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Purchasing Management with SAP

James Thompsone-Procurement Consultants, LLC

james@eprocurementconsultants.com

Purchasing Management with SAP

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Demand for Materials and

Services

Requisition and Approve Materials and

Services

Procure Materials and

Services

Receive Materials/Services and

Ensure Quality

Pay for Materials and

Services

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Goods

Receipts

1.

PlanningPurchase

Requisition

2. Require.

Requisition

Approval

Agreements

Purchasing

Document

3. Source

DeterminationService

Entry

Invoice

6. Invoice

Receipt

5.

InventoryGoods

Issue

4. Receiving

Supply Chain Lifecycle

Managing the growing complexity of purchasing processes requires integrated business information technology.

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Purchasing Document Complexity in SAP

There are 10 ways to pay a supplier/vendor/contractor 1 of which is Non-PO invoice 9 of which involve a type of PO (purchasing document)

We often generalize when we refer to PO’s, therefore it is imperative we understand the differences within each. see illustration in next slide

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Procurement of Goods and Services

SAP various purchasing documents (with/without Contracts) Purchase Order (PO) – standard purchasing doc. (NB)

Used for the procurement of materials only specifying Description, quantity, unit of measure & price

Framework Order (FO) Validity dates & lump sum amounts – no detail and no goods receipt or

service entry required

Service Order (SO) Used for the procurement of services only specifying Description, quantity, unit of measure & price

Limit Service Order (LSO) Validity dates & lump sum amounts – no detail – however service entry

is required

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Differences in Purchasing Documents

1 2 3 4 5 6 7 8 9 1043 series 44 series 44 series 44 series 44 series 44 series 44 series 44 series 45 series

Non-PO Framework LSO LSO plus LSO plus LSO LSO plus LSO plus SO only Material Invoice Order Contract SO Contract SO PO

unassigned unassigned unassigned with with with with withcost object cost object cost object cost object cost object cost object cost object cost object

• Less detail planning• Less work upfront• Much more work later• Poor control• Poor reporting• Manual coding• More flexible• More manual approvals

• More detail planning• More work upfront• Much less work later• Better internal controls• Better reporting• Automatic coding• Less flexible• Less manual approvals

afterbefore

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Benefits

SOX compliance 3-way match Segregation of duties Shift to more upfront approvals at the planning stage

More timely cost information by planning upfront in SAP Automatic coding Better Purchasing history Strategic Sourcing opportunities Better Maintenance history Better Capital Project information - Cost Control Automatic Accruals Less Manual Approvals

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E-Procurement Consultants, LLC is a private company that provides management consultation, and technology services to collaborate with clients in becoming or maintaining a high-performance business or government agency.

James Thompson, Principle

e-Procurement Consultants, LLCP.O. Box 2123DeSoto, Texas 75115

Phone Number: 214.770.0801E-Mail Address: james@eprocurementconsultants.comWeb Address: www.eprocurrementconsultants.com

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