PROCUREMENT CYCLE

This is the back bone of SAP MM, everything will be moving around this only. Let's see the procurement cycle in brief -

1. Determination of requirements - The user department responsible 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 R/3 System automatically generates a purchase requisition.

2. Determination of the source of supply - The R/3 System helps the buyer determine possible sources of supply. You can use determination of the source of supply to create requests for quotation (RFQs) and then enter the quotations. You can also access existing purchase orders and conditions 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 processing - The system facilitates data entry by providing entry aids when you are entering purchase orders.

5. Purchase order monitoring - The buyer can monitor the processing status of the purchase order online at any time and can determine whether goods or an invoice have been received for the relevant purchase order item. The system also supports reminder procedures.

6. Goods receipt - The system compares the goods receipt quantity with the purchase order quantity.

7. Invoice verification - Vendor invoices are checked for accuracy of prices and contents.

8. Payment processing - Financial Accounting normally deals with vendor payments.

Contents and image courtesy – http://help.sap.com