ASAP Business Blueprint: Materials Management Business Processes

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ASAP Business Blueprint

Materials Management
Business Processes
Created by
Krishna Akula
Date of creation
04/09/2011
Changed by
Date of the last changes
Version
V 1.0
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___________________
__________________
Sign Off Date
Signature Customer
Signature Consulting
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Table of Contents
1. Procurement.......................................................................................................................... 3
1.1. Procurement of Materials and External Services................................................................3
1.1.1. Purchase Requisition....................................................................................................... 3
1.1.1.1. Purchase Requisition Processing.................................................................................3
1.1.2. Purchasing....................................................................................................................... 5
1.1.2.1. Purchase Order Processing..........................................................................................5
1.1.2.2. Release of Purchase Orders......................................................................................... 15
1.1.2.3. Transmission of Purchase Orders.................................................................................17
1.1.3. Goods Receipt................................................................................................................. 19
1.1.3.1. Goods Receipt Processing........................................................................................... 19
1.1.3.2. Goods Receipt Processing with Reference...................................................................21
1.1.4. Service Entry Sheet......................................................................................................... 25
1.1.4.1. Service Entry Sheet...................................................................................................... 25
1.2. Procurement via Subcontracting......................................................................................... 28
1.2.1. Purchasing....................................................................................................................... 31
1.2.1.1. Purchase Order Processing..........................................................................................31
1.2.1.2. Release of Purchase Orders......................................................................................... 35
1.2.1.3. Transmission of Purchase Orders.................................................................................36
1.2.2. Provision of Components................................................................................................. 37
1.2.2.1. Goods Issue Processing............................................................................................... 37
1.2.3. Goods Receipt................................................................................................................. 39
1.2.3.1. Goods Receipt Processing with Reference...................................................................39
1.2.4. Invoice Verification........................................................................................................... 43
1.2.4.1. Invoice Processing with Reference...............................................................................43
1.2.4.2. Invoice Release............................................................................................................ 45
2. Inventory Management, Warehouse Management and Transportation.................................46
2.1. Goods Movements.............................................................................................................. 47
2.1.1. Goods Accepted.............................................................................................................. 47
2.1.1.1. Return Delivery............................................................................................................. 47
2.1.1.2. Goods Receipt Processing........................................................................................... 50
2.1.2. Stck Transfers / Trans. Pstngs.........................................................................................51
2.1.2.1. Two-Step Stock Transfer............................................................................................... 51
2.1.1.1. One-Step Stock Transfer................................................................................................ 53
2.1.2. Goods Issue..................................................................................................................... 54
2.1.2.1. Goods Issue Processing............................................................................................... 54
2.2. Physical Inventory & Cycle Counting..................................................................................57
2.2.1. Physical Inventory............................................................................................................ 58
2.2.1.1. Cycle Counting Phys. Inv. Preparation..........................................................................61
2.2.1.2. Determination of Scope for Periodic and Continuous Inventory....................................62
2.2.1.3. Definition of Scope of Periodic Inventory......................................................................63
2.2.1.4. Printout of Physical Inventory Document......................................................................63
2.2.1.5. Inventory Count............................................................................................................. 64
2.2.1.6. Physical Inventory Analysis...........................................................................................64
2.2.1.7. Post Inventory Differences............................................................................................ 64
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Company Confidential BusinessProcesses.doc
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A. Business Processes
Procurement
Questions:
Q: 1) How many different materials do you procure on a regular basis?
Q: 2) How does material move between plants?
Procurement of Materials and External Services

Purchase Requisition
Purchase Requisition Processing
Questions:
Q: 1) How are purchase requisitions created in the case of stock material,
material for direct consumption, external services?
A: [
[
[
[
[
[
]
]
]
]
]
]
Manually
MRP
Sales order
Replenishment
Store order
Outside R/3
CI (Customer Input) template:

1. Requirements/Expectations
2. General Explanations
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Request or instruction to Purchasing Dept. to procure a certain quantity

of a material or a service so that it is available at a certain point in
time.
A purchase requisition consists of a number of items, for each of which a
procurement type is defined. The following procurement types exist:
Standard
External service
An item of a requisition contains the quantity and delivery date

of the material to be supplied or the quantity of the service to be
performed.
A purchase requisition can be fulfilled through purchase orders or longerterm purchase agreements.
3. Special Organizational Considerations
.
4. Description of Improvements
5. Description of Functional Deficits
6. Approaches to covering Functional Deficits
7. System Configuration Considerations
8. Authorization and User Roles
Purchasing
Purchase Order Processing
Questions:
Q: 1) How will purchase orders be created in your system?
A: [ ] Manually
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[] From purchase requisitions (manual or automatic)

[ ] From store order
[ ] From replenishment
[ ] From allocation table
[ ] From load-building run
[ ] From SAP Retail Store
[ ] For stock material
[ ] For consumable material
[ ] For external services
Q: 2) Do you want the system to check whether the purchase price is
within a predefined tolerance in your system, compared with the material
valuation price?
Q: 3) Describe how the source of supply is determined for manually

created purchase requisitions!
Q: 4) Specify the consumption categories for which you will procure

external services and material directly: Asset, cost center, production order,
project, sales order, other (please specify).
Q: 5) Which types of purchase order will you use?

A: [
[
[
[
]
]
]
]
Standard
Consignment
Subcontracting
Stock transfer
Q: 6) How do you transmit purchase orders to your vendors?

A: [
[
[
[
]
]
]
]
via mail
via fax
By EDI
Other
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Q: 7) Do you order material in a unit of measure that differs from the one
used for stockkeeping purposes?
Q: 8) Do you pay for material in a different unit of measure than the one
that is shown in the PO/and or used for stock putaway?
Q: 9) Will you be purchasing material imported from foreign vendors ?
Q: 10) Are purchasing info records to be updated automatically with every

purchase order?
Explanation: If updating is desired and you use rounding profiles in the case
of stock transport orders, after the first purchase order created the logistic
data on the article is no longer read for the rounding profile. Instead the
newly created purchasing info records are read!
Q: 11) Do you wish to analyze/evaluate purchase transactions according to

the reasons for ordering?
Q: 12) Do you plan and enter freight costs in the PO? If yes, describe the
basis of the costs. Also indicate if any types of costs can be determined
automatically (for example, freight costs per piece, per unit of weight, as a
percentage of the value).
Q: 13) Do you want to prevent users from changing the account assignment
of items in purchasing documents for which they have no authorizations? If
so, for which purchasing documents?
A: [ ] Purchase requisitions
[ ] Purchase orders
[ ] Contracts
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[ ] Scheduling agreements
Q: 14) Do you sometimes order stock material directly for a cost center or
another consumption category?
Q: 15) Do you have to declare your ordering activities to the authorities? If
so, describe.
Q: 16) Do you allow overdeliveries? If so, specify the percentage variance

for the individual materials/material types.
Q: 17) On the occasion that a vendor sent you less than the quantity
ordered, would you ever want this shortfall to be considered an under
delivery, with no further deliveries expected? Please list the values for each
material/material group.
Explanation: In case of exceeding this value, it will be a partial delivery. In
case the value stayed below, it will be an under delivery
Q: 18) Can the materials you purchase be subject to different tax types?
(For example, based upon the material purchased, based upon the plant for
which the material is purchased, etc)?
Q: 19) Do your POs issued to vendors contain specific transport or packing

instructions? Is vendors' compliance with the transport and packing
instructions to be recorded when the goods are received ?
Explanation: e.g., full compliance, ignored instructions, ...
Q: 20) Is it to be possible for purchase orders to be generated

automatically following a goods receipt? Specify the criteria for this.
Explanation: Define the movement types for which this should be allowed.
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CI template:

7. Notes on further Improvements
.
10.
Project specific CI section
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Release of Purchase Orders

Questions:
Q: 1) Are purchase documents to be approved by someone before being
issued to vendors? Describe the approval procedure....
Explanation: Example: all purchase orders for over $100,000 must be
approved by the purchasing department manager, all purchase orders over
$1 million must be approved by the President. Describe the approval
process, and under what circumstances the approval process applies. - for
stock material - for consumable material - for external services
Q: 2) How is the person responsible for approval to be notified? - Approver
checks R/3 regularly, by phone, by e-mail, by workflow, other.
Explanation: Background: Workflow for release procedure Background:
Workflow for release procedure
Q: 3) Will you use an electronic signature to release purchasing documents?
CI template:
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Transmission of Purchase Orders

Questions:
Q: 1) How will you transmit your purchasing documents to your vendors?
Explanation: If you are using EDI, note also the EDI process in the reference
structure.
A: [ ] Internet
[ ] Other, please describe
[ ] By telephone
[ ] By e-mail
[ ] By fax
[ ] By EDI
[ ] By post (in written form)
Q: 2) How are purchase orders to be transmitted?
A: [
[
[
[
[
] Paper
] Telephone
] Fax
] E-mail
] EDI
CI template:
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10. Project specific CI section
Goods Receipt
Goods Receipt Processing
Questions:
Q: 1) The material stock balances shown in your legacy system are to be
transferred to the R/3 System. Will the stocks be valuated at the prices
specified in the R/3 total value of the former system be taken over?
Q: 2) If you do not use the R/3 Purchasing functionality, describe the

process of receiving goods from a vendor.
Q: 3) Should the person who posts a goods receipt be able to use a

different account assignment than the one specified via the automatic
account determination process?
CI template:
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Goods Receipt Processing with Reference

Questions:
Q: 1) Describe the process for receiving goods with reference to a purchase
order.
Explanation: General introduction to the subject
Q: 2) Name the storage locations to which vendors deliver the goods.
Q: 3) How do you inform the Purchasing Department that goods have been
received?
Q: 4) Do you receive quantities less than the ordered quantity? If yes, is
the purchase order considered complete then or do you receive the missing
quantities later?
Q: 5) Do you physically store the goods you have received into "stock in
quality inspection" at a different location than those posted to normal
stock?
Q: 6) Do you use a unit of measure for the pricing of the goods other than
the unit you order in? If yes, you can define the variances in customizing.
Q: 7) Which documents are generated with the goods receipt?

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Explanation:
determination
determination
A: [
[
[
[
]
]
]
]
Note on design of SAPScript

documents,
documents,
message
message
Goods receipt slip

Bar code sticker
Other
None
Q: 8) Which documents are generated in connection with a goods receipt?

Explanation:
determination
determination

documents,
documents,
message
message
Q: 9) If a goods receipt quantity is assigned to a goods issue, do you want

the person who enters the goods receipt to receive a corresponding
message?
Q: 10) Will you inspect the material/article at the time of goods receipt? If
so, do you enter the goods receipt and the inspection result or do you only
enter the goods receipt after the inspection has been carried out?
Explanation: QM module
Q: 11) If you are using batch management, how is the batch number
determined at the time of goods receipt?
Explanation: Batch management Batch management
Q: 12) Do you classify the batches at the time of goods receipt? Please
specify the criteria.
Q: 13) Is the automatic account determination process defined by Financial

Accounting? If not, who is responsible within Logistics?
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CI template:
Service Entry Sheet
Service Entry Sheet
Questions:
Q: 1) Do you wish to process or document completion of the services
performed by the service provider?
CI template:
Definition of Service:
Intangible good that is the subject of business activity and that can be
performed internally or procured externally (outsourced).
Services are regarded as being consumed at the time of their
performance. They cannot be stored or transported.
Examples of services include construction work, janitorial/cleaning
services, and legal services.
Service Entry Sheet:
List of services performed by a vendor on the basis of a purchase order,
containing service descriptions and details of quantities and values.
The descriptions of planned services deriving from the purchase order
appear as default values in the entry sheet. Unplanned services, which
were originally entered in the purchase order without descriptions and
only with the aid of value limits, are precisely defined in the service
entry sheet.
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Procurement via Subcontracting

CI template:
Sub-contracting activity
The processing, of materials provided by a customer. The result of this
processing is the manufacture by the supplier (subcontractor) of an
ordered material or product, or the performance by the supplier of an
ordered service.
The material to be produced by the vendor can be ordered as a
subcontract item in a purchase requisition, purchase order, or scheduling
agreement. Each subcontract item has one or more sub-items that
contain the individual components the vendor needs to perform the
subcontract work or value-added service.
The individual component items can either be
1
Entered or changed manually
2
Copied from an existing bill of material (this is known as a BOM
explosion)
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Purchase Order
Each subcontract item in the purchase order has component items. They
are copied from the purchase requisition, entered manually, or copied
from a bill of material.
The purchase order price is the subcontract price for manufacturing the
ordered material
Changes to the Purchasing Document
When we process subcontract orders in Purchasing, we have to note the
following:
If we change the order quantity or scheduled quantity, the

quantities of the components to be provided are changed proportionally,
providing the indicator Fixed quantity is not set.
If we change the delivery date, the system only recalculates the

date required, the components are not automatically redetermined in
the bill of material. In this case, we must request a new BOM explosion.
Purchasing Master Data
The conditions for the material to be produced are stored in a
subcontract info record.
We enter the special procurement type L (subcontracting) when making
quota arrangements.
Monitoring Materials to be provided to Vendor
By monitoring the material stocks to be provided to a vendor, we can
determine whether the components required for subcontract work at the
vendor's site is actually available in the warehouse
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Purchasing
Sub Contracting Purchase Order Processing
Questions:
Q: 1) How will purchase orders be created in your system?
A: [
[
[
[
[
[
[
[
[
[
]
]
]
]
]
]
]
]
]
]
Manually
From purchase requisitions (manual or automatic)
From store order
From replenishment
From allocation table
From load-building run
From SAP Retail Store
For stock material
For consumable material
For external services
Q: 2) Do you want the system to check whether the purchase price is

within a predefined tolerance in your system, compared with the material
valuation price?
Q: 3) Which types of purchase order will you use?

A: [
[
[
[
]
]
]
]
Standard
Consignment
Subcontracting
Stock transfer
Q: 4) How do you transmit purchase orders to your vendors?

A: [
[
[
[
]
]
]
]
via mail
via fax
By EDI
Other
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Q: 5) Do you order material in a unit of measure that differs from the one
used for stockkeeping purposes?
A:
[ ]Yes
[ ]No
Q: 6) Do you pay for material in a different unit of measure than the one
that is shown in the PO/and or used for stock putaway?
Q: 7) Are purchasing info records to be updated automatically with every
purchase order?
Explanation: If updating is desired and you use rounding profiles in the case
of stock transport orders, after the first purchase order created the logistic
data on the article is no longer read for the rounding profile. Instead the
newly created purchasing info records are read! profile. Instead the newly
created purchasing info records are read!
Q: 8) Do you wish to analyze/evaluate purchase transactions according to

the reasons for ordering?
Q: 9) Do you plan and enter freight costs in the PO? If yes, describe the
basis of the costs. Also indicate if any types of costs can be determined
automatically (for example, freight costs per piece, per unit of weight, as a
percentage of the value).
Q: 10) Do you sometimes order stock material directly for a cost center or
another consumption category?
Q: 11) Do you have to declare your ordering activities to the authorities? If
so, describe.
Q: 12) Do you allow overdeliveries? If so, specify the percentage variance
for the individual materials/material types.
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Q: 13) On the occasion that a vendor sent you less than the quantity
ordered, would you ever want this shortfall to be considered an under
delivery, with no further deliveries expected? Please list the values for each
material/material group.
Explanation: In case of exceeding this value, it will be a partial delivery. In
case the value stayed below, it will be an under delivery
Q: 14) Can the materials you purchase be subject to different tax types?
(For example, based upon the material purchased, based upon the plant for
which the material is purchased, etc)?
Q: 15) Do your POs issued to vendors contain specific transport or packing
instructions? Is vendors' compliance with the transport and packing
instructions to be recorded when the goods are received ?
Explanation: e.g., full compliance, ignored instructions, ...
Q: 16) Is it to be possible for purchase orders to be generated
automatically following a goods receipt? Specify the criteria for this.
Explanation: Define the movement types for which this should be allowed.
CI template:
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Release of Subcontract Purchase Orders

Questions:
Q: 1) Are purchase documents to be approved by someone before being
issued to vendors? Describe the approval procedure....
Explanation: Example: all purchase orders for over $100,000 must be
approved by the purchasing department manager, all purchase orders over
$1 million must be approved by the President. Describe the approval
process, and under what circumstances the approval process applies. - for
stock material - for consumable material - for external services
Q: 2) How is the person responsible for approval to be notified? - Approver
checks R/3 regularly, by phone, by e-mail, by workflow, other.
Explanation: Background: Workflow for release procedure Background:
Workflow for release procedure
Q: 3) Will you use an electronic signature to release purchasing documents?
CI template:
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Transmission of Subcontract Purchase Orders

Questions:
Q: 1) How do your vendors transmit shipping notifications?
A: [
[
[
[
[
] Paper
] Telephone
] Fax
] E-mail
] EDI
Q: 2) How will you transmit your purchasing documents to your vendors?

Explanation: If you are using EDI, note also the EDI process in the reference
structure.
A: [
[
[
[
[
[
[
]
]
]
]
]
]
]
Internet
Other, please describe
By telephone
By e-mail
By fax
By EDI
By post (in written form)
Q: 3) Do you wish to adopt vendors' own nomenclature for characteristics

(color codes, etc.) on your order form?
Q: 4) How are purchase orders to be transmitted?

A: [
[
[
[
[
] Paper
] Telephone
] Fax
] E-mail
] EDI
CI template:
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Provision of Components
Goods Issue Processing
Questions:
Q: 1) How do you record materials ordered for specific work orders?
Q: 2) How much time elapses between the actual goods issue and its
posting in the system?
Explanation: Info on process steps.
Q: 3) Is the posting made online or in batch mode?
Explanation: Steps in system
Q: 4) Are deliveries posted individually or for each group of goods issues?
Q: 5) Which documents are generated in conjunction with this posting and
what information do they contain?
Explanation: 1-step goods issue in which the GR at the receiving site is
posted simultaneously to the GI at the DC(Delivery Challan). simultaneously
to the GI at the DC.
CI template:
Provision of components
The components that are provided to the subcontractor are managed as
stock provided to vendor. In Inventory Management, the provision
represents a transfer posting from unrestricted-use stock to the stock of
material provided to vendor. Components in a subcontract order that are
consumed can only be debited from the stock of the material provided
to the particular vendor.
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Subcontract Goods Receipt

Goods Receipt Processing with Reference
Questions:
Q: 1) Describe the process for receiving goods with reference to a purchase
order.
Explanation: General introduction to the subject General introduction to
the subject
Q: 2) Name the storage locations to which vendors deliver the goods.
Q: 3) How do you inform the Purchasing Department that goods have been
received?
Q: 4) Do you receive quantities less than the ordered quantity? If yes, is
the purchase order considered complete then or do you receive the missing
quantities later?
Q: 5) Do you physically store the goods you have received into "stock in
quality inspection" at a different location than those posted to normal
stock?
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Q: 6) Do you allow every material to be stored at all storage locations?

Please describe!
Q: 7) Do you use a unit of measure for the pricing of the goods other than
the unit you order in? If yes, you can define the variances in customizing.
Q: 8) Do the materials you receive have to be stored for a certain time

before they can be used or do they have an expiration date that you want
to keep in the system?
Q: 9) Do you refuse to accept deliveries if the vendor has not complied
with the shipping instructions? (Can be used to evaluate vendors.)
Q: 10) Which documents are generated with the goods receipt?

Explanation:
determination
determination
A: [
[
[
[
]
]
]
]

documents,
documents,
message
message
Goods receipt slip

Bar code sticker
Other
None
Q: 11) Will you inspect the material/article at the time of goods receipt? If
so, do you enter the goods receipt and the inspection result or do you only
enter the goods receipt after the inspection has been carried out?
Explanation: QM module
Q: 12) If you are using batch management, how is the batch number
determined at the time of goods receipt?
Explanation: Batch management Batch management
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Q: 13) Do you classify the batches at the time of goods receipt? Please
specify the criteria.
Q: 14) Is the automatic account determination process defined by Financial
Accounting? If not, who is responsible within Logistics?
CI template:
Please Refer Node:
Invoice Verification
Invoice Processing with Reference
Questions:
Q: 1) Do you reduce the amount of your vendors' invoices in the event of
variances?
Q: 2) How do you notify your vendors of the reduction?
Q: 3) Do you carry out invoice verification in the background?
Q: 4) Do you have vendors who create one invoice for a delivery period?
Q: 5) Do you receive mixed invoices (credit and debit items in the same
document)?
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Q: 6) Name the types of tax that might appear on a vendor's invoice.
Q: 7) List the types of tax that are generally applicable and should
therefore be automatically suggested in the standard system when an
invoice is entered.
Q: 8) If you are implementing QM, do you always require that goods

receipts have passed QM inspection before being paid ?
Q: 9) How do you treat unplanned delivery costs included in an invoice ?

Explanation: Notes: Delivery costs are additional costs such as for express
delivery.
Q: 10) Do you sometimes have to change the account assignment for a
certain purchase order at the time of invoice verification?
Q: 11) Should down payments also be cleared?
Q: 12) Which other messages do you want to send to your vendors or to

people within your organization with respect to the invoice receipt?
Explanation: For example, a payment advice note
Q: 13) Is a goods receipt always necessary for invoice verification purposes?

If so, do you allow reversal of the goods issue after the invoice has been
posted? has been entered?
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Q: 14) Is the automatic account determination process only defined by

Financial Accounting? If not, who is responsible within Logistics?
Q: 15) Do you receive invoices relating to transactions that are not

administered in the system?
Invoice Release
Questions:
Q: 1) Do you want to block invoices for late delivery of goods? If so, block
the invoice when the number of days late times the value of the late items
is greater than X. Specify a value for X.
Q: 2) Invoices can be entered in the system but may be automatically

blocked due to variances. Specify the maximum quantity and price
variances that are allowed.
Explanation: When using purchase order price unit of measure, how big is
the quantity difference between GR quantity and IV quantity (in purchase
order price unit of measue) you tolerate without warning or error messages?
Q: 3) Do you want to block invoice items whose value exceeds a certain
amount? What is the threshold value for invoice items 1) with reference to a
purchase order 2) without reference to a purchase order?
Q: 4) Who is to be notified in the event of variances between the purchase

order price and the invoice price? How is this person to be notified?
Q: 5) Who checks and processes invoices that have been blocked for
payment?
le
manager)
Explanation: E.g. buyer, accounts payable accountant.
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A: User
Inventory Management,
Questions:
Q: 1) Who owns the inventory? To whom are the costs of managing the
inventory allocated?
Q: 2) At which level do you valuate material (for example, company level,

plant level)?
Q: 3) Where do you want to be able to analyze the inventory balance

sheet? Example at Plant level
Q: 4) How does material move between plants?
Q: 5) Do you use pallet identification for production supply?
Q: 7) Do you prepare raw materials for a production order on a scale and
do you have to ensure that exactly this material combination is used in the
order?
Goods Movements
Goods Accepted
Return Delivery
Questions:
Q: 1) Which documentation should accompany the goods that are returned
to the vendor?
Q: 2) Describe the handling of inspection lots where the usage decision has
determined that they are to be rejected and returned to the vendor.
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CI template:
Delivery returning goods that are part of your stock to an external
supplier.
A return delivery references a purchase order or goods receipt.
If we want to return delivered goods to the vendor for some reason (for
example, due to poor quality or because they are damaged), we can use
this function to return the goods, even if the goods receipt has already
been posted.
If the vendor sends a substitute delivery after we have returned goods,
we can reference the return delivery when we post the goods receipt.
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Stck Transfers / Trans. Pstngs

Questions:
Q: 1) Do you want to transport goods receipts to more than one physical
storage facility?
CI template:
Goods Issue
Goods Issue Processing
Questions:
Q: 1) How much time elapses between the actual goods issue and its
posting in the system?
Explanation: Info on process steps.
Q: 2) Is the posting made online or in batch mode?
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Q: 3) Are deliveries posted individually or for each group of goods issues?

CI template:
Various types of Stock Issues / Transfers are described below
Issue for Production:
Issues will be against a reservation. The material will be transfer posted
from stores to production storage location. The material will get
consumed for production from the same location, once the Finished
Goods are backflushed.
Issue for Scrap:
The issue against scrap will be from the regular stores location i.e.
consumption against scrap.
Return to Vendor:
Materials will be sent back to the vendor from QI stock for various
reasons.
Issues to Sub-contracting Vendor:
Components will be sent to Sub-contracting Vendor via material transfer
from un-restricted use stock to stock provided to sub-contract vendor
(special stock type). The material will get consumed when a GR is
posted for Finished processed goods received from sub-contracting
vendor. A 543 movement will get posted simultaneous to 101 for
consuming components.
Definition:
Term used in inventory management to describe a reduction in
warehouse stock due, for instance, to a withdrawal of stock or the
delivery of goods to a customer.
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31
April 2011
_____________________________________________________________________________________________
Stock Scheduled for Delivery

Withdrawal, picking, and shipping of goods to customers are carried out
in the Sales & Distribution (SD) component. They are not dealt with in
this section.
Material Withdrawals for Production Orders
Inventory Management provides for the staging of components for
production. You enter withdrawals for production as goods issues with
reference to the production orders for which the components are
required.
Other Types of Internal Staging of Material
Materials can be withdrawn not only for production but also for other
purposes (for example, for cost center, CO order, maintenance order, or
asset).
Return Deliveries to Vendors
Return deliveries to vendors are entered with the function Material
document for Return delivery or with the function Goods receipt for
purchase order.
Scrapping/Sampling
If a material is no longer usable, it must be scrapped. Scrapping of a
material is entered in the R/3 System as a goods issue. The withdrawal
of samples must also be entered as a goods issue.
This section explains the following goods issues:
Material withdrawals for production orders
Other types of internal staging of material
Scrapping/sampling

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32
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_____________________________________________________________________________________________
Physical Inventory & Cycle Counting

CI template:
The physical inventory check will be done for the following types of
materials.
Finished Goods
Raw Material
Packing Material
Engineering / General Materials..
Physical Inventory
CI template:
Physical Inventory Document:
Document that serves as the basis for a physical inventory (stock taking
process).
The physical inventory document is used to:
1
Plan and carry out the physical inventory
2
Record the actual count data
3
Post any differences that the count may reveal
Inventory Count:
Determination of the quantity of stock physically on hand by counting,
weighing, measuring, or estimating, and the recording of the count
results in the system. Any necessary correction of the book inventory can
then be made at a later point of time.
During the inventory count, all the materials being inventoried are
counted and entered physically.
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33
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_____________________________________________________________________________________________
The stocks are counted for individually for the materials in a physical
inventory document.
The count results are written on the printout of the physical inventory
document.
The printout is then directed back to the person responsible, so that he
or she can enter the count into the system and analyze it.
During the physical inventory analysis, we enter the count results in the
system, determine whether a recount is necessary if there are any
discrepancies, and post the inventory differences.
A physical inventory history is maintained which enables us to track the
progress of the physical inventory and carry out subsequent reports.
Counting one or more items of a physical inventory document (that have
already been counted once) again. A recount may be initiated due to an
inexplicable inventory difference.
The relevant items are transferred to a new physical inventory
document, which is created, from the original document
Once the results of the count have been entered in the system, the
differences are determined by the system via a difference list. The
system compares the book value at the time of the count with the
results of the count and calculates the differences.
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34
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_____________________________________________________________________________________________
Cycle Counting Phys. Inv. Preparation

Questions:
Q: 1) Do you block the relevant stock during the physical inventory count?
Explanation: Setting of flag when creating physical inventory Setting of flag
when creating physical inventory
A:
[ ]Yes
[ ]No
Q: 2) Do you conduct a physical inventory for:

A: [
[
[
[
[
[
[
[
]
]
]
]
]
]
]
]
Other
Unrestricted-use material
Stock in quality inspection
Blocked stock
Consignment stock at customer
Vendor consignment stock
Vendors' returnable packaging
Empties
Determination of Scope for Periodic and Continuous

Inventory
Questions:
Q: 1) Do you block the relevant stock during the physical inventory count?
Explanation: Setting of flag when creating physical inventory Setting of flag
when creating physical inventory
Q: 2) Do you conduct a physical inventory for:
A: [
[
[
[
[
[
]
]
]
]
]
]
Other
Unrestricted-use material
Stock in quality inspection
Blocked stock
Consignment stock at customer
Vendor consignment stock
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35
April 2011
_____________________________________________________________________________________________
[ ] Vendors' returnable packaging

[ ] Empties
Q: 3) Which types of physical inventory do you wish to use to count the
materials in your warehouses/stores?
Explanation:
necessary
A: [
[
[
[
Linkage via ALE may be necessary Linkage via ALE may be
] Annual (periodic) inventory

] Continuous inventory
] Cycle counting inventory
] Sample-based inventory
Definition of Scope of Periodic Inventory

Questions:
Q: 1) Which types of physical inventory do you wish to use to count the
materials in your warehouses/stores?
Explanation:
necessary
A: [
[
[
[
Linkage via ALE may be necessary Linkage via ALE may be
] Annual (periodic) inventory

] Continuous inventory
] Cycle counting inventory
] Sample-based inventory
Printout of Physical Inventory Document

Questions:
Q: 1) How are physical inventory documents to be printed out?
Inventory Count
Questions:
Q: 1) How do you carry out the physical inventory count (e.g. manually,
using bar code scanners)?
.
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_____________________________________________________________________________________________
Physical Inventory Analysis

Questions:
Q: 1) Are physical inventory differences aggregated at material group
level?
Q: 2) Do you allow physical inventory tolerances? Specify these tolerances.
Post Inventory Differences

Questions:
Q: 1) Who is responsible for posting physical inventory differences? Specify
the persons responsible and the maximum differences allowed.
___________________________________________________________________________________________________
37
April 2011

ASAP Business Blueprint: Materials Management Business Processes

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ASAP Business Blueprint

Date of the last changes

Sign Off Date

Q: 2) How does material move between plants?

Procurement of Materials and External Services

CI (Customer Input) template:

Request or instruction to Purchasing Dept. to procure a certain quantity

An item of a requisition contains the quantity and delivery date

7. System Configuration Considerations

8. Authorization and User Roles

[] From purchase requisitions (manual or automatic)

Q: 3) Describe how the source of supply is determined for manually

Q: 4) Specify the consumption categories for which you will procure

Q: 5) Which types of purchase order will you use?

Q: 6) How do you transmit purchase orders to your vendors?

Q: 9) Will you be purchasing material imported from foreign vendors ?

Q: 10) Are purchasing info records to be updated automatically with every

Q: 11) Do you wish to analyze/evaluate purchase transactions according to

Q: 16) Do you allow overdeliveries? If so, specify the percentage variance

Q: 19) Do your POs issued to vendors contain specific transport or packing

Q: 20) Is it to be possible for purchase orders to be generated

5. Description of Functional Deficits

6. Approaches to covering Functional Deficits

9. Authorization and User Roles

Project specific CI section

Release of Purchase Orders

Q: 3) Will you use an electronic signature to release purchasing documents?

3. Special Organizational Considerations

6. Approaches to covering Functional Deficits

7. Notes on further Improvements

8. System Configuration Considerations

Transmission of Purchase Orders

Q: 2) If you do not use the R/3 Purchasing functionality, describe the

Q: 3) Should the person who posts a goods receipt be able to use a

3. Special Organizational Considerations

5. Approaches to covering Functional Deficits

Goods Receipt Processing with Reference

Q: 7) Which documents are generated with the goods receipt?

Note on design of SAPScript

Goods receipt slip

Q: 8) Which documents are generated in connection with a goods receipt?

Note on design of SAPScript

Q: 9) If a goods receipt quantity is assigned to a goods issue, do you want

Q: 13) Is the automatic account determination process defined by Financial

5. Description of Functional Deficits

Procurement via Subcontracting

If we change the order quantity or scheduled quantity, the

If we change the delivery date, the system only recalculates the

Q: 2) Do you want the system to check whether the purchase price is

Q: 3) Which types of purchase order will you use?

Q: 4) How do you transmit purchase orders to your vendors?

Q: 8) Do you wish to analyze/evaluate purchase transactions according to

8. System Configuration Considerations

Release of Subcontract Purchase Orders

Transmission of Subcontract Purchase Orders

Q: 2) How will you transmit your purchasing documents to your vendors?

Q: 3) Do you wish to adopt vendors' own nomenclature for characteristics

Q: 4) How are purchase orders to be transmitted?

3. Special Organizational Considerations

Subcontract Goods Receipt

Q: 6) Do you allow every material to be stored at all storage locations?