out for consumption to Cost
Centre (movement type 201 K), Projects (movement type 221 K) and so on.
To reverse movements, movement types are 202 K (Consignment
consumption for Cost centre reversal), 222 K (Consignment consumption for
Project reversal) and so on.

While posting from Consignment stock, Vendor entry is mandatory, so that
system knows as to consume from consignment stock of which vendor.

Apart from Vendor, consumption object (such as Cost centre), Material No,
Quantity, Batch (if applicable) are to be entered

During Consumption, associated with Material Document are Accounting,
Controlling and Consolidation documents (if Consolidation active). The
accounting document would result in following entries:

Consignment stock Clearing A/c Cr
Stock consumption A/c Dr

In MMBE report, the consignment stock would be reduced by the amount
consumed.

Step 6.Auto settlement of liabilities created on consumption of consignment
stock

Transaction: MRKO

In the initial screen enter Company code, Vendor, Plant, Material,
Consignment (ticked), Document Date, Withdrawals not settled (ticked), etc.
as relevant

Initially run the report with Processing option set to Display

For settlement of items, execute with processing option set as Settle in the
initial selection screen

An Invoice document would be generated in the settlement run.

The accounting entries that are generated are:

Vendor reconciliation A/c Cr
Consignment stock clearing A/c Dr
GST/Input Tax credit a/c Dr

Step 7.Vendor payments


7. Recurring payments using Invoicing Plan

Scenario brief: Certain procurements are done on a regular basis and would
involve payment on a periodic basis, say at the end of each month. Such
payments can be planned using an Invoicing plan set in the Purchase order.
Purchase order created is a Framework Purchase Order. In such cases, there is
no Goods receipt performed. On a periodic basis, Invoices would be generated
through auto settlement report in Logistics Invoice Verification.

Pre-requisites:

 Vendor should have been set up for auto ERS settlement
 Invoicing Plan details should be set in Purchase Order (Framework PO)
process objects including Material movements and Accounts postings should


Step 1.Creation of Framework Purchase Order

Transaction: ME21N

Choose Order type “FO” and enter other details at Header and Item level of
Purchase Order

Header details would include Vendor Data, Organizational Data such as
Purchasing Org.,Purchasing Group, Company Code, Validity Start date, Validity
End date, etc.

Item details would include Account assignment key (K- Cost centre, P-Projects
etc.), Material ID/Short text, Quantity, Unit,Price per unit, Material
Group,Plant, etc.

A crucial section to be filled in is the Item details – Invoice section, where
onlyInvoice receipt and ERS are to be ticked and Invoice Plan details are to be
filled, with planned invoice dates. Invoice amount would be equal to the price
of the item against which Invoicing plan has been set.

Click on Invoicing plan tab and Invoicing Plan type is to be selected from
dropdown

In Delivery section of Item detailseither Goods receipt should be unchecked or
it can be set to GR – Non-valuated

Step 2.Carry out Automatic settlement (Invoicing Plan)

Transaction: MRIS

In the Initial screen enter the details known – such as Company code, Plant,
Vendor, Purchasing Document etc. Initially execute it in Test run mode

On removing the Test run checkbox in initial screen, Invoice document would
have been generated.

Step 3.Execute Vendor Payment

As detailed in previous process sections

8. Miscellaneous Purchasing

Scenario brief: There are 4 primary scenarios in miscellaneous purchasing,
namely:

 Direct charge purchase , GST input taxed (P3), cannot be recovered
from ATO
 Direct charge purchase, Service – multiple tax code (taxable and non-
taxable)
 Direct charge purchase, Service – multiple account assignment

Pre-requisites:

 Configurations, master data and inter-module integration associated
with all process objects including Material movements and Accounts
postings should be complete and valid.


Direct charge purchase , GST input taxed (P3), cannot be recovered from ATO

Purchase Order is created through a Purchase requisition or directly. The
process is similar to process scenarios as described earlier.

However, in the purchase order line item, the tax code should be selected as
P3.

The difference lies in Input tax not being recoverable from ATO.

Direct charge purchase, Service – multiple tax code (taxable and non-taxable)

In this scenario, multiple tax codes are used across service activities, of which
some may be liable to input tax and some may not be.

The Tax codes are then specifically set for each service activity line of the
Purchase order, in the Item details -> Invoice section.

During Invoice verification, the postings will differ for line item subject to Tax
and item not subject to Tax

Item with Tax will have following accounting entries

GR/IR A/c Dr, Tax A/c Dr
Vendor A/c Cr

Item with no Tax will have following accounting entries

GR/IR A/c Dr
Vendor A/c Cr

Direct charge purchase, Service – multiple account assignment

Multiple account assignments could refer to each line of Purchase order being
assigned to different account assignment objects (such as K- Cost centre, P-
Projects, etc.) or Same item line charges distributed to multiple account
assignment objects such as different Cost centres, WBS elements etc.

In SAP Terminology, it’s the latter which is referenced to as multiple account
assignment. A pre-requisite to same would be multiple account assignment
should be activated in the Purchase order and distribution rule to the various
accounts must be set within the Account assignment section of Purchase
Order.

During Goods receipt, the consumption posting to the designated consumption
objects would be split in the percentage/amount as set within the Purchase
order

9. Inventory Management

Scenario brief: As Goods receipt of Stock/non stock items has been detailed in
the previous process sections, Goods issue is the other important aspect of
Inventory Management. Goods issues are in general carried out against
Reservations generated for Stock items planned within Maintenance Orders in
ABC process perspective. There could be direct Goods issues to Cost
centre/WBS Elements in certain cases.

There could be Goods issues of Finished Goods against Sales Order which are
usually through Outbound Delivery and not direct. This has been detailed in
one of the previous scenarios (Stock Transport between Plants) in this
document.

Goods issues has again been segregated into Normal hour goods issues (using
MIGO/MIGO_GR), After Hour Goods issues (using ZMIGO_WO)

Pre-requisites:

 All configurations and settings pertaining to Goods movement,
Account determination for movement types, Posting periods etc. should
have been done.

 There should be adequate stock at source storage location to post
goods issue (may not be a requisite in case of Negative stock scenario at
ABC such as Goods issue against Sales order of Finished products)


Normal hour Goods issue

Transactions: MIGO/MIGO_GI/MB11

Movement types: 201 (Goods issue to Cost Centre), 221 (Goods issue to WBS
elements), 261 (Goods issue to Maintenance Orders)

Business Transaction (Goods issue), Account Assignment object no. (Order
etc.), relevant Movement type should first be entered.

For Goods issue, Item Quantity should be checked, supplying Plant/Storage
Location should be checked, Item OK should be ticked, and prior to posting,
the Check tab should be clicked to see if everything is OK. If there are any
errors, system will issue an error traffic light against the item and its details
can be checked by clicking on it.

On posting of Goods issue,

Stock A/c Cr
Consumption A/c Dr

After hour Goods issue

After hour Goods issues at ABC refers to a custom transaction ZMIGO_WO,
which has been developed for Goods issues of spare parts and inventory for
Maintenance Orders/Order Reservations primarily. However, as per
functionalities available in the transaction, it may also be used for Transfer
postings etc.

It is assigned to specific user roles that are designated to carry out after hour
Goods issue.

The functionalities of the transaction are otherwise same as per other Goods
movement transaction.

Standard Business Processes in SAP MM

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Standard Business Processes in SAP MM