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The typical procurement cycle for a service or material consists of the following phases:
Determination of Requirements
Materials requirements are identified either in the user departments or via materials planning and control. (This can cover both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the latter.) You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system.
Source Determination
The Purchasing component helps you identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds up the process of creating requests for quotation (RFQs), which can be sent to vendors electronically via SAP EDI, if desired.
Vendor Selection and Comparison of Quotations
The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations. Rejection letters can be sent automatically.
Purchase Order Processing
The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, you can generate Pos yourself or have the system generate them automatically. Vendor scheduling agreements and contracts (in the SAP System, types of longer-term purchase agreement) are also supported.
Purchase Order Follow-Up
The system checks the reminder periods you have specified and - if necessary - automatically prints reminders or expediters at the predefined intervals. It also provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders.
Goods Receiving and Inventory Management
Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and underdeliveries of ordered goods.
Invoice Verification
The system supports the checking and matching of invoices. The accounts payable clerk is notified of quantity and price variances because the system has access to PO and goods receipt data. This speeds the process of auditing and clearing invoices for payment.
Notes for technical detail:
1. You will create material master (MM01)
2. You will create vendors (XK01)
3. Purchase Requisition (ME51N)
4. Request for Quotation (ME41)
5. Maintain Quotation (ME47)
6. Select best vendor and create PO (ME21N)
7. Goods Receipt (MIGO)
8. Invoice Verification (MIRO)
Meantime you can maintain Info-record for material and vendor combination (ME11)
You can also have a source list of approved vendors (ME01)
You can create contracts (ME31K)
