EXTERNAL PROCUREMENT PROCESS

Materials are procured in your company by means of various channels - partly from external vendors and partly from other branches of your company. The departments involved in these procurement processes are Purchasing, Warehousing and Invoice Verification. These are organized on a regional and functional basis. As a SAP consultant, you should know how these procurement processes and the necessary company structure are replicated in the SAP system.

The external procurement of materials is based on a cycle of general activities. In detail, a typical procurement process includes the following phases:

1. Determination of requirements - The responsible user department can manually pass a requirement for materials to the Purchasing department via a purchase requisition. If you have set a MRP procedure for a material in the material master, the SAP system automatically generates a purchase requisition.

2. Determination of source of supply - As a purchaser, you are supported during determination of possible sources of supply. You can use determination of the source of supply to create requests for quotation (RFQs) and then enter the quotations. In addition, you can refer to purchase orders, contracts and conditions that already exist in the system.

3. Vendor selection - The system simplifies the selection of vendors by making price comparisons between the various quotations. It automatically sends rejection letters.

4. Purchase order handling - Similar to purchase requisitions, you can create purchase orders manually or have them created automatically by the system. When you create purchase orders, you can copy data from other documents, such as purchase requisitions or quotations, to reduce the amount of entry work required. You also have the option of working with outline agreements.

5. Purchase order monitoring - You can monitor the processing status of the purchase orders in the system. You can also determine, for example, whether a delivery or an invoice for a purchase order item has been entered. You can remind the vendors of outstanding deliveries.

6. Goods receipt – When you enter incoming deliveries in the system, you refer to the relevant purchase order. The amount of entry work is therefore minimized, and you can check whether the delivered goods and quantities match the purchase order. The system also updates the purchase order history of the purchase order.

7. Invoice verification – When entering invoices, you refer to the previous purchase order or delivery so you can check the calculations and the general accuracy of the invoice. The availability of the purchase order and goods receipt data enables you to refer to the quantity and price variances.

8. Payment processing – The payment program authorizes payment to the creditor liabilities. Financial Accounting executes this program regularly.

As well as the "normal" procurement process described above, various other special procurement processes are also possible. We will discuss these special procurement processes later on.