404 Handler

Faisal Mahboob

Integration of Materials Management with Financial Accounting in SAP ®

Bonn � Boston

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Contents at a Glance 1

Introduction  .............................................................................

19

2

Overview of SAP ERP  ...............................................................

25

3 Overview of the Materials Management and Financials Relationship   ............................................................................

41

4

Basics of Configuration and the Processes in Procurement   ....

69

5

Procurement of Stock and Consumable Materials   ................. 113

6 Conditions, Price Determination, and the Basics of Material Price Changes   ........................................................... 157 7

Balance Sheet Valuation   ......................................................... 191

8

Material Price Change   . ........................................................... 219

9

Accounts Payable Invoice from Materials Management  ......... 255

10 Variances and Blocking of Invoices   . ....................................... 311 11 Additional Functionalities in LIV   ............................................ 363 12 Conclusion  . .............................................................................. 399 A Optimizing the Integration between Materials Management and Financial Accounting  .................................. 405 B

Commonly Used Abbreviations   . ............................................. 415

C

References   ............................................................................... 417

D

Useful Links   . ........................................................................... 419

E

The Author   .............................................................................. 421

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Contents Preface  .......................................................................................................

15

1 Introduction  ............................................................................... 19 1.1 1.2 1.3 1.4 1.5 1.6

Business  . ..................................................................................... Enterprise Resource Planning  ....................................................... Procurement and Finance  ............................................................ Purpose of this Book  . .................................................................. Scope of the Book  ....................................................................... Summary  .....................................................................................

19 20 20 22 23 23

2 Overview of SAP ERP  . ............................................................... 25 2.1

The Building Blocks of SAP ERP   .................................................. 2.1.1 Financials  ........................................................................ 2.1.2 Logistics  .......................................................................... 2.1.3 Human Resources  ........................................................... 2.1.4 Materials Management  ................................................... 2.2 Integration of Materials Management in SAP ERP  ........................ 2.3 Analysis and Resources for Materials Management  ...................... 2.3.1 SAP Easy Access  .............................................................. 2.3.2 SAP Customizing  ............................................................. 2.3.3 SAP Library  ..................................................................... 2.3.4 SAP Service Marketplace  ................................................. 2.4 Summary  .....................................................................................

25 26 27 28 28 30 31 32 32 35 37 40

3 Overview of the Materials Management and Financials Relationship   .............................................................................. 41 3.1

Elements of Materials Management   ............................................ 3.1.1 Purchasing  ...................................................................... 3.1.2 Inventory Management  ................................................... 3.1.3 Material Valuation  .......................................................... 3.1.4 Logistics Invoice Verification  ........................................... 3.1.5 GR/IR Account Maintenance  ...........................................

43 44 48 49 50 51 7

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Contents

3.2 Elements of Financial Accounting  ................................................ 3.2.1 General Ledger  . .............................................................. 3.2.2 Accounts Payable  ............................................................ 3.2.3 Asset Accounting  ............................................................ 3.3 Relationship between the Elements of Materials Management and Financial Accounting and Controlling  .................................... 3.3.1 Commitments in Procurement  . ....................................... 3.3.2 Elements of Financial Accounting and Controlling in a Purchase Order  ............................................................ 3.3.3 Accounting Documents for Goods Receipt  ...................... 3.3.4 Accounting Documents for Invoices  ................................ 3.4 Troubleshooting Techniques  . ....................................................... 3.4.1 Introduction to Technical Elements  ................................. 3.4.2 The Troubleshooting Approach  . ...................................... 3.4.3 The Technical Analysis  ..................................................... 3.4.4 Debugging  ...................................................................... 3.5 Summary  .....................................................................................

52 52 52 53 54 54 57 58 58 61 61 63 64 64 67

4 Basics of Configuration and the Processes in Procurement   .... 69 4.1

Enterprise Structure  ..................................................................... 69 4.1.1 Definition  ....................................................................... 71 4.1.2 Assignment  ..................................................................... 75 4.1.3 Materials Management Enterprise Structure  .................... 78 4.1.4 Financial Accounting Enterprise Structure  ....................... 80 4.2 Processes in Procurement  ............................................................ 81 4.2.1 Procurement Cycle  .......................................................... 84 4.2.2 Procurement of Stock Material  ........................................ 87 4.2.3 Procurement of Consumable Materials  ............................ 88 4.2.4 Procurement of External Services  .................................... 89 4.3 Master Data  ................................................................................ 91 4.3.1 Material Master  .............................................................. 91 4.3.2 Vendor Master  ................................................................ 95 4.3.3 Master Data in Purchasing  .............................................. 97 4.4 Documents in Procurement  ......................................................... 99 4.4.1 Purchase Requisition  ....................................................... 99 4.4.2 Request for Quotation and Quotation  ............................. 100 4.4.3 Purchase Orders  .............................................................. 102

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Contents

4.4.4 Outline Purchase Agreements  ......................................... 108 4.4.5 Purchasing Info Records  .................................................. 111 4.5 Summary  ..................................................................................... 111

5 Procurement of Stock and Consumable Materials   .................. 113 5.1

5.2

5.3

5.4

5.5

Procurement of Stock Material  .................................................... 5.1.1 Stock Material within Document Flow  ............................ 5.1.2 RFQs/Quotations  ............................................................ 5.1.3 Conditions and Calculation Schema  . ............................... 5.1.4 Purchasing Info Record  ................................................... 5.1.5 Stock and Valuation  ........................................................ 5.1.6 Material Valuation Procedure  .......................................... 5.1.7 Stock Valuation in Inventory Management and LIV  ......... Procurement of Consumable Materials  . ....................................... 5.2.1 Purchase Requisition and Purchase Order  . ...................... 5.2.2 Blanket Purchase Order  . ................................................. Procurement of External Services  ................................................. 5.3.1 Procurement Cycle for External Services  .......................... 5.3.2 Service Entry Sheet, Its Acceptance, and Its Invoicing  ..... Subcontracting  ............................................................................ 5.4.1 Subcontracting in Purchasing  .......................................... 5.4.2 Subcontracting in Inventory Management  ....................... 5.4.3 Subcontracting in Logistics Invoice Verification  ............... 5.4.4 Technical Elements of Subcontracting  . ............................ Summary  .....................................................................................

113 114 121 124 128 130 132 134 138 138 141 144 144 147 152 152 153 154 155 156

6 Conditions, Price Determination, and the Basics of Material Price Changes   ........................................................................... 157 6.1

Conditions and Price Determination  ............................................ 6.1.1 Elements of Condition Techniques  . ................................. 6.1.2 Price Determination  ........................................................ 6.1.3 Header and Group Conditions  ......................................... 6.1.4 Special Condition Types and Special Functions  ................ 6.1.5 Subsequent Settlement  ................................................... 6.2 Basics of Material Price Changes  .................................................. 6.2.1 Control of Material Valuation  ..........................................

157 157 168 176 178 181 184 185

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Contents

6.2.2 Valuation Structure  ......................................................... 187 6.2.3 Changes in Material Valuation  . ....................................... 189 6.3 Summary  ..................................................................................... 190

7 Balance Sheet Valuation   ........................................................... 191 7.1

7.2

7.3

7.4

Lowest Value Determination  . ...................................................... 7.1.1 Lowest Value Determination Based On Market Prices  ..... 7.1.2 Lowest Value Determination Based On Range of Coverage  . ....................................................................... 7.1.3 Lowest Value Determination Based On Movement Rate  .... 7.1.4 Lowest Value Determination: Loss-Free Valuation  ........... LIFO Valuation  ............................................................................ 7.2.1 LIFO Methods and the Layer Versions  ............................. 7.2.2 Quantity and Index LIFO Procedures  ............................... 7.2.3 Pool LIFO Valuation  ........................................................ 7.2.4 Lowest Value Comparison  ............................................... FIFO Valuation  ............................................................................ 7.3.1 FIFO Configuration  ......................................................... 7.3.2 Procedures for FIFO Valuation  . ....................................... Summary  .....................................................................................

192 193 195 197 201 201 204 206 212 213 214 215 217 217

8 Material Price Change   .............................................................. 219 8.1

Value Changes in Inventory Management  .................................... 8.1.1 Goods Receipt for Purchase Orders  ................................. 8.1.2 Account Postings: Planned Delivery Costs  ....................... 8.1.3 Delivery Free of Charge  ................................................... 8.1.4 Value Changes in Transfer Postings  .................................. 8.1.5 Initial Entry of Inventory Data  ......................................... 8.1.6 Goods Receipt Reversal  ................................................... 8.2 Value Changes in Logistics Invoice Verification  . ........................... 8.2.1 Subsequent Debit/Credit  ................................................. 8.2.2 GR/IR Clearing Account Maintenance  ............................. 8.3 Value Changes Resulting from Cash Discounts  ............................. 8.3.1 Gross Goods Receipt – Gross Invoice Receipt  .................. 8.3.2 Gross Goods Receipt – Net Invoice Receipt  ..................... 8.3.3 Net Goods Receipt – Net Invoice Receipt  . ...................... 8.4 Revaluation  .................................................................................

219 220 222 223 224 229 231 237 238 240 242 243 244 245 245

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Contents

8.4.1 Price Changes in the Previous Period Only  ...................... 8.4.2 Price Changes in the Previous and Current Period  ........... 8.5 Posting to a Previous Period  ........................................................ 8.5.1 Posting Goods Movements to the Previous Period  .......... 8.5.2 Posting Invoices to the Previous Period   .......................... 8.5.3 Posting to a Previous Period after a Price Change  ............ 8.5.4 Stock Shortage in the Current Period  . ............................. 8.6 Summary  .....................................................................................

247 247 248 250 250 251 252 254

9 Accounts Payable Invoice from Materials Management  .......... 255 9.1

Logistics Invoice Verification   ....................................................... 9.1.1 Functional Basis  .............................................................. 9.1.2 SAP Functional Design  .................................................... 9.1.3 Checkpoints and Real-time Issues  ................................... 9.1.4 Technical Elements  .......................................................... 9.1.5 Troubleshooting Tips  ....................................................... 9.2 Incoming Invoice  ......................................................................... 9.2.1 Functional Basis  .............................................................. 9.2.2 SAP Functional Design  .................................................... 9.2.3 Checkpoints and Real-Time Issues  ................................... 9.2.4 Technical Elements  .......................................................... 9.2.5 Troubleshooting Tips  ....................................................... 9.3 Invoice Verification Online  . ......................................................... 9.3.1 Functional Basis  .............................................................. 9.3.2 SAP Functional Design  .................................................... 9.3.3 Invoices for a One-Time Vendor  ...................................... 9.3.4 Duplicate Invoice Check  . ................................................ 9.3.5 Checkpoints and Real-Time Issues  ................................... 9.3.6 Technical Elements  .......................................................... 9.3.7 Materials Management, Financial Accounting, and Controlling Interface for Transaction MIRO  ..................... 9.4 Invoice Parking  ............................................................................ 9.4.1 Functional Basis  .............................................................. 9.4.2 SAP Functional Design  .................................................... 9.4.3 Integration with Financial Accounting  ............................. 9.4.4 Checkpoints and Real-Time Issues  ................................... 9.4.5 Troubleshooting Tips  .......................................................

255 256 256 258 259 259 260 260 260 262 264 265 266 266 267 272 275 277 278 280 280 280 281 283 284 285

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Contents

9.5 Prepayment  ................................................................................. 9.5.1 Functional Basis  .............................................................. 9.5.2 SAP Functional Design  .................................................... 9.5.3 Checkpoints and Real-time Issues  ................................... 9.5.4 Troubleshooting Tips  ....................................................... 9.6 Invoice Verification in the Background  ......................................... 9.6.1 Functional Basis  .............................................................. 9.6.2 SAP Functional Design  .................................................... 9.6.3 Technical Elements  .......................................................... 9.6.4 Checkpoints and Real-Time Issues  ................................... 9.6.5 Troubleshooting Tips  ....................................................... 9.7 Account Determination  ............................................................... 9.7.1 Principles of Financial Accounting Integration in an SAP System  ................................................................ 9.7.2 Functional Elements of Account Determination  . ............. 9.8 Purchase Account Management  . ................................................. 9.8.1 Postings at Receipt Value  ................................................ 9.8.2 Postings at Stock Value  ................................................... 9.9 Direct Posting  .............................................................................. 9.9.1 Posting to SAP G/L Accounts  . ......................................... 9.9.2 Posting to a Materials Account  . ...................................... 9.10 Posting Taxes  ............................................................................... 9.10.1 Types of Taxes  ................................................................. 9.10.2 Proposal Logic for Tax Codes  ........................................... 9.10.3 Settings for Taxes in Customizing and in Master Data  ...... 9.10.4 Technical Flow and Architecture  . .................................... 9.10.5 Technical Details of Tax Calculations  . .............................. 9.11 Cash Discount  . ............................................................................ 9.11.1 Cash Discount Base  ......................................................... 9.11.2 Cash Discount Postings  ................................................... 9.12 Summary  .....................................................................................

285 285 286 287 288 289 289 290 291 292 293 293 293 294 295 295 296 297 297 298 299 299 302 303 304 305 305 306 306 310

10 Variances and Blocking of Invoices   .......................................... 311 10.1 Invoice with Variances  ................................................................. 10.1.1 Quantity Variance  ........................................................... 10.1.2 Price Variance  ................................................................. 10.1.3 Quantity and Price Variance  ............................................ 10.1.4 Order Price Quantity Variance  . .......................................

311 312 316 320 325

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Contents

10.2 Invoice Blocking  .......................................................................... 10.2.1 Functional Basis  .............................................................. 10.2.2 SAP Functional Design  .................................................... 10.2.3 Checkpoints and Real-Time Issues  ................................... 10.2.4 Technical Elements  .......................................................... 10.2.5 Troubleshooting Tips  ....................................................... 10.3 Invoice Release  ............................................................................ 10.3.1 Functional Basis  .............................................................. 10.3.2 SAP Functional Design  .................................................... 10.3.3 Checkpoints and Real-Time Issues  ................................... 10.3.4 Technical Elements  .......................................................... 10.3.5 Troubleshooting Tips  ....................................................... 10.4 Delivery Costs  . ............................................................................ 10.4.1 Planned Delivery Costs  . .................................................. 10.4.2 Unplanned Delivery Costs  ............................................... 10.5 Total-Based Differences  ............................................................... 10.5.1 Functional Basis  .............................................................. 10.5.2 SAP Functional Design  .................................................... 10.5.3 Checkpoints and Real-Time Issues  ................................... 10.5.4 Technical Elements  .......................................................... 10.6 Invoices for Purchase Orders with Account Assignment  ............... 10.7 Entering Invoices in a Foreign Currency  . ...................................... 10.8 Summary  .....................................................................................

329 329 329 336 337 338 339 339 339 342 343 344 345 345 350 354 354 354 356 357 357 360 361

11 Additional Functionalities in LIV   . ............................................ 363 11.1 Valuation and Account Determination  ......................................... 11.1.1 Influencing Factors  .......................................................... 11.1.2 Organizational Level Dependency  ................................... 11.1.3 Account Determination of Stock Materials  ...................... 11.1.4 Account Determination of Consumable Materials  . .......... 11.1.5 Simulation  ...................................................................... 11.2 Automatic Settlements  ................................................................ 11.2.1 Evaluated Receipt Settlement (ERS)  . ............................... 11.2.2 Consignment and Pipeline Settlement  ............................. 11.2.3 Revaluation  ..................................................................... 11.2.4 Invoicing Plan Settlement  . .............................................. 11.3 Messages in Logistics Invoice Verification  ....................................

363 364 365 366 372 375 376 377 380 382 386 387

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Contents

11.3.1 Areas of Messages  . ......................................................... 11.3.2 Message Schema  . ........................................................... 11.3.3 Outputting Messages  ...................................................... 11.4 Credit Memos, Returns, and Reversals  ......................................... 11.5 GR/IR Clearing Account  ............................................................... 11.6 Summary  .....................................................................................

388 389 390 390 394 398

12 Conclusion  ................................................................................. 399 12.1 Lessons Learned  .......................................................................... 399 12.2 Additional Resources  ................................................................... 402

Appendices  ...................................................................................... 403 A Optimizing the Integration between Materials Management and Financial Accounting  ............................................................................. B Commonly Used Abbreviations   ............................................................ C References   ........................................................................................... D Useful Links   ......................................................................................... E The Author   ..........................................................................................

405 415 417 419 421

Index  .......................................................................................................... 423

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A large portion of Materials Management is initiated and represented by the processes in procurement. The system is configured with the goal of representing these processes.

4

Basics of Configuration and the Processes in Procurement

In this chapter, we’ll demonstrate and explain the most important elements of the configuration steps that decide the integration of Materials Management with SAP ERP Financials Financial Accounting. Later in this chapter, you’ll learn about the various kinds of master data used in procurement and the different application transactions that correspond to procurement. The understanding you will develop in this chapter will help you represent the procurement processes in the SAP system for your business. You will also learn about the different types of master data you need in the SAP system and the various documents that make use of this master data.

4.1

Enterprise Structure

An enterprise is made up of people and departments. Its structure represents the people within different departments that are a part of the reporting hierarchy. In an SAP system, the enterprise is represented differently, on the basis of various operations such as Materials Management, Sales and Distribution, Financial Accounting, Human Resources, and so on. We then pursue the integration of these components and in this book, will talk about them as and when required. The representation of an enterprise structure for business into SAP ERP is the first step towards realizing real-time business scenarios. If you examine an enterprise’s building blocks for the purpose of analysis, you see that it’s made up of organizational units and the relationships among them.

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4

Basics of Configuration and the Processes in Procurement

Customizing is used to configure business functionalities in the SAP system. The same is true for the enterprise structure, which is represented with the help of the following two Customizing options: EE

Definition

EE

Assignment

As you can see in Figure 4.1, both options are present for all of the components that require organizational units specific to them. The enterprise structure shows the interdependence of the organizational units on one another and the organizational units of one component may be used in another to define its own enterprise structure. For instance, Materials Management uses the company code from Financial Accounting, the plant from Logistics – General, and the purchase organization and storage location from Materials Management to define its enterprise structure. We’ll describe the enterprise structures of Materials Management and Financial Accounting later in this chapter.

Figure 4.1  Definition and Assignment of Organizational Units in Customizing

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Enterprise Structure

4.1

The decision on which organizational units to create is a fundamental step in your project. When you have decided on an organizational structure, it’s not easy to change it. Not all of the application components are included in the enterprise structure. Why? You’ll find that not all of the application components are included in the Enterprise Structure in Customizing. The only components included are those that require the organizational units specific to them. Quality Management, Production Planning, Project System, and so on use the organizational units from other SAP software, for example. Therefore, they don’t appear under Definition or Assignment under the Enterprise Structure.

Now that you know that the enterprise structure is used in Customizing to portray and configure the specific structure of your business, let’s move on to the definition and assignment, to help you understand how it’s represented within the SAP system.

4.1.1

Definition

You define various organizational units the under the Division section in Customizing (Transaction SPRO) menu path: SAP IMG • Enterprise Structure • Definition. In most cases, you’ll find an SAP standard organizational unit already defined. It’s advisable to first come up with the structure and naming convention on paper and then create new organizational units by copying those delivered in the SAP standard. The definition is kept simple and generally represents a code with a text description. Because our focus in this entire book is Materials Management and Financial Accounting, let’s take a quick look at some of the important organizational units from these areas that help in defining the enterprise structure in Materials Management and Financial Accounting. Client The client is a commercial organizational unit in the SAP ERP system, with its own data, master records, and set of tables. From a business perspective, the client forms a corporate group. From the technical point of view, is the client is a three-character key you enter along with the user id and the password when you log into the system. At this time, the client along with the user id decides the following:

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4

Basics of Configuration and the Processes in Procurement

EE

User master data such as parameters, authorizations, and user groups

EE

Customizing data such as organizational units, assignments, and document types

EE

Application data such as business transaction data and material master data

Because the client is decided at the time of logging into the system, you’ll notice that in Materials Management or Financial Accounting, it doesn’t appear as an option in the enterprise structure in Customizing (Transaction Code SPRO).

Let’s move on to define the various organizational units used in the enterprise structure of Materials Management and Financial Accounting. Company The company is an organizational unit in accounting that represents the business organization that acts as an internal trading partner and facilitates inter-company transactions. Company Code The company code is the smallest legal organizational unit that represents an accounting unit for which you can have an independent accounting department within external accounting. It’s important to note that the company code has to be a legal entity but the company may or may not be a legal entity. Company and company code: Points to remember EE

In the SAP system, consolidation functions in Financial Accounting are based on companies.

EE

A company can comprise one or more company codes.

EE

All company codes for a company must work with the same operational chart of accounts and fiscal year. You assign a chart of accounts to each company code. This chart of accounts is the operational chart of accounts and is used for the daily postings in this company code. This is a list of all SAP G/L accounts used by one or several company codes.

EE

The currencies of various company codes of a company can be different.

Business Area A business area is an organizational unit within accounting that represents a separate area of operations or responsibilities in a business organization. The use of

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Enterprise Structure

4.1

business area is optional. However, SAP recommends the use of profit center, which helps in segmental reporting. Functional Area A functional area is an organizational unit that classifies the expenses of an organization by functions such as administration, sales and distribution, marketing, production, research and development, and so on. The classification takes place to meet the needs of cost of sales accounting. Financial Management Area The financial management area, also called the FM area, is an organizational unit within accounting that structures the business organization from the perspective of Cash Budget Management and Funds Management. Controlling Area The controlling area is an organizational unit in accounting used to subdivide the business organization from a cost accounting standpoint. A controlling area may be assigned to one or more company codes in a 1:1 or 1:n relationship. Operating Concern The operating concern is an organizational unit in accounting that structures the enterprise from the point of view of Profitability Analysis, based on the cost of sales accounting method. Plant The plant is an organizational unit used to divide an enterprise according to production, procurement, maintenance, and materials planning. It’s the place where materials are produced or goods and services are provided. The valuation level determines the level at which material stocks are valuated. You may choose either plant or company code as the valuation level. Your choice of valuation level affects the following: EE

Maintenance of the material master record.

EE

How accounting data is maintained. In this case, it is maintained for each plant or for each company code in the material master depending on the valuation level.

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4

Basics of Configuration and the Processes in Procurement

EE

The SAP G/L in which material stocks are managed.

EE

How account determination is defined. In this case, if the material stocks are valuated at the company code level, all of the plant stocks for a material are managed in a joint stock for each company code. If material stocks are valuated at the plant level, the material stock for each plant can be managed in different accounts. Thus, you can define separate account determination for each plant.

EE

The SAP G/L to which transactions are posted in Materials Management.

Depending on whether the valuation is at the plant level, there is a separate account determination for each plant. If the plant is chosen as the valuation level, you can define material prices for each plant. In addition, each plant can have its own account determination. Switching the valuation level The valuation level or the valuation area determines the level at which material stocks are valuated. This can be either the plant or the company code level. The valuation area is hidden within the Materials Management component. This is one of the fundamental settings for materials valuation and should be set carefully as it’s not possible in the standard to switch the valuation level from plant to company code or vice versa. For switching the valuation level, you must ensure the following: EE

An assignment of plant to company code isn’t present.

EE

Entries don’t exist in Table T001K.

EE

If materials already exist, all stocks must be cleared and posted again after the conversion.

EE

The valuation data of the materials (Table MBEW at the valuation area level) must be converted.

EE

You may have to adjust the account determination for all accounts that depend on valuation area and valuation classes. Valuation classes represent the assignment of a material to a group of SAP G/L accounts. This is explained in detail later in the book.

EE

You may have to adjust the assignment of business areas per valuation area, division, and so on.

Storage Location The storage location is an organizational unit that allows the differentiation of material stocks within a plant. Inventory management on a quantity basis is carried out at the storage location level in the plant.

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Enterprise Structure

4.1

Purchasing Organization A purchasing organization is an organizational level that negotiates conditions of purchase with vendors for one or more plants. It’s legally responsible for completing purchasing contracts. Now that you have a fair amount of information about defining various organizational units for Materials Management and Financial Accounting, we’ll continue to explaining the significance of the assignment of these organizational units.

4.1.2

Assignment

The framework of an enterprise for processing business transactions is realized by linking organizational units. The assignment in Customizing provides a set of options available for portraying your enterprise in SAP. It serves the purpose of creating references between the organizational units you have defined. The organizational units from other components can be used during assignment. For instance, only the purchasing organization belongs to Materials Management, however, the following options are present for assignment under the menu path SAP IMG • Enterprise Structure • Assignment • Materials Management: EE

Assign Purchasing Organization to Company Code

EE

Assign Purchasing Organization to Plant

EE

Assign Standard Purchasing Organization to Plant

EE

Assign Purch. Organization to Reference Purch. Organization

Table 4.1 provides the technical details for the definition and assignment for Materials Management, Financial Accounting, and Controlling in Customizing. Menu Path

Table/View

Transaction

(All of the menu paths listed are found under SAP IMG Enterprise Structure) •

Definition • Materials Management • Maintain storage location

EE

T001L/V_T001L

OX09

EE

TWLAD/V_TWLAD

Definition • Materials Management • Maintain purchasing organization

T024E/V_ T024E

OX08

Definition • Logistics – General • Define valuation level

TCURM

OX14

Table 4.1  Menu Path and the Technical Elements of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling

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4

Basics of Configuration and the Processes in Procurement

Menu Path

Table/View

Definition • Logistics – General • Define, copy, delete, check plant

EE

T001W/V_T001W

EE

T005 (T/S/U/G/E/ H/F)

EE

T002 (T)

EE

TFACD (T)

Transaction OX10 (Only for defining the plant organizational unit)

Definition • Financial Accounting • Define company

T880/V_T880

OX15

Definition • Financial Accounting • Define Credit Control Area

T014/V_T014

OB45

Definition • Financial Accounting • Edit, Copy, Delete, Check Company Code

T001/V_T001

OX02

Definition • Financial Accounting • Define Business Area

TGSB/V_TGSB

OX03

Definition • Financial Accounting • Define Functional Area

TFKB/V_TFKB

OKBD

Definition • Financial Accounting • Maintain FM Area

FM01/V_FM01_A

OF01

Definition • Controlling • Maintain Controlling Area

TKA01/V_TKA01_GD

OX06 (Maintain controlling area)

Definition • Controlling • Create Operating Concern

TKEB/V_TKEB2

KEP8

Assignment • Materials Management • Assign purchasing organization to company code

EE

T024E/ V_ T024E_ ASSIGN

EE

T001

EE

TASSIGN_MM_ EKORG

EE

T000

EE

T024W/W_T024W_ ASSIGN

EE

T000

EE

T001W

EE

T024E

EE

TASSIG_MM_WERKS

Assignment • Materials Management • Assign purchasing organization to plant

OX01

OX17

Table 4.1  Menu Path and the Technical Elements of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling (Cont.)

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Enterprise Structure

Menu Path

Table/View

Transaction

Assignment • Materials Management • Assign standard purchasing organization to plant

T001W/V_001W_E

OMKI

Assignment • Materials Management • Assign purch. organization to reference purch. organization

EE

T024Z/V_T024Z

OMKJ

EE

T024E

Assignment • Logistics – General • Assign plant to company code

EE

T001K/V_T001K_ ASSIGN

EE

T001

EE

TASSIGN_MM_ T001W

EE

T001W

EE

T001W_EXT

OX18

Assignment • Financial Accounting • Assign company code to company

T001/V_001_Y

OX16

Assignment • Financial Accounting • Assign company code to credit control area

T001/V_001_X

OB38

Assignment • Financial Accounting • Assign business area to consolidation business area

EE

TGSB/V_GSB_A

EE

TGSBK

EE

TGSBL

Assignment • Financial Accounting • Assign company code to financial management area

EE

T001/V_T001_FM

EE

FM01

EE

FM01T

Assignment • Controlling • Assign company code to controlling area

EE

TKA01/V_TKA01_GD

EE

TKA02/V_TKA02

EE

T001

Assignment • Controlling • Assign controlling area to operating concern

TKA01/ V_TKA01_ER

4.1

OBB6

OF18

OX19

KEKK

Table 4.1  Menu Path and the Technical Elements of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling (Cont.)

As we discussed in the previous chapter, a transaction code might not be available for each menu path in Customizing. The maintenance views and the tables therefore represent the technical elements of such menu paths in Customizing.

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4

Basics of Configuration and the Processes in Procurement

In this section, you learned only about the options available for assignment in Customizing. However, to understand how these options impact the enterprise structure, we’ll describe the Materials Management and Financial Accounting enterprise structures in the following sections.

4.1.3

Materials Management Enterprise Structure

The enterprise structure in Materials Management in SAP ERP consists of the organizational units from Financial Accounting, Logistics – General, and Materials Management, and the relationships between them. Figure 4.2 shows a typical Materials Management enterprise structure.

Client 1:n

Company Codes

1:n

1:n

Plants

m:n

Purchasing Organizations

1:n

Storage Locations Figure 4.2  Enterprise Structure in Materials Management in SAP ERP

As shown in Figure 4.2, there is 1:n (one to many) relationship between client and company codes, company codes and plants, and plants and storage locations. This means that there can be multiple company codes per client, multiple plants per company code, and so on. The client is decided when you log into the system; therefore, there is only one client for an enterprise structure. The relationship between company codes and purchase organizations is 1:n and is illustrated in Figure 4.2 by broken lines in the arrow. It means the relationship may not exist, depending on your choice of cross-company code procurement. The relationship between plants and purchase organizations is many to many. The enterprise structure in Materials Management is quite simple, except for the relationship between purchasing organizations and company codes and plants. It provides added flexibility in configuring real time procurement scenarios. ­Different

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Enterprise Structure

4.1

options exist for organizing purchasing within your company, as you can see in Table 4.2. In this example, we have the purchase organizations A, B, 0001, and C100. The company code is 1000 and the plants are 1000 and 1100. In addition, plants 1000 and 1100 are assigned to company code 1000 and plants 2000 and 3000 are assigned to company codes 2000 and 3000 respectively. Scenario

Purchasing Organizations (A, B, 0001, C100

Purchasing Organization Assignment to Company Code (1000, 2000, 3000)

Purchasing Organization Assignment to Plants (1000, 1100)

Plant Assignment to Company Code

Plant-specific purchasing organization

A

1000

1000

1000

B

1000

1100

1000

Cross-plant purchasing organization

0001

1000

1000

1000

0001

1000

1100

1000

Crosscompany code purchasing organization

C100

1000

1000

C100

2000

2000

C100

3000

3000

Table 4.2  Different Procurement Scenarios in an Enterprise

As you can see, for configuring the plant-specific purchasing scenario, purchasing organizations A and B are assigned to company code 1000 and plants 1000 and 1100 respectively, which belong to company code 1000. For configuring the cross-plant procurement scenario, the same purchasing organization 0001 is assigned to company code 1000 and plants 1000 and 1100 belonging to company code 1000. For configuring purchasing on a cross-company-code basis, the same purchasing organization C100 is assigned to plants 1000, 2000, and 3000 belonging to company codes 1000, 2000, and 3000 respectively. In this case, the purchasing organization isn’t assigned to the company code; therefore, you’ll find that the column for the purchase organization to company code assignment is blank in Table 4.2. You should now understand the enterprise structure for Materials Management, as well as the different procurement scenarios possible for its representation in

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4

Basics of Configuration and the Processes in Procurement

the SAP system. Let’s now take a look at the enterprise structure of Financial Accounting.

4.1.4

Financial Accounting Enterprise Structure

The SAP ERP Financials component includes other components capable of carrying out an organization’s complete financial and management accounting processes. SAP ERP Financials Financial Accounting provides information on your company’s financial position to external entities such as government regulators and shareholders. SAP ERP Financials Controlling provides internal stakeholders with information necessary for financial decision-making such as that related to overhead and cost of goods. Together, they deliver a complete picture of the overall financial status of your organization and can be integrated with other SAP ERP components to provide real-time cost, revenue, and planning data. Both have their own organizational structures.

yC an

mp Co

Co

mp

an

yC

od

od

e

e

Although a full-fledged discussion of Financial Accounting and Controlling is beyond the scope of this book, we’ll briefly describe the essential elements of the organizational structures for both of these components and subcomponents, as shown in Figure 4.3.

Company Credit Control Area Financial Area Controlling Area Operating Concern Client

Figure 4.3  Organizational Structure for Financial Accounting and Controlling

Figure 4.3 doesn’t represent the assignments in Customizing precisely. Instead, it’s meant to provide you with an overview and should help you develop an

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Processes in Procurement

4.2

­ nderstanding of the way various organizational units in Financial Accounting and u Controlling can be visualized. The controlling area and the operating concern belong to Controlling, whereas the credit control area, company, and company code belong to Financial Accounting. Financial management area (FM area) is also called financial area. It’s taken into account in Cash Budget Management and Funds Management and has its assignment in the corresponding components. The controlling area is used for the purposes of reporting. It’s an organizational unit within a company, used to represent a closed system for cost accounting purposes. A company code is assigned to one controlling area, but a controlling area can have more than one company code assigned to it. The company code is the most important organizational unit for Financial Accounting. All other subcomponents connect to Financial Accounting by assigning their organizational units to the company code. You have so far learned about the various organizational units and their relationship in Materials Management and Financial Accounting and Controlling, used to realize the enterprise structure. The objective of setting up an enterprise structure is to establish a framework for processing different business transactions. Having set up the enterprise structure, we’re now ready to take a look at the various processes in procurement.

4.2

Processes in Procurement

The processes in procurement are optimized to meet financial objectives. At a lower level, these objectives may either be about complying with the principles of external accounting or about providing information for management decisionmaking in Controlling. Of course, the business objective is to make the materials/ services available at the planned date and at the best possible price. Materials can be procured in your company through various channels such as external vendors or other branches of your company. The departments that are involved are purchasing, inventory management, and invoice verification. SAP has knit together operational requirements with financial objectives using documents. The various documents created in Purchasing, Inventory Management, and Invoice Verification reflect the integration and configuration flexibility of Materials Management and Financial Accounting.

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Index A

C

Access sequence, 177, 179 Account assignment category, 153 Account determination, 48, 320, 395, 398 Account grouping code, 402 Accounting1, 129 Accounting document, 284 Header, 290 Accounts payable, 60, 277 Invoice, 277 Accounts receivable, 277 AP Invoice, 277 Application Linking and Enabling, 279 Asset Accounting, 60 Authorization data, 36 Automatic account assignment Simulation, 407 Automatic account determination, 404 Automatic invoice reduction, 423 Automatic settlements, 408

Calculation schema, 139, 179 RM0000, 140, 174, 181 Calculation Schema, 137 Call Transaction, 281 MIR7, 281 MIRO, 281 Cash Budget Management, 90 Cash discount, 263, 333 Cash discount gross, 335 Cash discount net, 335 Gross goods receipt, 265 Net goods receipt, 266 Net invoice receipt, 266 Value changes, 263 Cash discounts, 138 Change document, 119 Chart of Accounts, 399 Client, 79 Collective number, 135 Commitments, 51 Commitments in Procurement, 62 Company, 80, 90 Company code, 80, 90 Components, 26 Condition, 137, 173 Records, 141, 176 Tables, 176 Time-dependent, 139 Time-independent, 139 Condition technique, 173 Condition type, 139, 175 PB00, 176, 185 PBXX, 185 Configuration, 77 Consignment and pipeline settlement, 412, 423 Consumable materials, 152, 404 Account determination, 404

B Balance sheet valuation, 209 Lowest value principle, 210 Recognition-of-loss principle, 210 Bid invitation, 100 Bill of materials, 167 Blanket purchase order, 155, 156 Account assignment, 157 BOM explosion, 167 BPX, 44 BSV, 403 BSX, 403 Business area, 80 Business Process Expert, 44 Business volume, 200

423

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Index

Contract, 121 Centrally-agreed contract, 121 Distributed contract, 121 Quantity contract, 121 Technical elements, 122 Value contract, 121 Contributor recognition program, 44 Controlling, 31 Controlling area, 81, 90 Conventional invoice verification, 279 Credit control area, 90 Credit memo, 261, 425 Warning and error messages, 261 Customizing data, 36

D Debugger, 74 Debugging, 73 Screen, 75 Default SAP G/L account, 391 Delivery costs, 376 Delivery free of charge, 243 Determination of requirements, 94 Direct posting, 324 Documents in procurement, 92, 110 Duplicate invoice check, 300 Points to remember, 301

E Effective price, 138 EIN, 403 EKG, 403 End-of-period rebate, 138 Enterprise Resource Planning, 24 Enterprise structure, 77 Assignment, 83 Definition, 79 Financial Accounting, 89 Materials Management, 86 Technical elements, 86 ERP Central Components, 30 ERP Financials, 31

Evaluated Receipt Settlement (ERS), 409 Planned delivery cost, 410 Exchange rate, 393 External services, 158 Procurement cycle, 158

F FIFO valuation, 234, 236 Configuration, 236 Sample, 235 Final Invoice indicator, 164 Financial Accounting, 31 Financial management area, 81, 90 Financials, 30 Framework order, 155, 157 Freight charges, 138 FRL, 403 FRN, 403 Functional area, 81

G General Ledger, 59 Goods issue, 251 Value changes, 251 Goods receipt, 33, 96, 241, 296 Price variance, 241 Goods receipt reversal, 251 After goods receipt and invoice receipt, 253 Purchase order price quantity variance, 255 GR-based IV, 418 GR/IR Account Maintenance, 58 GR/IR clearing account, 262, 396, 430 GR Non-Valuated, 56 Gross goods receipt, 265 Gross price, 138 Group conditions, 194 GR Valuated, 56

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Index

H Header conditions, 194 HotNews, 44 Human Resources, 32 Payroll, 32 Personnel Management, 32 Personnel Time Management, 32 Talent Management, 32 Training and Event Management, 32

I Implementation consultants, 42 Index LIFO procedure, 229 Example, 229 Info record, 123, 136, 142 Automatic update, 143 Last purchase order, 143 Initial entry of inventory data, 249 Integration of Materials Management, 34 Controlling, 35 Financial Accounting, 35 Human Resources, 35 Logistics Execution, 35 Production Planning, 35 Quality Management, 35 Sales and Distribution, 35 International Accounting Standards Board, 209 International Financial Reporting Standards, 209 Inventory Management, 33, 55, 149, 239 Initial entry of inventory data, 249 Stock valuation, 149 Value changes, 239 Invoice Foreign currency, 392 Purchase order with account assignment, 389 Invoice blocking, 358 Invoice item amount block, 363 Invoice parking, 306 Hold, 308 Park, 308

Save as Complete, 308 Substitution, 310 Validation, 310 Workflow, 309 Invoice reduction, 422 Invoice release, 368 After goods receipt, 426 Without Goods Receipt, 428 Invoice Verification, 33, 96, 277 In the background, 315 Online, 290 Invoice with variances, 339 Invoicing party, 282 Invoicing plan settlement, 419, 423 Partial invoicing plan, 420 Periodic invoicing plan, 420

K KDM, 403

L Layer, 220 Layer versions, 223 Levels of valuation, 48 LIFO/FIFO, 224 Quantity comparison parameter, 225 LIFO methods, 223 LIFO procedures, 226 Progressive fill-up basis, 228 Quantity and index, 226 LIFO valuation, 220 Layer versions, 225 Models, 223 Sample, 221 Logistics, 31 Logistics Execution, 32 Logistics General, 31 Logistics invoice verification, 57, 258, 277 Clearing details, 286 Direct posting, 324 Duplicate invoice check, 300

425

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Index

Important tables, 287 Important transactions, 281 Insufficient stock coverage, 258 Messages, 421 Taxes, 327 Value changes, 258 Lowest value comparison, 233 Lowest value determination, 210 Based on market prices, 211 Base price, 219 Range of coverage, 214 Based on movement rate, 217 Lowest value principle, 210

Sample Posting, 150 MRBR, 374 Technical program flow, 374

N Net goods receipt, 266 Net invoice receipt, 266 Net price, 138 Non-valuated goods receipt, 61

O M Maintenance views, 39 Manual block, 364 Manual invoice reduction, 423 MAP, 148 Master data, 36, 101, 283 Purchasing, 108 Material document, 284 Material master, 101, 126, 203 Accounting1, 129 Accounting view, 105 Database tables, 105 Organization of, 102 Material master price, 229 Material price change, 173, 201, 239 Material type, 126, 204 Material valuation, 57 Procedure, 147 Materials Management, 31, 33 ME21N, 406 SAP G/L, 406 Message schema, 423 MIRO Exchange rate, 393 Header screen, 291 Layout, 291 Planned delivery costs, 379 Movement rate, 216 Movement type, 204 Moving average price, 147, 148

Offsetting entry for inventory posting, 402 One-time vendor, 296 Operating concern, 81, 90 Optimization, 24, 25 Order price quantity variance, 354 Order unit and the order price, 254 OSS Message, 43 OSS Note, 43 Outline purchase agreements, 121

P Parking workflow, 309 Partial invoicing plan, 420 Payment block, 367 PB00, 176 Periodic invoicing plan, 420 Planned delivery cost, 151, 197, 242, 376, 410 Account postings, 242 Plant, 81 Plant Maintenance, 32 Pool LIFO valuation, 232 Merging, 232 Splitting, 232 Pool number, 233 Posting to previous period, 270 After a price change, 273 Posting goods movements, 272

426

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Index

Posting invoices, 272 PRD, 403 Precious metal condition, 195 Prepayment, 311 Price change, 268 Previous and current period, 269 Previous period only, 268 Price determination, 139, 173 Price variance, 344 Pricing in ME21N, 190 Processes in procurement, 77, 91 Procurement cycle, 33, 34, 94, 95 external services, 97, 100 services, 97 Procurement of consumable materials, 98, 152 Procurement of external services, 158 Procurement of stock material, 97 Procure-to-pay, 33 Production Planning, 32 Product Lifecycle Management, 31 Purchase account management, 322 Postings at receipt value, 322 Postings at stock value, 323 Purchase commitments, 51 Purchase order, 113, 153 Database tables, 117 Elements of Financial Accounting, 115 monitoring, 96 processing, 95 Service, 160 Technical elements, 115 Purchase order-based invoice verification, 294 Purchase order history, 289 Chronological order, 289 Purchase order with account assignment, 389 Purchase requisition, 33, 110, 153 Technical elements, 111 Purchasing, 50 Purchasing documents, 110 Purchasing info record, 109, 123, 142 Technical elements, 123 Purchasing organization, 83 Cross-company code, 88

Cross-plant, 88 Plant-specific, 88

Q Quality Management, 32 Quantity and price variance, 349 Quantity update, 56 Quantity variance, 340 Account postings, 341 Quota arrangement, 109 Quotation, 111, 134, 135

R Recognition-of-loss principle, 210 Reconciliation account, 68, 108 Request for quotation, 111 Technical elements, 113 Return, 425 Return delivery, 255, 257 Purchase order price quantity variance, 257 Revaluation, 207, 267, 414, 423 Account postings, 268 Credit memo, 418 Invoice, 417 Reversal, 425 RFQ, 134, 135, 136 Collective number, 135 Technical elements, 137 RM08RELEASE, 373

S Sales and Distribution, 31 SAP Best Practices, 42 SAP Customer Messages, 43 SAP Customer Notes, 43 SAP Customizing, 36, 38, 39 SAP Developer Network, 44 SAP Easy Access, 36, 37 SAP ECC, 32

427

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Index

SAP ERP, 23, 24, 26, 29, 47 Building blocks, 29 Expenses, 23 Financials, 30, 33 Human Capital Management, 32 Introduction, 23 Logistics, 31 Revenue, 23 SAP ERP Financials, 26, 77, 277 Financial Accounting, 77 SAP G/L, 127, 406 SAP HotNews, 44 SAP Library, 36, 41 SAP Service Marketplace, 42 SAP Support Portal, 43 SAP TopNotes, 44 Scheduling agreement, 122 Technical elements, 123 Without release documentation, 122 With release documentation, 122 SDN, 44 Service acceptance, 101 Service entry, 101 Service entry sheet, 162 Acceptance, 162 Entry, 162 Field selection, 166 Final Invoice indicator, 164 Invoice reversal, 164 Partial invoice, 163 Service Marketplace, 42 Service purchase order, 160 Services User exit, 166 Source determination, 94 Source list, 109 Split valuation, 49, 182 Standard price, 147 Stochastic block, 363 Stock material, 33, 125, 398 Account determination, 398 Database tables, 133 Material master, 126 Stock overview, 145 Stock shortage in the current period, 274 Storage location, 82

Subcontracting, 167 Account postings, 169 In Inventory Management, 168 In Logistics Invoice Verification, 169 In Purchasing, 167 Technical elements, 170 Subledger accounting, 68, 108 Subsequent debit Account postings, 261 Subsequent debit/credit, 259 Subsequent settlement, 198 Supplementary conditions, 186 Support consultants, 42 Support Portal, 43

T Taxes, 327 Customizing, 331 Deductible taxes, 327 Non-deductible taxes, 327 Proposal logic, 330 Technical naming convention, 93 Time-dependent Condition, 109, 139 Time-independent Condition, 139 Timesheets, 32 Tolerance keys, 359 TopNotes, 44 Total-based acceptance, 386 Total-based differences, 385 Total-based invoice reduction, 386 Transaction, 39, 401 ME41, 136 ME47, 135 ML81N, 97 MM01, 105 MMBE, 145 MR11, 431 MR11SHOW, 431 MRKO, 413 OMED, 141 OMWB, 40 SM30, 40 SPRO, 38 Transaction data, 36, 284

428

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Index

Transfer postings, 244 Consignment to company-owned stock, 246 Material to material, 247 Valuation type to valuation type, 248 Value changes, 244 Types of data, 36 Authorization data, 36 Customizing data, 36 Master data, 36 Transaction data, 36

U UMB, 403 Unplanned delivery cost, 151, 152, 381 Update allocation, 308 User parameter EFB, 188 EVO, 187 User Parameter, 187, 188

Valuation class, 129, 204, 391, 400 Valuation grouping code, 399 Valuation level, 49, 82, 146 Switching, 82 Valuation modifier, 399 Valuation price, 153 Valuation Structure, 204 Valuation Type, 204 Lowest value, 213 Value added tax, 278 Value-based commitment, 64 Value creation, 24 Value string, 402 Value update, 56 VBR, 406 Vendor evaluation, 109 Vendor master, 106, 199 Company Code Data, 107 General Data, 107 Purchasing Organization Data, 107 Subsequent settlement, 199 Transactions, 107 Vendor selection, 95 Views, 39

V Valuation, 395 Valuation area, 49, 82, 146 Valuation Category, 204

W WRX, 403

429

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