Day in the life of a Material Buyer – 3- Purchasing

[Narasimha]

Purpose: The purpose of this blog post is to bring the real-life day-to-day scenarios of a material buyer based on my own domain experience as a material buyer.

This is the Third blog post of the series – Day in the  Life of a material buyer. Please go through the previous blog posts listed below.

Day in the life of a Material Buyer – 1-  Overview of buyer functions -

Day in the life of a Material Buyer – 2- Vendor acknowledgment and communication

Here I would explain the third activity with SAP tools.

• Purchasing activities.


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  • Activities related to Purchase requisitions.
  
  
  • Purchase order-related activities like
    
    
    
    • ME58 - Convert Assigned Purchase Requisitions to Purchase Orders
    
    
    • ME57 - Assign and Process Purchase Requisitions to Purchase Orders
    
    
    • MEAN – Delivery Address
    
    
    • PO Release Approval
    
    
    • Purchasing Document – Closing Procedures.
    
    
    
    
  
  
  
  

• Other purchasing strategies (Are not covered in this blog post)

–Scheduling Agreements

–Stock Transport Orders

–Kitted Material Process

–Subcontracting Process

–Kan Ban Process

–Consignment.

–3rd Party Ship Drop Process

–Contract

 

Purchasing flow in SAP.

 

Purchase requisition transactions

Step	Activity	Tcode in SAP	Remarks	Fiori App (To update soon)
1	Create Purchase Requisition	ME51K	Purchase Requisition created
2	Change Purchase Requisition	ME52K	Purchase Requisition changed
3	Material Requirements Planning (MRP) Process	See P2P Process	Process MRP-generated Purchase Requisitions
4	Display Purchase Requisition	ME53K	Purchase Requisition displayed
5	Convert Planned Orders to Purchase Requisition	MD14 Individual MD15 Collectively	Purchase Requisition(s) created from MRP planned order(s)

Key things to remember in purchase requisitions as a buyer.

• Account Assignment Category

–A key indicating whether an item is to be assigned to an auxiliary account (such as a cost center). The account assignment category determines which account assignment details are required for the item (for example, cost center or account number).

• Item Category

–An identifier indicating the characteristics of an item. The item category determines whether the following are mandatory or permitted for an item:

• Material number


• Additional account assignment


• Inventory management in the SAP system


• Goods receipt


• Invoice receipt

Purchase Order Process

• System-generated purchase order.
  
  
  
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    • A purchase requisition is generated via the Material Requirements Planning (MRP) process. A buyer converts the purchase requisition into a purchase order. The purchase order is subject to approval based on the release strategy. The buyer then sends the purchase order to the vendor.
    
    
    
    
    
    
    • Goods are shipped from the vendor, and the receipt of the goods is done with reference to the purchase order.
    
    
    • The invoice is received from the vendor. Invoices are entered with reference to a purchase order. The vendor is paid by accounts payable.
    
    
    
    
  
  
  
  

• Purchase order Process Flow

Step	Activity	Tcode in SAP	Remarks	Fiori Apps to be updated
1	Review MRP List (optional)	MD06	Results of latest MRP run viewed.
2	Display and assign purchase requisitions	ME57	Unassigned requisitions are displayed, and sources of supply assigned
3	Convert assigned requisitions to purchase orders	ME58	The system generates a purchase order.
4	Approval of purchase orders	ME28 / ME29N	The purchase order is now released.
5	Transmit purchase order	ME9F	The purchase order is printed, faxed, e-mailed, as needed
6	Goods Receipt	MIGO	Material is received.
7	Invoice Receipt by Line Item	MIRO	The invoice is verified.
8	vendor Outgoing Payment	See finance process	The outgoing payment is processed.

As a buyer, you should also be aware what are the different types of purchase document types created by your consultant. For eg, you may have a separate document type (Usually NB standard sap, but could be different based on need).

• NB - System generated


• MAN- Manually created


• RET- Returned to vendor PO


• CON- Consumables.


• AST -Asset purchase.

Each would ideally have its own number range,

Different Purchase order Scenarios you may face are as below.

Scenarios	Document Type	Description	Account Assignment Category	Description	Item Category	Description
Stock	NB or Custom	System-Generated or Manual Created				Standard
Subcontracting	NB or Custom	System-Generated or Manual Created			L	Subcontracting
Third-party (Sales Order)	NB or Custom	System-Generated or Manual Created	X	All Account Assgts.	S	Third-party
Sales Order (Ship Loose)	NB or Custom	System-Generated or Manual Created	M	Procure to order
Consignment	NB or Custom	System-Generated or Manual Created			K	Consignment
Consumable Material	usually Custom	Assets/Consumables	K	Cost center
Consumable Service	usually Custom	Assets/Consumables	K	Cost center
Fixed Asset	usually Custom	Assets/Consumables	V	Purchase to BS acct
Return to Vendor	usually Custom	Return to Vendor Ord
Stock Transfer	UB	Stock Transport order			U	Stock transfer

 

This blog post is more focused on Material buyers (end users) and new consultants may find it useful to understand SAP MM functionality better.

Do give feedback to make this blog post better.