R ELEASE P ROCEDURE FOR P URCHASE O RDER

Release procedures will be defined for the following documents:

 Purchase Requisition

 Purchase Orders

In case of Purchase Requisitions only Engineering Purchase Requisitions will follow a release procedure as the engineering specification are to be vetted out.

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be different for each of the Purchasing Groups as per the person responsible (i.e. Imports, Local, Service, Admin and Plant Purchases). The entire POs will be finally released by the MD. All types of PO will have a release procedure including STO.

4.4.10

Forms and reports required

Purchase Order Print layout will be developed 4.5 High Sea Sales

ZZZ will use the High Sea Sales scenario for the sale of base oil. The process flow will be as shown below

Create Imports PO

Create Sales

Order PR generated

automatically

Amend the Imports PO

Post a GRN

Create invoice in SD

Invoice Verification

for the PO

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4.5.1

Exceptions and Variations

The PO has to be amended as the sales order will be prepared after the PO. The existing line item has to be deleted / modified and new line item will be added with reference to the PR generated from the Sales Order.

A statistical GRN will be made in the system causing the following accounting entries:

Dr. Cost of Goods Sold Cr. GR/IR Account

This entry will eliminate the need for taking the material into stock, making customer delivery and posting goods issue.

Customer invoice can be raised once the statistical GRN and the invoice verification are posted.

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5.

Inventory Management 5.1 Material Receipt

 A goods receipt is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to increase of material stock.

 Material shall be received at the plants or the delivery address other than the plant identified in the PO.

 In case of Subcontracting PO, the finished goods shall be received at the plants from where raw material was issued for processing.

Non - Stock material Cost centre

Project Other Blocked stock ( Valuated ) MVT 101 (S)

Unrestricted Use stock MVT 101

Vendor Stock

Consumption

Conditional acceptance

GR blocked stock MVT 103

Goods Receipt

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5.1.1

Goods Receipt Procedure

 In Goods receipt is done using Movement Type 101, Stock is directly posted to unrestricted stock or quality inspection stock and vendor can be paid after invoice verification.

 Both rejection and acceptance cannot be done for the material on which quality management is not activated. The system can not allow posting accepted quantity and rejected quantity simultaneously in single posting and for such condition two step goods receipt procedure is to be followed.

Irrespective of the procedure followed,

 No material shall be received without any reference of the PO

 ZZZ can use single step goods for material like spares, regular consumable items etc.

 Any changes to the PO shall be reflected before preparation of GR

 There shall be only one internal number range for the all types of Goods Receipt across all the plants.

Goods Receipt for Local Material

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WRT PR

Receive Quotations

Create Purchase Order

PR

Through MRP

Manual

YES NO

Create RFQ Manually

YES

Compare Quotations

Accept Reject

Release Purchase Order

Close Quotation with Reason

 

Scenario IA: Good receipt of Excisable Material

 CENVAT related details should be captured by the user before preparing the GR. User shall enter the Vendors Excise Invoice details in the SAP CIN module. The reference of the internally generated document shall be given at the time of GR. At the time of GR, RG23A Part I shall be gets updated if excise invoice has been captured before GRN.

 Part II entries will be generated at the time of Excise Invoice Verify and post.

 In case if Excise Invoice is captured after GR, Part I and Part II entries will be updated at the time of Excise Invoice Verify and Post

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 If Excise Invoice has not accompanied the material, the material can be received into unrestricted stock. Whenever Excise invoice comes, Excise Invoice is captured after GR, Part I and Part II entries will be updated at the time of Excise Invoice Verify and Post.

Invoice verification can be entered only after the excise invoice verified & posted.

 If Vendor has not given the excise invoice for excisable material, then user has to change the PO as non excisable before posting of goods receipt and vendor invoice.

 

Scenario IA: Good receipt of Non Excisable Material

 If the material is not excisable then user shall prepare the GRN using movement 101 without use of CIN Excise Module.

The following accounting entry will be passed in the Financial Accounts Dr. RM/PM Stock Account

Cr. GR/IR Account

Cr. Freight Clearing Account Excise Entry for revenue purchases

Dr. Cenvat BED/ AED/ SED Account Cr. Cenvat Clearing Account Excise Entry for Capital purchases

Dr. Cenvat BED/ AED/ SED Account Dr. Cenvat on hold Account Cr. Cenvat Clearing Account Goods Receipt for Import Material

Import good receipts will be carried out either at the outside storage location or directly at the Manufacturing Plant

Amendments will have to done in the PO, for quantity splitting as per receiving plant and any other condition if required

The break up of the pricing elements (i.e. freight, Barging, CVD etc) will be copied from the last PO

If the material is received at Outside Storage location, Stock transfer Order will be used to transfer the material to the manufacturing plant.

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Invoice Verification for Duties i.e. Planned Delivery Costs

 

Scenario IIA: Goods Receipt for imports at Outside Storage Locations

 Preparation of PO

 Release of PO

 The invoice verification shall be carried out for CVD before the goods receipt of the material in the system.

 Posting of invoice verification for duty charges as delivery costs

 The excise invoice (i.e. CVD) shall be captured and posted in CIN.

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 The GRN shall be prepared with respect to PO.

 Posting of part 2 in dummy excise registration

 Preparing of Transfer order & confirmation for warehouse

 Placing in Bin

 

Scenario IIB: Goods Receipt for imports directly at Manufacturing Plant

 Preparation of PO

 Release of PO

 The invoice verification shall be carried out for CVD before the goods receipt of the material in the system.

 Posting of invoice verification for duty charges as delivery costs

 The excise invoice (i.e. CVD) shall be captured and posted in CIN.

 The GRN shall be prepared with respect to PO.

 Posting of part 2 in respective plants excise registration

 Preparing of Transfer order & confirmation for warehouse

 Placing in Bin

Accounting Entry:

Invoice Verification for Custom Duty when material not purchased against Advance License Dr. Cenvat Clearing Account

Dr. Custom Clearing Account Cr. Vendor Account

Invoice Verification for Custom Duty when material purchased against Advance License.

Dr. Custom Clearing Account

Cr. License Vendor Account (Recon A/c-adv license receivable A/c)

Goods receipt when the material is not purchased against advance License Dr. Stock Account

Cr. GR/ IR Account

Cr. Custom Clearing Account

Goods receipt when the material is purchased against advance License

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Cr. GR/ IR Account

Cr. Custom Clearing Account

Capture Excise Part II when the material is not purchased against advance License Dr. BED Account

Dr. Cess Account

Cr. Cenvat Clearing Account Invoice Verification for Foreign Vendor

On receipt of vendor bill the following entry will be passed:

Dr. GR/IR Account Cr. Vendor Account

 

Scenario IIC: Goods Receipt for imports in Manufacturing Plant from Outside Storage Locations (Stock Transport Order)

 Creation of Stock transport order with supplying plant as Outside Storage Location and receiving Plant as Manufacturing Plant

 Creation of Replenishment Delivery

 Preparing of Transfer order and Confirmation for warehouse

 Creation of Post Good issue to reduce the inventory at Outside Storage Location

 Pro-forma Invoice

 Excise Invoice at Supplying Plant (i.e. Outside Storage Locations)

 Good receipt at Receiving Plant (i.e. Manufacturing Plant)

 Preparing of Transfer order and Confirmation for warehouse

 Excise Invoice post and capture in receiving plant

 

Scenario IID: Weigh Bridge Interface

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 

Scenario III: Goods Receipt for Assets Material / Spares

 The cycle of local /import GRN holds good for capital materials.

 The type of material (Asset) shall be specified while capturing the excise invoice.

 The GRN shall be prepared with respect to excise invoice. The system shall update RG23C Part I after the GRN has been posted.

 The excise invoice shall be posted and the system shall pass an entry for claiming 50%

Modvat for the current year updating RG23C Part II. In the subsequent year remaining 50% Modvat shall be claimed.

 

Scenario IV: Goods Receipt for Consumable materials

 The regular GRN cycle holds well for the consumable materials with the exception that system shall not update the stock of the material.

 It shall be assumed that the material is consumed after good receipt no separate goods issue transaction needs to be carried out.

Accounting entries in FI at the time of GRN Dr. Consumption A/c Cr. GR/IR Clearing A/c

 

Scenario V: Goods Receipt for Production Order

 Goods shall be received in the concerned plant and storage location with respect to production order. This shall result into converting of stocks from work in progress to semi finished material or finished good. This shall result into increase of stocks in the storage location.

Accounting entries in FI at the time of GRN Dr. FG inventory A/c

Cr. Factory output A/c / Cost of production A/c

 

Scenario VI: Goods Receipt against Returnable Gate Pass

 Service PO will be created for the repairs to be made along with the charges

 The inventory of the asset eg pump or motor will be generated against a non valuated material code

 A transfer posting to the subcontractor stock will be entered in SAP to keep a track of the stock

 The material will be sent out of the gate against a printed copy of Returnable gate pass from SAP

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 Service entry sheet will be posted for the repair charges and the invoice verification will be done for the same. The GRN for the services will be posted automatically in the background.

 

Scenario VII: Goods Receipt for Subcontracting Purchase Order and Material received in Plant and transferred to Subcontractor

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WRT PR

Receive Quotations

Create Purchase Order

PR

Through MRP

Manual

YES NO

Create RFQ Manually

YES

Compare Quotations

Accept Reject

Enter Transfer Posting

Close Quotation with Reason

Create Subcontracting Challan

Reconcile Challan Post GRN

Complete Challan

SUBCONTRACT PURCHASE ORDER

 

Scenario VIII: Goods Receipt for Subcontracting Purchase Order material is directly received at Subcontractor

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(STD) in Background

 The PO shall be prepared on the subcontractor for the End Product (incoming material)

 The components (outgoing material) required for the manufacture of the end product shall be specified in the PO manually or based on the Bill of Material and will be supplied by ZZZ.

 The components shall be issued to the vendor with respect to the subcontracting PO through transfer posting. This will result in the posting and identification of stocks at the vendor location. The raw materials can also be received directly at the subcontractor by

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posting a GRN for the PO in which the subcontractor has been identified in the delivery address of the PO.

 No Accounting transactions shall take place when stocks (components) are transferred to the vendor location.

 A 57F4 document (Excise Challan) shall be generated and printed (optional) based on the transfer-posting document in CIN.

 On the receipt of the End Product from the vendor (subcontractor) at plant, the GRN shall the prepared with respect to the subcontracting PO and 57F4 document.

 This shall result in the posting of the consumption entries for the components lying at the vendor location.

 The 57F4 document shall be reconciled & completed in CIN after final receipt of the End Product.

 Logistics Invoice Verification shall be carried out for the labour charges for the end product supplied by the Vendor.

 The subcontracting PO shall have the Labour charges as the price component.

5.1.2

Excise details to be captured at goods receipt from vendor

 User would capture excise-related details at the time of preparing the GR. User will enter the Vendor’s Excise Invoice details in the GRN transaction. At the time of GR, RG23 A or C Part I will get updated.

 Part II entries will be generated at the time of Excise Invoice Verify and Post stage which will be done after GR

 In case if Excise Invoice is captured after GR, Part I and Part II entries will be updated at the time of Excise Invoice Verify and Post.

 If Excise Invoice has not accompanied the material, the material can be received into GR Blocked stock. The GR block stock shall not update the total valuated stock and will not be available for usage. Whenever Excise invoice comes, the material can be taken to unrestricted stock from GR block stock. However, from unrestricted stock the material cannot be moved back to GR block stock.

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production the user can post the goods receipt and subsequently post the CENVAT with the reference of PO and goods receipt material document number.

5.1.3

Gaps / Issues Identified and Solutions

As per standard SAP only two weights can be captured in the GRN out of which one is actual GRN quantity the other one can be either BOE/ BL quantity or actual quantity received at the dock. Development will be done to capture four different weights.

Transport vendor and the barge vendor will be changed at the time of GRN if different than that identified in the PO.

5.1.4

Forms and reports required

 Report for outturn i.e. the weights captured at the different stages will be developed

 Returnable Gate Pass

 Non Returnable Gate Pass

5.1.5

Interfaces

Weigh Bridge Interface will be developed to meet the business requirement of identifying the quantity in weight and volume of the raw materials (e.g. Oils) which are received in Tankers.

5.2 Material Issues (Consumption)

A goods issue (GI) is a good movement with which a material withdrawal or material issue, a material consumption or a shipment of good to a customer is posted. A good Issue leads to reduction of the stocks. Material shall be issued to various departments. The issues can be specific against a production order, maintenance order or generally to a cost centre against a reservation. The consumption entries shall get posted at the time of goods issue. Other than high value maintenance spares, all materials will be charged to consumption as soon as it issued from the main stores. In certain cases the material is issued to production or cost centre but is not identified as consumption. For e.g. materials issued to shop floor locations, for such cases, a separate storage location will be identified in the system for tracking the stock on the shop floor. High value maintenance spares such as chemical & fluxes shall be transferred from Main

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Stores storage location to the Shop floor location. Hence, the issues for production/ cost centre from the main storage will be shown as transfer posting from storage location to storage. No accounting entries shall be generated for the transfer posting. On charging the materials to a work order or cost centre, issue to production order/cost centre will be recorded. Thus exact consumption quantity will be recorded for the production order. For other products, which can be issued, as per exact requirement, a material issue to production order will be carried out from the main storage location directly.

Negative stocks shall not be allowed in the system.

The materials such as chemicals, oils, engineering goods shall be stored in the defined stores and directly issued to the production order or cost centre if required.

The materials such as high value maintenance spares shall be stored in the engineering stores and transferred to the shop location and subsequently the issue shall be booked against maintenance order or cost centre if required.

If stores want to issue material other than originally planned in the reservation then material has to be changed in the reservation with the required alternative material.

There shall be only one internal number range for all types of Goods Issue and Transfer Posting documents across all the plants.

When the material is issued against the production order the following accounting entries will take place in FI

Dr. RM stock A/c

Cr. Inventory Change A/c

5.2.1

Transfer Postings

During the normal business activity it may be essential to move the material physical from one place to the other within the same company code, or within the same plant or move it from one stock type to another or from one material to another. These can be done in SAP by transfer posting.

The major material transfers that can be carried out in SAP are

 Plant to Plant

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 Stock to Stock i.e. unrestricted to blocked

 Batch to Batch

 Batch to Batch

In document Sap Mm Business Blue Print_sample (Page 38-78)