BBP_MM[1]
April 15, 2017 | Author: Arvind Davanam | Category: N/A
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DOCUMENT APPROVALS
Material Management Business Blueprint Submitted to
TABLE OF CONTENTS 1
EXECUTIVE SUMMARY...................................................................... 1.1 BACKGROUND...................................................................................6 1.2 BUSINESS BLUEPRINT OVERVIEW......................................................7 1.3 MODULE DETAILS..............................................................................8 1.4 MODULE INTEGRATION.....................................................................11 2 ORGANIZATION STRUCTURE...........................................................11 2.1 Plant..............................................................................................11 2.2 Storage Locations............................................................................12 2.3 Purchasing Organization...................................................................14 2.4 Purchase Group...............................................................................15 3 MASTER DATA................................................................................16 3.1 Material Master................................................................................16 3.2 Vendor Master.................................................................................23 3.3 Service Master................................................................................26 3.4 Purchasing Info record......................................................................26 3.5 Source List......................................................................................27 4 BUSINESS PROCESSES....................................................................27 4.1 Configuration Settings......................................................................27 4.2 Consumption based planning.............................................................27 4.2.1 4.2.2 4.2.3 4.2.4
Purpose...............................................................................................29 Master Data.........................................................................................29 Features with respect to Janki Corp Ltd...................................................29 Business Process..................................................................................30
4.3.1 4.3.2 4.3.3 4.3.4 4.3.5
Purpose...............................................................................................36 Master Data.........................................................................................36 Features with respect to Janki Corp Ltd...................................................36 Country Version India...........................................................................37 Business Process..................................................................................42
4.3
Purchasing......................................................................................33
MM Business Blueprint 4.4
Inventory management....................................................................52
4.4.1 4.4.2 4.4.3
4.5
Physical Inventory...........................................................................60
4.5.1 4.5.2 4.5.3 4.5.4
4.6
Purpose...............................................................................................61 Master Data.........................................................................................61 Features with respect to Janki Corp Ltd...................................................61 Business Process..................................................................................62
Material Valuation............................................................................63
4.6.1 4.6.2 4.6.3
Master Data.........................................................................................65 Features with respect to Janki Corp Ltd...................................................65 Business Process..................................................................................65
4.7.1 4.7.2 4.7.3 4.7.4
Purpose...............................................................................................68 Master Data.........................................................................................68 Features with respect to Janki Corp Ltd...................................................68 Business Process..................................................................................69
4.7
5 6 7
Purpose...............................................................................................52 Master Data.........................................................................................53 Features with respect to Janki Corp Ltd...................................................53
Logistics Invoice Verification..............................................................66
INTERFACE REQUIREMENT..............................................................70 STANDARD INFORMATION SYSTEM..................................................70 ANNEXURES..................................................................................72 7.1 Annexure 1 – GAPS..........................................................................72 7.2 Annexure 2- FRICE requirements.......................................................72 7.3 Annexure 3- BBP Workshop ………………………………………………………………………72
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MM Business Blueprint
1 EXECUTIVE SUMMARY 1.1 BACKGROUND Janki Corp Limited (JCL) was originally incorporated in the year 1993 as a public limited company under the name Janki Processors Limited. It was set up for carrying out the business of a textile process house in Bhilwara, Rajasthan. Later the name of the Company was changed to Janki Corp Ltd. w.e.f December 31, 2003. Since inception, the company has been growing by leaps and bounds and now enjoys the reputation of being one of the biggest processing houses in India. In JCL there is two Business processes
Sponge Iron Business Textile Business
SAP implementation is for Sponge Iron Business (Steel Plant) The details of activities presently being carried on by the Company are as under:
Business Segment – Sponge Iron
Business Segment – Power
Business Segment - Pellet
The company has undertaken manufacturing sponge iron as the nucleus for setting up a wholly Integrated Steel Plant. The setting up of integrated steel plant will make the company gain cost competitiveness. The sponge iron plant has a capacity of 1,80,000 MT per annum and is setup at Sidiginamola village, Bellary District, Karnataka. Our senior management team has more than 300 years of collective work experience.
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MM Business Blueprint
1.2
BUSINESS BLUEPRINT OVERVIEW
The following activities have been covered in the business blueprint phase: 1. Organization structure finalization pertaining to this module 2. FSBP processes definition and identification wrt CSBP processes (Pls. attach a matrix of CSBP vis-à-vis FSBP Mapping with the final FSBP Code and names of processes)
S.No.
1
Attachment
Description
CSBP-FSBP Link
C:\Documents and Settings\wipro\Desktop\FSBP-CSBP.xls
3. FSBP discussion along with changes in existing Organization structure, standard reports available in SAP 4. Online review of FSBPs by Infosys with comments and check points to be incorporated 5. Incorporation of JCL comments wherever justified and applicable and closure of other comments with reasoning in the FSBP Tracker 6. Discussion of FSBP with BPOs and incorporation of their review comments 7. Final release of FSBPs for purpose of sign-off 8. Gap discussion with CTMs 9. Review of Gaps by JCL and incorporation of review comments in Gap document to be released to BPOs 10. Gap discussion with BPOs 11. FRICE requirements discussion, prioritization and finalization 12. Review of FRICE requirements by Infosys and incorporation of review comments to be released to BPOs 13. Peer review of FSBPs by WIPRO Sr. Consultants 14. Incorporation of peer review remarks wherever justified and applicable in FSBP 15. Discussion of configurational values applicable to each FSBP and documenting them in business blueprint document 16. Review of BBP document by JCL and incorporation of review comments for release to BPOs 17. Discussion of BBP with BPOs 18. Joint BBP Presentation preparation and workshop with Sr. management
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MM Business Blueprint The Objective of this document is: 1. To identify and document the configurational values applicable FSBP wise post discussion with CTMs 2. Have one comprehensive document wrt capturing of Gaps and FRICE requirements 3. Brief about the module’s standard functionalities, it’s integration with other modules, master data requirements and relevant organization structure Note: The configurational values given in the document is not an exhaustive list but can be said as almost 80-90% final; the range may vary from module to module. The remaining configurational values will emerge during the Baseline Unit testing and testing prior to Final configuration.
1.3
MODULE DETAILS
Materials Managements module is used for mapping the Business process used in Janki Corp Ltd….., for Planning, Procurement, Receipts, Issues, Transfer Posting, Physical Inventory, Valuation of materials & Invoice verification. It is sub divided into
Consumption-based planning Purchasing Inventory Management Valuation Logistics Invoice Verification
Consumption-based planning: The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing (purchase requisitions). This target is achieved by using various materials planning methods which each cover different procedures. In consumption-based planning, the following MRP procedures are available: Re-order point planning Forecast based planning Time phased planning Following values are important for defining reorder point
Safety stock Average consumption Replenishment lead time
At Janki Corp Ltd. Indirect materials will be procured externally with manual re-order point with Replenishment up to Maximum stock level, fixed lot size or lot to lot size. Purchasing:
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MM Business Blueprint The tasks of the MM Purchasing component are as follows:
External procurement of materials and services. Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department. Monitoring of deliveries from and payments to vendors.
Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly. The typical procurement cycle for a service or material consists of the following phases:
1. 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.
2. Source Determination The Purchasing component helps you identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQ’s), which can be sent to vendors electronically via SAP EDI, if desired.
3. 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.
4. 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 PO’s 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.
5. 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.
6. Goods Receiving and Inventory Management
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MM Business Blueprint Goods receiving personnel can confirm the receipt of goods simply by entering the PO number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. 7. Invoice Verification The system supports the checking and matching of invoices. The accounts payable 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. 8. Payment Payments are processed in FI in accounts payable. Inventory Management: This component deals with the following tasks.
Management of material stocks on quantity and value basis. Planning, Entry, and Documentation of all Goods Movements. Carrying out the Physical Inventory.
Stock of materials that must be managed separately for reasons of ownership or location. Material is procured from external or internal sources on the basis of the requirements determined by Material Requirements Planning. The delivery is entered in Inventory Management as a goods receipt. The material is stored (and managed under Inventory Management) until it is delivered to customers (Sales & Distribution), or is used for internal purposes (for example, for production). During all transactions, Inventory Management accesses both master data (such as material master data) and transaction data (such as purchasing documents) shared by all Logistics components. Material Valuation: This includes the following application areas:
Purchasing. Inventory Management. Logistics Invoice Verification.
Material Valuation determines or records the stock value of a material. The stock value is calculated using the formula: Stock value = stock quantity x material price
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MM Business Blueprint Thus, if the stock quantity or the material price changes, the stock value changes. Material Valuation serves the following purposes:
Adjusting material price to market price. Performing Revaluation Balance sheet valuation
Logistics Invoice Verification: It is carried out at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting. You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and values) suggested by the system with that in the invoice and making any necessary corrections. You then post the invoice.
1.4 MODULE INTEGRATION Materials Management is integrated with all relevant modules.
Sales & Distribution –Delivery, availability check, Stock transfers etc. Finance/Controlling – Material Valuation, Vendor payments, Material costing etc.
2 ORGANIZATION STRUCTURE 2.1 Plant Plant is an organizational unit within Logistics, serving to subdivide an enterprise according to procurement, maintenance, and materials planning. A plant is a place where either material is produced, or goods and services are provided. Material stocks are valued at the plant level.
Plants defined for Janki Corp Ltd Plant (max 4 char) 1100 1200 1300
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Name1
(max 30 char)
Spongy Iron Plant Power Plant Pellet Plant
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MM Business Blueprint
Plants created for India are attached to Company code 1000 JCL
S.No.
1
Attachment
G:\All doc\Plant Template.xls
Description
Plant Address
2.2 Storage Locations A Storage location is the place where stocks are physically kept within a plant. Stocks are managed only on a quantity basis and not on a value basis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant. The Storage locations defined for various plants are as follows:
Storage Locations –Spongy Iron Plant -1100 Plant Spongy Iron Plant(1100)
Sloc 1101 1102 1103 1104 1105 1106 1107 1108 1109 1110 1111 1112 1113 1114 1115 1116 1117
Description Mechanical Electrical Automobile Labortory Administration Process Project Accounts Purchase Safety & Security Marketing Stores Q&A Safe Custody Repaired Scrap Instrumentation
Storage Locations –Power Plant 1200 Wipro Ltd.
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MM Business Blueprint
Plant Power Plant(1200)
Sloc 1201 1202 1203 1204 1205 1206 1207 1208 1209 1210 1211 1212 1213 1214 1215 1216 1217
Description Mechanical Electrical Automobile Labortory Administration Process Project Accounts Purchase Safety & Security Marketing Stores Q&A Safe Custody Repaired Scrap Instrumentation
Storage Locations – Pellet Plant 1300 Plant Pellet Plant (1300)
Sloc 1301 1302 1303 1304 1305 1306 1307 1308 1309 1310 1311 1312 1313 1314 1315 1316 1317
Description Mechanical Electrical Automobile Labortory Administration Process Project Accounts Purchase Safety & Security Marketing Stores Q&A Safe Custody Repaired Scrap Instrumentation
Additional storage locations will be added if required.
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MM Business Blueprint
2.3 Purchasing Organization Purchasing Organization is an organizational unit within Logistics, subdividing an enterprise according to the requirements of Purchasing. A Purchasing Organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transactions. Master data: For every new Purchasing Organization created, a new set of master data at the Purchasing Organizational level will have to be created for vendor masters, purchasing information records, source lists, and pricing information. Maintenance of purchasing documents: Many purchasing documents are purchasing Organization-specific. This is because the Purchasing Organization is a header field in the following SAP transaction documents - Purchase order, Contract. Pricing Flexibility: The Purchasing Organization is one of the influencing factors in determination of pricing schemes. Purchasing Organizations within JCL may choose to allow different types of prices, discounts, surcharges, delivery costs, etc. Reporting Flexibility: In any business function, reporting is one of the basic business requirements. The choice of the Purchasing Organization will influence the ease with which reports are being generated. In particular, reports that provide information on collective activities/transactions will be greatly affected by this decision. With multiple Purchasing Organizations, consolidating of information by plant will be more straightforward as Purchasing Organizations are used as selection criteria. Authorisation Control: The Purchasing Organization is one of the authorisation objects in SAP. The adoption of multiple Purchasing Organizations implies that authorisation can be enforced via the Purchasing Organization. If this is not the case, authorisation may have to be enforced via other alternatives such as Purchasing Groups.
Purchasing Organization (max 4 char)
Pur. Organization description (max 20 char)
1000
Purchasing Organization
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MM Business Blueprint
Purchasing Organization
Purchase organization
(1000)
Plants
1100
1300
1200
Spongy Iron Plant
Power Plant
Pellet Plant
2.4 Purchasing group Purchasing Group is a buyer or a group of buyers’ responsible for certain purchasing activities. It is also being used for configuring release strategies. The Purchasing Groups defined for Janki Corp Ltd. are:
Plant
Purchasing Groups Purchase
Spongy Iron Plant (1100) Power Plant (1200) Pellet Plant (1300)
PGP
Description
101
S.Vijay Kumar
102
Suneel Kumar Prasad
103 104
Ajit Kumar R.Pavan Sudhir chowdary
105
Kiran Kumar.B
106
R.L.Seetharam Shetty
3 MASTER DATA
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MM Business Blueprint
3.1 Material Master The Material master contains information on all the materials that a company procures or produces, stores, and sells. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records. A material master record contains data of a descriptive nature (such as size, dimension and weight) and data with a control function (such as Material type, MRP type and price control, Purchase group, Profit center etc.). Description of the material is at Client level. In addition to this data, which can be directly maintained by the user, it also contains data that is automatically updated by the system (such as stock levels). The material master is used by all components in SAP logistics. The integration of all material data in single database object eliminates redundant data storage. In the SAP Logistics System, the data contained in the material master is required, for example, for the following functions:
In In In In
Purchasing for ordering. Inventory Management for goods movement postings and physical inventory. Invoice Verification for posting vendor invoices. Sales and Distribution for sales order processing.
Master data is common across all plants. There are no multi-lingual descriptions for the materials. In addition to the basic description, Purchase Order Text will be maintained for the materials. All the existing materials will be loaded to the SAP system; to avoid duplication of master data a central department will create new materials. Janki Corp Ltd. will be operating in a multi-plant environment in SAP R/3. For common materials, master data in more than one plant will have to be maintained on an ongoing basis. The ownership and corresponding process for maintenance of these master data has to be finalized by Janki Corp Ltd., in the Realization Phase and documented. When we create a material master record, it is required to classify the material according to industry sector and material type. Industry It is a factor determining the screen sequence and field selection in a material master record. Once assigned an industry sector to a material, it cannot change the industry sector again afterwards.
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MM Business Blueprint
Material Type Material type groups’ together material with the same basic attributes, for example, raw materials, semi-finished products, or finished products. When creating a material master record, materials are assigned to a material type. Material type determines whether the material number can be assigned internally or externally and the number range from which the material number is drawn.
When a material master record is created, the material type determines:
Whether the material is intended for a specific purpose, for example, as a process material. Whether the material number can be assigned internally or externally. The number range from which the material number is taken. Which screens appear and in what sequence. Which departmental data is allowed to enter? What procurement type the material has; that is, whether it is manufactured inhouse or procured externally, or both.
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MM Business Blueprint Together with the plant, the material type determines the material's inventory management requirement; that is:
Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting.
In addition, the accounts affected by a material entering or leaving the Warehouse depend on the material type. In Janki Corp Ltd...., currently the Material Master or Item Master, as it is known, is maintained independently at plant level and for the projects the materials are created as and when required. The concept of material type is followed to distinguish the material. The following Material types will be used in Janki Corp Ltd. Additional Material type can be created in future.
Material Type ROH
Material Type Description Raw Materials
Valuation Class 3000
Valuation Class Description Raw Materials
ZCON
Consumables
3001
Consumables
ZSAS
Stores & Spares
3002
Stores & Spares
ZCSP
Capital Spares
4000
Capital Spares
ZCAS
Capital Assets
4100
Capital Assets
ZCCN
Capital Consumables
4150
Capital Consumables
ZGEN
General
4200
General
ZCPT
Captive
4300
Captive
ZSRP
Scrap Returnable Packaging
4400
LEIH
3050
Scrap Returnable Packaging
FERT
Finished Products
7920
Finished Products
Material Numbering For every material a material master record in the material master must exit. A material number uniquely identifies this record. Material numbering will be *internally/externally generated according to the material type. However the existing stock numbers in the legacy system will be transferred to SAP as an Old material number in the material master record. The maximum number of characters will be *18. In the case of external if the number of characters is less, then the leading zeros will not be displayed and for internal number assignment system will use the number from the range allocated.
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MM Business Blueprint
Mat type
From number (max 18 char)
To number (max 18 char)
Internal (I) External (E)
or
MAT_CODIFICATION .xlsx
Material Group A key that is used to group together several materials or services with same attributes. Each material can belong to only one material group. Material groups can be used to restrict the scope of analysis and search specifically for material master records via search helps. Material groups can access necessary reports. Additional Material groups and Series group will be added in future.
Material Group M001 M002 M003 M004 M005 M006 M007 M008 M009
Service Group S001 S002 S003 S004 S005 S006 S007 S008 S009
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Material Group Description
Mechanical Electrical Field Machinery Instrumentataion Laboratory Administrative Construction/Civil Structural Tools & Tackles
Sevice Group description
Civil -C Civil- R Structurel -C Structurel -R Fabrication/Erection/Commission/Te sting -C Fabrication/Erection/Commission/Te sting -R Manpower supply - C Manpower supply - R Hiring of Vehical -C Page 16 of 70
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MM Business Blueprint Hiring of Vehical -R
S010 S011 S012 S013 S014 S015 S016 S017 S018 S019 S020 S021 S022 S023 S024
Rent - C Rent - R Repair -C Repair -R Installation -C Installation -R Plantation -C Plantation -R Supply - C Supply - R Grouting Consultancy services Miscellaneous - C Miscellaneous - R
Unit of measure The R/3 System distinguishes between the following units of measure: Base unit of measure This is the unit of measure in which the stocks of a material are managed. The system converts all quantities entered in other units to the base unit of measure. Alternative units of measure Individual departments may have their own units of measure. For example, Purchasing may use a different unit than Sales or Warehouse Management (WM). All units of measure other than the base unit of measure are referred to as alternative units of measure. The R/3 System supports the following alternative units of measure:
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o
Order unit Allows a material to be ordered in a unit differing from the base unit of measure. The order unit is proposed automatically in purchasing functions, where it can be changed.
o
Sales unit Allows a material to be sold in a unit differing from the base unit of measure. The sales unit is proposed automatically in the sales order, where it can be changed.
o
Unit of issue Unit of measure is the unit in which the material is issued from the Warehouse. It allows consumption, stock transfers, transfer postings, and
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MM Business Blueprint physical inventories to be recorded in a unit differing from the base unit of measure and from the stockkeeping unit. The relationship between the base unit of measure and alternative units of measure
Basic Unit of Measure NO KG ROL L M BAG M2 FT2 FT FT3 FT SET M G BTL PAC SET BDL TIN LOT BOX M3 TUB Wipro Ltd.
Description NUMBERS KILOGRAM ROLL LITRE METER BAG SQUARE METER SQUARE FEET RUNNING FEET CUBIC FEET FEET SET METER GRAM BOTTLE PACKET PAIRS BUNDLE TINS LOT BOX CUBIC METER TUBE Page 18 of 70
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MM Business Blueprint LBS SPL CAN T BAND SHT CY
POUND SPOOL CAN METRIC TONE BAND SHEET CYLINDER
Material Valuation Material valuation is the determination of the value of a stock of materials. The valuation relevant data on a material include: a) Valuation price. b) Assignment to a valuation class, Valuation class is used to determine the G/ L account during the material movement. c) Selection of the valuation method using the price control indicator, S – Standard Price , V – Moving Average Price. The materials will be valuated at Standard Price and Moving average price. For Standard Price Control indicator will be S and Moving average price control indicator will be V. The Standard / moving average price should be entered at the time of creation of the Material Master. Standard cost estimate can be carried out in SAP to arrive at the standard price and can automatically update the current standard price of the material. Also the standard price can be changed manually through the price change functionality in SAP. Necessary authorization control will be put in place to restrict unauthorized change in the standard price. Semi finish & Finish Material will have Standard Price all other Material type will Moving Average Price. Period end closing has to be carried out in Materials Management at the end of each period to allow goods movement in the next period. This is required as the price; stock value and quantity are managed period wise in the system.
3.2 Vendor Master Vendor master record is the data record containing all the information necessary for any contact with a certain vendor, in particular for carrying out business transactions. Data in the vendor master record is organized under general data, company code data and purchasing organization data. Vendor master records have the following structures:
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MM Business Blueprint
It consists of data like Vendor name, address, reconciliation account, payment terms, Schema group etc. The vendor master will be created centrally and the required purchasing data will be maintained in the respective purchasing organization level. The order currency and the terms of payment will be in the display field in the purchasing organization data. If the master data currency differs from the purchasing currency it can be changed in the Purchase order. Business partners have a number of different functions, described as partner functions, in connection with your company. You use partner functions to define the rights and responsibilities of each partner type in a business transaction. When you sell or order goods, for example, your business partners can assume partner functions such as: Ordering Address, Goods supplier, Alternate payee. Vendor Account Group
Vendor account group is a classifying feature within vendor master records that determines: The type of number assignment, internal or external. A number range for assigning account numbers. Which fields are displayed and whether their entry is optional or required (field status) when you enter or change vendor master data. Whether the account is for one-time vendors. To create a master record, an account group must be specified. The account group cannot be changed after you create the master record. The following account groups will be created for Janki Corp Ltd..
Account Group
Account Description
From number
To number
ZIRO
JCL-Iron Ore
100000
199999
ZCOL
JCL-Coal
200000
250000
ZORM
JCL-Other Raw Materials
300000
399999
ZASS
JCL-Assets
400000
499999
ZSSC
JCL-Stores, Spares &
500000
599999
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MM Business Blueprint
Consumables
ZTRP
JCL-Transporters
600000
699999
ZTRS
JCL-Trade Services
700000
600000
ZSAD
JCL-Commission agent(S&D)
800000
825000
ZCSS
JCL-Capital Services
900000
999999
ZIMP
JCL-Overseas(Imported)
825001
850000
ZCSR
JCL-Capital Spares
850001
875000
ZGEN
JCL-General
875001
899999
ZOTV
JCL-One Time
250001
299999
Vendor Purchasing Organization data
Vendors can be maintained for each company code and for a purchasing organization. Wherever a Vendor exists in both a Company Code and a Purchasing Organization, the vendor master data can be copied to the other Purchasing Organizations or Company Codes. If required, default data for the material master like the planned delivery time, purchasing groups, etc. can be maintained at the vendor level in the vendor master. The data maintained in the vendor master will be defaulted and can be changed when purchasing. Janki Corp Ltd., Payment terms are on credit as well as on delivery & against advance. These terms will be maintained in the system along with the standard SAP payment terms as below:
S No 001 002
003 004 005 006 007 008
Description 100% Against Proforma invoice 85% Against Proforma invoice , 15% Payment Released along with order 70% Against Proforma invoice , 25% advance against Bank Gurantee , 5% against performance bank gurantee for the period of 12 months 50% Against Proforma invoice , 50% Payment Released along with order 100% Payment Released along with order 20% Payment Released along with order , 80% Payment Relased within 10 days from the date of receipt of material at our end 100% Payment shall be releeased against COD basis 100% Payment Relased within 5 days from the date of receipt of material at our end
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MM Business Blueprint 009 010 011 012 013
014
100% Payment Relased material at our end 100% Payment Relased material at our end 100% Payment Relased material at our end 100% Payment Relased material at our end
within 30 days from the date of receipt of within 10 days from the date of receipt of within 7 days from the date of receipt of within 20 days from the date of receipt of
100% Payment Relased within 15 days from the date of receipt of material at our end 100% Payment Relased within 45 days from the date of receipt of material at our end
Incoterm is international commercial terms negotiated with vendor. The following Incoterm will be maintained in the SAP system.
Incoterm
Description
FOR EXW FOB
FOR Destination EX- works Free on Board (FOB)
CIF
Cost Insurance & Freight (CIF)
CFR
Cost and Freight (CFR)
Pricing Schema Pricing Schema Z1 Z2 Z3
Description Raw material Imports Domestic / Service
3.3 Service Master Services that are procured on a regular basis can be created as a service master. In the service master service specifications will be maintained. A service master record contains the following principal information for the unique description of a service:
Service number Service category Descriptive texts (short and long text)
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MM Business Blueprint Base unit of measure Material group Valuation class Service masters can be referenced at the time of creation of the Purchase requisition and all the Purchasing documents. The Service Number will have External Number Range.
Service Category SMEC SELE SINS SCIV
Service Category Description Mechanical Electrical Instrumentation Civil
Valuation Class A001 A002 A003 A004
Valuation Class Description Mechanical Electrical Instrumentation Civil
3.4 Purchasing Info record Purchasing info record contains concise information about a material and a vendor supplying that material. Information like price, lead times, reminders, etc. can be stored in the info record. An info record thus represents a material-vendor relationship. Info records can be created for different procurement types (standard, sub-contracting and consignment). Info records can be created with material master. New data will be maintained on line in the info record prior to purchasing. Automatically it will be updated during the quotation process. The number range will be ten digits and will be system generated.
Info records can be created with or without a material master record.
From number Max 10 digits
Info record with material master 5300000000 record
To Number Max 10 digits 5399999999
Internal (I) / External(E)
I
3.5 Source List A Source list specifies the allowed and disallowed sources of a material for a certain plant within a predefined period. Each source is defined by means of a source list. A Source list is also used to define a source as fixed for a period. In this case the system takes this source as a preferred source over that period. It is also used to define a vendor/source as blocked over a period of time; it can also be used as an aid in an optimized purchase.
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MM Business Blueprint In Janki Corp Ltd.. the source list will be used to maintain the preferred vendor list. If a contract exists it will be maintained in the Source list. Currently in some of the plants preferred vendors exist for supplying certain parts, these will be maintained in the source list in SAP No restriction will be placed initially for procurement only from the vendors maintained in the source list. There is no requirement to restrict suppliers according to their region.
4 BUSINESS PROCESSES 4.1 Configuration Settings Sr.No.
1
Configuration Setting
C:\Documents and Settings\wipro\Desktop\MM_BBP1\SAN_BBP_MM_CON_SET_0.1.xls
4.2 Consumption based planning Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values. In consumption-based planning, the following MRP procedures are available:
Reorder point procedure Forecast-based planning Time-phased materials planning
In the planning run, the system carries out the following processes: 1. The system checks the planning file entries. Here, the system checks to see whether a material has been changed in some way relevant to MRP and should therefore be included in the planning run. 2. The system carries out a net requirements calculation for every material. Here, the system checks to see whether the requirement quantity is covered by available Warehouse stock and fixed receipts from Purchasing or production. If the requirement quantity is not covered, the system creates a procurement proposal.
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MM Business Blueprint 3. Then the system carries out the lot-sizing calculation. Here, the system takes the lotsizing procedure and, if necessary, the rounding up or down values into account. 4. The system carries out scheduling to calculate the start and finish dates of the procurement proposals. 5. The system determines the type of procurement proposals. Depending on the settings, the system creates planned orders, purchase requisitions or schedule lines for a material (see determining the Procurement Proposal). If you have maintained the necessary specifications for procurement, the system determines the source of supply which it assigns to the procurement proposal. 6. The system recognizes critical situations, which the planner has to processes manually in the planning results. For this purpose, the system creates exception messages and carries out a rescheduling check. 7. It also calculates the actual days’ supply and the receipt days’ supply. MRP Procedures Creation of procurement proposals The type of procurement proposal to be created automatically in the planning run depends on the procurement type of the material. For in-house production, the system always creates a planned order. For external procurement, the MRP controller can choose between a planned order and a purchase requisition. If the MRP controller chooses a planned order, it then has to be converted into a purchase requisition in a separate step so that it is made available to Purchasing. The advantage of creating a planned order is that the MRP controller has more control over the procurement proposals. The purchasing department cannot order the material until the MRP controller has checked and converted the order proposal. If a purchase requisition is created, it is immediately available to the purchasing department, which then takes over the responsibility for material availability and Warehouse stocks. Planning at plant level or for MRP areas As materials planning are usually carried out at plant level, all available stock in the plant (from now on described as available Warehouse stock) is taken into account during planning. However, stocks from individual storage locations can be excluded from requirements planning or they can be planned independently. These stocks are then not included in material requirements planning at plant level. On the other hand, consignment stocks from the vendor are always included in MRP. You can also carry out MRP for individual MRP areas. You can define the MRP areas. This means, for example, that you can group several storage locations into one MRP area and carry out MRP for this MRP area.
Lot-sizing procedures
The standard lot-sizing procedures are available in the R/3 System. However, you can quite easily integrate your own formulas without much effort.
Automatic planning run
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MM Business Blueprint The automatic planning run determines shortages and creates the appropriate procurement elements. The system creates notes for critical parts and exceptional situations providing you with the necessary information for processing the planning results.
4.2.1
Purpose
The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. In Janki Corp Ltd. Indirect materials are planned on re-order point basis. Re-order point will be defined for each & every material in material master at plant level. MRP will calculate net requirement for each material, plant based on re-order point, lead time, stocks, expected receipts, expected Issues. MRP output will give planned order/ Purchase requisitions based on planning parameters. This output can be converted Purchase orders & send to vendors for supply of materials. The whole process is online having effective planning.
4.2.2
Master Data
The master data in the area of consumption-based planning includes: Material Master Vendor master Source List
4.2.3
Features with respect to JCL
In Janki Corp Ltd. Business
Direct materials will be planned based on report provided for stock level and consumption for each unit. Manuals re-order point planning will plan indirect materials based on manual re-order point. As a result of materials planning the identification of exact requirement is possible based on, lead time, stocks, Expected receipt, expected issues planned independent requirement/ re-order point. It ensures optimum inventory at minimum procurement cost. Plant dependent planning will be very easy.
4.2.4
Business Process
In SAP, a material master for the stock material should exist in the system. No stock can be maintained without a material master.
Wipro Ltd.
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MM Business Blueprint In the material master Re-order levels can be maintained. Whenever the stock goes below this re-order level a Purchase requisition will be generated through Material Requirements Plans. If there is preferred vendor for the requirement created, MRP will create a PR with Vendor assigned. Creating a purchase requisition can create requirements for stock material on line. Manual re-order planning is used to achieve the functionality of requirement calculation & generation of purchase requisitions. The reorder point should cover the average material requirements expected during the replenishment lead time. The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays. Therefore, the safety stock is included in the reorder level. The following values are important for defining the reorder point:
Safety stock. Average consumption. Replenishment lead time.
The following values are important for defining the safety stock:
Past consumption values (historical data) or future requirements. Vendor/production delivery timelines. Service level to be achieved. Forecast error, that is, the deviation from the expected requirements.
Re-order point planning process flow will be:
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MM Business Blueprint
1.
2.
The continuous monitoring of available Warehouse stock within reorder point planning is carried out in Inventory Management. o
Every time a material is withdrawn from the Warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level. If this is the case, the system makes an entry in the planning file for the next planning run
o
If a material is returned to the Warehouse, the system checks in exactly the same way whether the available Warehouse stock exceeds the reorder level again. If this is the case, an entry is made in the planning file, which acts as an indicator for the planning run to delete any unnecessary procurement proposals.
o
If planned receipts are no longer required due to material returns, for example, then the system will suggest that these receipts should be cancelled. In this case, the MRP controller in cooperation with Purchasing or Production must check whether the purchase order or the production order can be cancelled.
The system then calculates the net requirements. The system compares the available stock at plant level (including safety stock) plus the firmed receipts that have already been planned (purchase orders, production orders, firmed purchase requisitions and so on) with the reorder point. If the sum of the stock plus receipts is less than the reorder point, a material shortage exists.
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MM Business Blueprint
3.
4.
The system then calculates the procurement quantity according to the lot sizing procedure defined in the material master. For reorder point planning, the system supports the fixed lot size and Replenish up to maximum stock level lot-sizing procedures. The system then schedules the procurement proposal, that is, the system calculates the dates, on which the purchase order has to be sent, or when production has to begin and the date on which the vendor has to deliver the goods or by which production has to have the goods ready.
Various control parameters are available for the total planning procedure and for single-item planning, which you can set in the initial screen of the planning run. You use these parameters to determine how the planning run is to be executed and which results are to be produced. The control parameters include:
Planning run type You can choose whether all materials are to be planned or only those with MRP relevant changes.
Creation indicator for procurement proposals for materials that are procured externally You can choose whether planned orders, purchase requisitions should be created for materials that are procured externally.
Creation indicator for MRP lists You can define whether MRP lists are to be created.
Planning mode You can determine how the system is to deal with procurement proposals (panned orders, purchase requisitions, scheduling agreement lines) from the last planning run, which are not yet firmed, in the next planning run.
Scheduling - You can choose basic date calculation or lead time scheduling.
Once MRP run is over, the following evaluations are available for evaluating the planning results in consumption-based planning:
MRP list Current stock/requirements list
Planned orders and purchase requisitions are internal planned elements that can be changed, rescheduled or deleted at any time.
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MM Business Blueprint Generated planned orders can be converted to Purchase requisitions/Production orders based on procurement type of the material. Direct generated purchase requisitions can be converted to Purchase Orders/Contracts. FSBP Link: S.No.
Major Process
Sub Process
1
Procurement
Consumption Based Planning
Minor Process
FSBP Document
J CL_FSBP_MM_CBP_ 0009_1.0.doc
4.3 Purchasing The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification. The tasks of the MM Purchasing component are as follows:
External procurement of materials and services. Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department. Monitoring of deliveries from and payments to vendors.
Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly. Purchase requisitions are usually regarded as internal documents used within Purchasing. Requisitions can be created either directly or indirectly. S.No.
1
Attachment
Description
Tolerance Limit
C:\Documents and Settings\wipro\Desktop\Tollerence limit.xls
"Directly" means that someone from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date. "Indirectly" means that the purchase requisition is initiated via another SAP component.
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MM Business Blueprint There are primary two type of procurement in SAP
Procurement for Stock
A stock material is a material that is kept in stock. Such materials are placed in storage following a goods receipt. When goods are received by or issued from stores or the Warehouse, the stock on hand is increased or reduced by the amount of the quantity received or issued. When you order a material for stock, the system does not require an account assignment. This is because the posting to the appropriate stock and consumption accounts occurs automatically after each goods movement (for example, after a material is received by the stores or issued from stores). Furthermore, the value and the quantity of the stocked material are updated in the material master record. To order a material for stock, the material must have a master record.
Procurement for Direct Consumption
When you procure for direct consumption, you specify the consumption purpose by entering an account assignment (for example, a cost centre). On goods receipt, the material or service counts as having been consumed. If a material is procured for direct consumption, the consumption accounts in Financial Accounting are posted when the goods receipt is entered. The total quantity and value of existing stocks of the material are not affected. For spare parts under warranty the details will be captured through characteristics maintained for the material master. During Goods Receipt the warranty details are entered in the system. The following list shows the various external purchasing documents available in the standard SAP System. Request for quotation (RFQ) Transmits a requirement defined in a requisition for a material or service to potential vendors. Quotation Contains a vendor's prices and conditions and is the basis for vendor selection. Purchase order (PO) The buying entity’s request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works, formalizing a purchase transaction. Purchase Value Key’s
S.No.
Wipro Ltd.
Attachment
Description
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MM Business Blueprint
1
Purchase Key’s
Value
C:\Documents and Settings\wipro\Desktop\Tollerence limit.xls
Contract In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement. The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time. For each item of a purchasing document, specify whether procurement is for stock or for direct consumption. In a purchasing document, can enter items with or without account assignments. If you order stock materials, the ordered material must have a material master record. If order is for consumable materials, the ordered material may have a material master record. ` Account assignments are possible for the following purchasing documents:
Purchase requisitions Purchase orders Outline agreements
Contract and Release Orders: For materials that are ordered regularly and in sufficient quantity, can negotiate longer-term pricing and conditions with the vendor and record them in a contract. In the contract, specify its validity period and the total target quantity or total INR value covered. When creating a contract, we can reference an RFQ or another contract. The purchase requisition (representing a request to set up a longer-term contract) can also simplify the data entry process by serving as a reference document. When creating the associated release orders, information is adopted from the contract. Individual deliveries are affected on the basis of the release orders, which specify the exact order quantity and the delivery date. FSBP Link: S.No.
Major Process
Sub Process
1
Procurement
Contract
Wipro Ltd.
Minor Process
FSBP Document
J CL_FSBP_MM_PRM_ 0007_1.0.doc
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MM Business Blueprint
4.3.1
Purpose
Various activities are involved in Purchasing
Requirements identification Source determination Vendor selection & comparison of quotations Ordering the requirements Purchaser order follow up
Every document stores the history & subsequent relevant flow to have traceability & reporting purpose. Required purchasing documents will go through release strategy for better control on purchasing. MM External Services Management is an application component within the Materials Management (MM) module. It supports the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process.
4.3.2
Master Data
4.3.3
Material master Vendor master Service master Purchasing info record Source list Conditions
Features with respect to JCL
In Janki Corp Ltd..
For Direct materials PR will be converted to PO based on RFQ, Quotation, comparison. For indirect materials PR will be converted to PO based on old PO or RFQ, Quotation, comparison. . Online approval process will follow for Purchase order/Contracts/ and Purchase requisitions on predefined Conditions. Document history with all reference is available. Reduction in purchase cycle time due to online across purchase organizations visibility. Services will be coded & tracking will be simple. Pricing break up like discount, freight, packing, insurance etc will be available for each every material ordered in every purchase order/contract. Central vendor master record avoids duplication of master data.
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MM Business Blueprint
Reporting will be very easy across JCL on procurement.
4.3.4
Country Version India
This country version is designed for use by businesses with operations in India. As well as the generic SAP R/3 functions, it comprises functions designed for laws and business practices particular to India. Most of the country-specific functions for India relate to Financials and Logistics are covered under CIN. The main areas are as follows:
Excise duty and the central value-added tax system (CENVAT) Withholding tax (also known as tax deducted at source) Sales tax Maintenance and printing of statutory excise registers
Country Version India comes with functions for calculating, posting, remitting, and reporting excise duty, and for handling incoming and outgoing excise invoices. For these purposes, extra fields are available in the vendor master data and material master data for information required in India only. Can enter incoming excise invoices in the R/3 System for goods receipts arising from external procurement, subcontracting, and stock transfer. Excise department can capture incoming excise invoices using a dedicated transaction, or, alternatively, warehousemen can capture them in the standard Goods Movement transaction, MIGO, when they enter a goods receipt. As per the statutory requirements, necessary registers need to be updated at the end of each transaction and necessary registers can be generated.
Utilization of CENVAT
CENVAT Register – Monthly Return under rule 57AE of the Central Excise Rules
Updation of RG1 / RG23A Part I / RG23C Part I Registers
RG1 Register Extraction
Excise Registers An entity in India that is entitled by law to produce any goods liable to excise. Each entity is assigned its own excise registration number.Every factory that manufactures excisable goods is required to register separately. Details like ECC No, Excise Registration number, Excise Range, Excise Division , Excise Commissionerate at the plant level will be maintained.
S.No.
Wipro Ltd.
Attachment
Description
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MM Business Blueprint
1
Excise Registration
G:\All doc\Plant Template.xls
Excise Groups A unit within an excise registration, in India, which keeps its own set of excise records. Whereas the excise registration reports to the excise authorities, the excise group is a purely internal organizational unit. Each excise group keeps records of all transactions that have to be reported to the excise authorities. When the time comes to present these records to the authorities, the excise registration compiles the information from all of its excise groups. Excise Groups will be finalized in detail during realization phase. Excise Grp E1 E2 E3
Description
Plant
Excise Group for Spongy Iron Plant Excise Group for Power plant Excise Group for Pellet plant
1100 1200 1300
Series Groups Different excise series groups are defined within the company. Series groups allow you to maintain multiple number ranges for the outgoing excise documents.
Plant
Series group
Description
Series Groups will be finalized in detail during realization phase. Master Data Object RG23A1 RG23A2 RG23C1 RG23C2
Excise Group E1 E1 E1 E1
RG23A1 RG23A2 RG23C1 RG23C2
E2 E2 E2 E2
Wipro Ltd.
No
Year
From number
1 1 1 1
2011 2011 2011 2011
100000 200000 300000 400000
To number 199999 299999 399999 499999
1 1 1 1
2011 2011 2011 2011
500000 600000 700000 800000
599999 699999 799999 899999 Page 35 of 70
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MM Business Blueprint
RG23A1 RG23A2 RG23C1 RG23C2
E3 E3 E3 E3
1 1 1 1
2011 2011 2011 2011
900000 1000000 1100000 1200000
999999 1099999 1199999 1299999
Chapter ID:
Define the Chapter IDs and corresponding descriptions as described in the excise tariff structure.
This information is used when you create excise invoices and is also shown in the various excise registers.
Material Chapter ID combination:
Define which chapter ID is relevant for the material (Plant specific) Whether the material can be sent to subcontractors. The material type (Raw material, RG1, asset or tools or etc).
Cenvat Determination:
Specify which raw materials are used to produce which finished (or semi finished) goods.
This information is used to determine whether CENVAT credit can be claimed for a material.
Vendor excise details:
Enter the vendors' tax numbers such as, Excise registration number (and the range, division, and collectorate in which this is located), Central sales tax (CST) number, Local sales tax (LST) registration number, Permanent account number (PAN).
Assign the excise duty indicator, which determines excise duty status of the vendor.
Specify what type, the vendor is, for example, a manufacturer, first-stage dealer, or importer, etc.
Excise indicator for Plant:
Assign each of the plants an excise duty indicator; this determines how excise should be handled for that particular plant.
Excise indicator for plant and vendor:
Define the final excise duty indicator, which helps in the determination of excise duty during excise transaction involving that plant and vendor.
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MM Business Blueprint Excise tax rates:
Specify for each chapter ID every possible rate of excise duty that might apply for each combination of plant and vendor.
For each rate, specify the validity period.
Tax Codes For condition based tax determination Input tax codes are created and entered in the purchasing documents. The combinations of tax code can be maintained as follows o
Excise Duty
o
Educational Cess
o
VAT
o
Local Sales Tax
o
Central Sales Tax
o
Surcharge
o
Service Tax
o
Educational Cess on Service Tax
o
Resale Tax
S.No.
Attachment
1
Description
Tax codes G:\All doc\Tax codes_0.2.xls
Period End Processing Extraction and Printing of the Registers:
The excise registers are not created until they are extracted. The extraction process should be a routine procedure to ensure systematic updation of the registers.
The print utility program will help in printing out the registers.
Updation of excise registers during consumption and other movements:
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MM Business Blueprint
The system does not automatically generate Part I entries for goods issues of excisable materials.
The missing entries have to be generated once a day using the Update of Registers RG 23 (Part I) program for all goods issues involving excisable material.
Ensure that the receipts are updated first before the issues, so that any updation of incoming Part 1 entries, which were left out, gets updated and inconsistencies between receipts and issues are thus prevented.
Adjustment Entry Material write- off / Declared Non-productive:
Issue the materials out to scrap.
Create an Excise JV with reference to the material document. The excise duty debited to the Cenvat account should be reversed.
The excise duty to be reversed is calculated manually or using the get Excise invoice functions.
The debit account can be overwritten when the JV postings happen.
Additional Excise:
This procedure is used when a vendor has increased the amount of excise duty that it originally charged.
The additional duty is debited to the Cenvat Account with reference to the vendor’s invoice number.
The Credit account can be changed at the posting the excise JV.
Other Adjustments:
When there are any adjustments, which do not fall into any of the above-mentioned category, then this function is used.
Cancel Excise invoice:
This function can be used to cancel any out going invoice created through J1IS. It reverses the excise duty accounted for.
FSBP Link: S.No.
Wipro Ltd.
Major Process
Sub Process
Minor Process
FSBP Document
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MM Business Blueprint
1
4.3.5
Goods Receipt
GRN & Reversal J CL_FSBP_MM_GRN_ 0011_1.0.doc
Business Process
Identifying requirement The task in purchasing starts from identifying the purchasing requirement, which could be originated either by MRP or by manual. Manually created requisition will go through release strategy & MRP outputted PR’s will go through release strategy. Several selection criteria available to get list like PR MRP outputted PR, Manually crated PR, approved PR etc for buyers as well as indenters. In case of annual services, manual PR will be created with service numbers indicating service wise qty & tentative rate will be paid for each service rendered. Release strategy will be set up with pre requisites for requisitions that need to be fulfilled by respective release code approver. This will ensure administrative control as well as visibility across organization. Release Strategy
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MM Business Blueprint S.No.
Attachment
Description Release procedure for po will be decided later by JCL management.
1
Requirements processing Request for Quotation (RFQ) will be raised in the system with reference to the PR. In SAP the quotation number is generated internally for each vendor. All these quotations can be linked through a collective number. The quotation can be sent electronically or can be printed and the hard copy forwarded. . Vendor selection can be decided with the help of the Info Record and the source list. In SAP both the Requests for Quotation and the vendor’s response to the quotation documents will be handled through the Request for Quotation function. The vendors pricing and different conditions can be entered in the maintenance of the quotation document. CST/LST/VAT, Excise can be maintained through the tax code. History of all generated RFQ/quotations/Comparisons is available in the system for future reference or any traceability. This will help for vendor selection for RFQ also. Service also PR can be converted to RFQ, quotation, comparison in the same line as material. Purchase Requisition Types An identifier allowing differentiation between the various forms of a document category. PR types can be used to setup different number ranges and release strategies. Version Management is activated for Purchase Requisition. When a purchasing document is changed, the changes are recorded in a change document. Change documents from a certain period are collected in a version and are then available for analyses. Doc Type ZCAP ZREN ZRAW ZSER ZCCN
Wipro Ltd.
Description
CAPITAL PR REVENUE PR RAW MATERIAL PR SERVICE PR CAPITAL CONSUMABLE
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MM Business Blueprint ZIMP
IMPORT
FSBP Link: S.No.
Major Process
Sub Process
1
Procurement
Purchase Requisition
Minor Process
FSBP Document
J CL_FSBP_MM_PR_0 002_1.0.doc
Vendor selection & comparison of quote Through the price comparison screen SAP ranks all the quotations based on the price. Price comparison can have the break of pricing components like discount, packing, freight, insurance etc. along with taxes. The other details such as delivery date and related information is also displayed. The entire quotation of the vendors also can be viewed from the same screen. If quotation is submitted in foreign currency it can be converted to local currency. The decision to select a vendor or a reject a vendor can be based on the price comparison list generated by the system and by checking the vendors technical competency (specifications, delivery terms), which will be done outside the system. If vendors are negotiated, the same can be maintained with valid effective period & revised comparison can be done against the same quotations. Services will follow the same procedure. Ordering the requirements Purchase orders can be created with reference to the quotation. Contracts will be created if there is a continuous requirement over a period of time. Normally contracts will be created for direct materials & Purchase orders will be created for indirect materials. Contracts & Purchase orders will go through release strategy for approval. Ordering can be done different unit of measure than stock keeping unit. If a contract is issued, a separate release order has to be issued with reference to the contract. Contracts can be a value contract or a quantity contract. Contracts will have a validity period and a price specified for this period and the price can be maintained against a quantity scale.
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MM Business Blueprint Delivery schedules can be maintained in Purchase Order for every line item. The reference document information is maintained in the consecutive document. The necessary payment terms and the Inco terms are automatically copied from the quotation and it can be changed in the purchase order if required. Purchase orders can be raised in foreign currency, standard functionality is available to maintain the foreign currency requirements. In the purchase order delivery address, if there is a requirement to maintain delivery addresses other than the ordering plant, then they can be maintained at item level. If more than one delivery address is required to be maintained then the item has to be split into more than one line item. In the Purchase order/Contract apart from the material price, freight, Insurance, excise, tax and other delivery charges can be maintained in the pricing condition. These will be maintained through separate Condition types. Condition types are the various elements in the pricing of the Purchase order. Different condition types will be defined to meet the requirements of Import purchases and local purchases. The other delivery charges can be maintained in the Header level i.e. applicable to the whole Purchase order or in the item level of the Purchase order. If the delivery charges are maintained at Purchase order level, then the system will treat them as planned delivery costs. For freight and other delivery charges, if there is a different vendor for the planned delivery costs, the vendor details can be maintained in the Purchase order against each of the condition types. Vendor pricing schema will decide which pricing procedure is applicable for the specific vendor. The Purchase Order/Contract created will be subjected to an approval process. In the approval process certain approving personnel can be maintained as mandatory and non mandatory. If the person is not available alternative persons can be configured in the system to approve the document. Purchase Orders/Contracts will have a 10-digit number. Order Types
Number ranges for PR,PO,RFQs are decided to be maintained at Document Type Level An identifier allowing differentiation between the various forms of a document category. Order types can be used to setup different number ranges and release strategies. Procurement types are primarily getting divided based on account assignment & Item category given in the purchasing document. For all procurement types overall purchasing cycle remains the same. Various types of Purchasing involved in Janki Corp Ltd. are:
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MM Business Blueprint
Procurement for stock Material: All purchasing document having materials code & no account assignment, all such materials receipts will go to inventory. It will be issued from inventory for usage. Procurement of non-stock items: Materials with material type non-valuated or all purchasing document having account assignment will get consumed on receipt. Such Purchasing documents need to have consumption G/L account defined in the document. This will not update inventory nor for qty nor for value. Procurement of Capital items: Procurement of capital items will be carried out through Project Systems through WBS element. Item Categories: Item Category defines the procurement of Materials and Services. Standard Item categories are used for Janki Corp Ltd..
B K L S T D
Standard Limit Consignment Subcontracting Third-party Text Service
Account Assignment Categories:
Account assignment categories define if accounting for a item is effected by a auxiliary account. Standard Account assignment categories are used for Janki Corp Ltd. A B C D E F G K M N P
Asset MTS prod./sales ord. Sales order Indiv.cust./project Ind. cust. w. KD-CO Order MTS prod./project Cost center Ind. cust. w/o KD-CO Network Project
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MM Business Blueprint
Q T U X
Proj. make-to-order All new aux.acc.ass. Unknown All aux.acct.assgts.
External Procurement (Domestic):
Create purchase orders with relevant tax codes
The vendor supplies the material along with an excise invoice.
Goods receipt is posted in the system and the excise invoice is captured. Here the system gives three options.
Two-step procedure: Involves capturing the excise invoice with reference to the PO and then posting it after goods receipt.
One-step procedure: The excise invoice is captured and posted in one shot after goods receipt.
Capture and post during GR: Capture and posting of excise invoice at the time of Goods receipt itself.
During the above process Part 1 & Part 2 Registers gets updated automatically for the receipts. Cenvat Value if different from that proposed by the system this has to be entered at the time of Capture of Excise Invoice.
Excise Invoice for Vendor returns Excise Invoice will be created with the return Material document. Part 2 will be posted and Part 1 will have to be updated.
Procurement of non-stock items
Materials with material type non-stock, non valuated or all purchasing document having account assignment will get consumed on receipt. Such Purchasing documents need to have consumption G/L account defined in the document. This will not update inventory nor for qty nor for value.
Excise posting for materials procured for Direct consumption:
In case of account assigned purchase orders, depending on the customizing settings for the excise group, the consumption posting in part 1 can be updated automatically at the time of goods receipt for the purchase order.
Rejection and Reversal of Excise Invoice: Case I: Rejection of excise invoice occurs if the vendor sends an excise invoice, which cannot be accepted.
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MM Business Blueprint
Capture the excise invoice with a rejection code.
When the vendor sends the corrected excise invoice the same is re-processed after removing the rejection code.
Case II
Reversal happens, also when the material itself is rejected after the excise invoice has been posted.
For reversal of Cenvat postings, the material document is reversed first, and then the excise invoice is cancelled.
FSBP Link: S.No.
Major Process
Sub Process
1
Procurement
Purchase of Stores and Spares
Minor Process
FSBP Document
J CL_FSBP_MM_PSS_ 0006_1.0.doc
Procurement of Raw Material.
PO Will be created for the Raw Material for the agreed qty The PO will have all the pricing condition including freight condition (how much feight we are paying to the transporter). The Handling charges, Royality paid and other charges can be included in the PO line items. The tax code will be used to get the right duties and VAT.
The Entry would be made in Gate Entry for the Raw materials - The details captured in the transaction screen - Truck No, LR No, LR Date, Transporter Number (Vendor Number), PO No, PO Date, Entered by and automatically gate entry number will be generated. The same
In case of multiple transporter known at the time of PO split the quantity into the condition types and maintain the transporter othewise feed the transporter code manually in the gate entry screen.
In case of multiple transporter known at the time of PO split the quty nto the condition types and maintain the transproter othewise feed the transporter code manually in the gate entry screenj.
The option to change transporter name shall be given in GR before posting. IR can not be processed for a transporter different from the GR transporter.
At weigh bridge by using the weigh bridge vendor application the gross weight, tare weight and net weight will be captured the moment the calculation done automatically by pressing the button the data will be transferred to SAP at all the three quantiy fields. The Gate entry number has to be entered to get all the other details from the gate entry table. The SAP will generate one unique number automatically
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MM Business Blueprint
The automatic SAP Weighbridge entry number will be captured and LR NO, LR Date, Transporter, PO No will be automatically captured. Only enter the Qty, Storage Location in GR
if there is any difference the Delivery challan Qty and GR qty then first receive the material in GR and then post the physical difference for the excess / shortage quantity
The Gate Entry number will be called even in the MIRO to cross verify the duplicate payment of the freight charges. Once the freight amount is paid automatically mark the line entry as paid in the ztable of the Gate Entry screen
The MIRO will be done against PO for the received qty. The vendor will be credited total amount and debit to the GR/IR a/c (suspense a/c)
FSBP Link:
S.No.
Major Process
Sub Process
1
Procurement
Purchase of Raw Material
Minor Process
FSBP Document
J CL_FSBP_MM_PRM_ 0007_1.0.doc
Flow- Procurement of Imported Materials
Orders are placed in foreign currency; system calculates the net value based on exchange rate updated in master. Exchange rate can be changed in PO based on the requirement. Customs duty & CVD are the conditions maintained in pricing procedure. Customs as a vendor needs be updated for each customs duty condition in PO/Contract. This is only procurement type where GR based IV will not be used. Tax code should be nil tax code. Import freight & local freight needs to maintained separate condition type. After goods shipped by vendor, it will go through customs procedure. Customs will issue bill of entry for the received material. Logistics invoice verifications will to be posted for customs duty amount. Based on LIV Finance will release the payment to the customs. Goods receipt & excise capturing will be done based on LIV document generated for customs duty posting. After good receipt LIV will be done for material vendor & freight vendor separately.
External Procurement (Import) :
Create an imports purchase order with the necessary duties payable to the customs (CVD, Customs duty, etc.) referencing the Purchase Requisitions.
Enter the customs vendor, in the vendor field with the appropriate rates for these duties.
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MM Business Blueprint
Custom duties in the Bill of Entry is captured as ‘planned delivery cost’ in LIV with INR currency in the Header and reference to the imports purchase order.
Capture the excise invoice with reference to the imports purchase order and enter the commercial invoice number (LIV number representing the CVD portion of the B/Entry) in the dialog box.
Receive the goods through the standard procedure.
Post the excise invoice, with reference to the commercial invoice and the system updates the part 2 register.
Invoice verification is done through Logistics Invoice Verification
FSBP Link: S.No.
Major Process
1
Procurement
Sub Process
Minor Process
FSBP Document
Imported Purchase J CL_FSBP_MM_PIM_ 0013_1.0.doc
Procurement of Capital items
Purchase orders will be created with reference to account assignment A. Incase procurement against asset number account assignment will be A & incase of procurement against internal order it will be F. All the procurement cost will be get debited to asset & not to the inventory.
Capital Goods – Taking subsequent Credit:
This functionality has provision to identify the capital goods for which credit is to be taken in the subsequent year or for those of which the subsequent credit is to be taken in the current year.
This process can also be used to transfer the credit in the same year if necessary.
FSBP Link: S.No.
Major Process
Sub Process
1
Procurement
Purchase of Asset/Capital Goods
Wipro Ltd.
Minor Process
FSBP Document
J CL_FSBP_MM_PAC_ 0005_1.0.docx
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MM Business Blueprint Procurement of External Services The procurement of services may involve the following steps: Determination and recording of requirements A need for certain services can arise in a user department of your enterprise, within the framework of a project (such as the translation of software) or with regard to regular maintenance work (such as the outsourcing of routine electrical jobs) for instance. The user department can either prepare a purchase requisition itself, or request Purchasing to do so. In each case, the requisition is the trigger for procurement activities in MM Purchasing. Determination of possible sources In the source determination facility, an instrument for analysing this data, enabling to establish whether suitable potential bidders exist for the requested services and whether longer-term business relationships have already been set up with certain service providers in the form of contracts. The price simulation function can help to choose the desired source of supply from the sources suggested by the system. In this case, the requisition can then be converted directly into a standard purchase order or a release order to be issued against a contract that already exists with the service provider. Bid invitation procedure If a bid invitation process is to be initiated for services, an RFQ must be created. Entry of data from quotations submitted by bidders When quotations (bids) are received from bidders, the latter’s prices and conditions are entered in the RFQs that already exist in the system. The status of the RFQs is then changed: the RFQs in fact become quotations. Comparison of quotations When all quotations have been received and entered, the most favourable one is quickly determined using the price comparison list. The price comparison list evaluates the quotations for you at different levels. You can make your decision on the basis of list of all quotations ranked by total value or compare the quotations at individual outline levels. The system provides comparative data right down to the individual service (task or activity) level if required. Award phase (order placement) The successful bidder receives either a standard purchase order or a release order issued against an existing contract, either of which is created by conversion of the relevant quotation. Monitoring of purchase orders
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MM Business Blueprint During the phase of service performance, the cumulative "actual" values (for the services actually performed) are continually updated in the underlying purchase order (standard PO or contract release order). Entry of services actually performed You enter services that have actually been performed by means of service entry sheets with reference the PO. Each individual service is recorded together with quantities and values. Acceptance of services performed After services have been performed for the firm it has to be recorded in the service entry sheet, check & formally accept the services. Verification of invoices for services
At the conclusion of the procurement process, the service provider’s invoices are checked for correctness. This involves comparing the value from the accepted entry sheet with that shown in the invoice and checking that the tax amounts are correct.
FSBP Link: S.No.
Major Process
1
Procurement
Sub Process
Minor Process
FSBP Document
Purchase of Service J CL_FSBP_MM_PSR_ 0008_1.0.doc
4.4 Inventory management 4.4.1
Purpose o o o o
4.4.2
Wipro Ltd.
Material tracking with value or qty tracking is effectively achieved. Identification of Physical location of material stocks within location or across locations by online is possible. Stocks status of the materials like under quality, blocked, In transit, unrestricted can be easily tracked. Special stocks like material with sub-contractor, Returnable vendor packing are tracked online.
Master Data
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MM Business Blueprint
Material master
.
4.4.3
Features with respect to Janki Corp Ltd.
Transparency of stocks available, through common database, across locations. Planning will be effective considering expected receipts, expected issues & online correct stocks. Stock transfer activities are planned. Quantity and Value updating on receipts/ issues is done. Forecast receipt can be planned due to availability of expected receipt online in the system. Reduction in inventory holding cost. Availability checks on goods issue and stock transfers. Updating of consumption accounts and Inventory accounts online.
Excise related data online with inventory management transactions will be updated. Material is procured from external or internal sources on the basis of the requirements determined by Material Requirements Planning. The delivery is entered in Inventory Management as a goods receipt. The material is stored (and managed under Inventory Management) until it is delivered to customers (Sales & Distribution), or is used for internal purposes (for example, for production). During all transactions, Inventory Management accesses both master data (such as material master data) and transaction data (such as purchasing documents) shared by all Logistics components. It involves
Management of material stocks on a quantity and value basis Planning, Entry, and Documentation of all Goods Movements
All transactions that bring about a change in stock are entered in real time, and the stocks are updated as a result of these changes. You can obtain an overview of the current stock situation of any given material at any time. This, for example, applies to stocks that:
Are located in the Warehouse Have already been ordered, but have not yet been received Are located in the Warehouse, but have already been reserved for production or a customer Are in quality inspection and in blocked stock type.
If a further subdivision by lots is required for a material, one batch per lot is possible. These batches are then managed individually in the stock. Inventory Management can manage various types of a company’s own special stocks and externally owned special stocks separately from standard stock. The stocks are managed not only on a quantity basis but also by value. The system automatically updates the following data each time there is a goods movement:
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MM Business Blueprint
Quantity and value for Inventory Management Account assignment for cost accounting G/L accounts for financial accounting via automatic account assignment
The valuation area is the organizational level at which a material's stock value is managed. The valuation area can be plant level or company code level. In Inventory Management, work is basically done at plant and storage location levels. When you enter a goods movement, you only have to enter the plant and the storage location of the goods. The system derives the company code from the plant via the valuation area. When Good receipt for the purchase order is done system automatically updates stock quantities & values including P&F, Freight, Delivery charges, incidental charges mentioned in the PO. For PO’s having account assignment cost will be debited to relevant G/L account indicated in PO. Goods movements include both "external" movements (goods receipts from external procurement, goods issues for sales orders) and "internal" movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings). For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements. Inventory management basically involves: Goods receipt A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in Warehouse stock. The System distinguishes between the following types of goods receipts: 1. Goods receipts with reference to an order 2. Other goods receipts Goods receipts Goods receipts for Purchase Orders, goods receipts for production orders, subsequent adjustment of subcontract orders, initial entry of stock balances in to SAP, vendor returns and customer returns all will be treated as Goods receipt in SAP. Material documents are generated when there is a goods movement registered in the system. Numbering of these documents are based on the transaction / event types of the transaction. Numbering is defined for a fiscal year and internal numbering has been defined for a material document.
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MM Business Blueprint When Goods Movement transaction is run, the system displays an additional tab at header level for the excise invoice header information, and one tab at item level for the excise invoice line item information. Fill the data as required. When save the goods receipt or goods issue, the system also saves the excise invoice (either captured/created or posted). It creates all appropriate excise register entries, material documents, and accounting documents Goods receipt for purchase order process as follows: 1) Choose Goods movement ® Goods receipt ® For purchase order ® PO number known or PO number unknown. 2) Enter the data on the initial screen: a. Enter the header data. b. Select the movement type. 3) If the quantity delivered is intended for the warehouse or for consumption/usage, select Movement type ® PO to warehouse (Movement type 101 ). a. Enter the purchase order number. In addition, we can enter the plant and a purchase order item, in order to restrict selection of the purchase order items. 4) If you selected PO number not known, you can specify search criteria for the purchase orders on the initial screen. The system then displays a list of purchase orders. Select and copy the required purchase order items. 5) The item selection list is displayed. This list contains all of the purchase order items that satisfy the criteria entered. 6) Select the purchase order items to be copied. If necessary, you can change data in the selected items on this screen. 7) Copy (adopt) the selected items. 8) Post the document. Excise capturing process during goods receipt as follows: 1. In the top line, enter the purchase order number and choose. 2. Enter header data as required, following the standard procedure. In addition, on the Excise Invoice tab: a. Set the excise action to Capture Excise Invoice or Capture & Post Excise Invoice. b. Enter the official excise invoice number and the excise invoice date. 4. Enter line item data as required, again, following the standard procedure. In addition, on the Excise Item tab, change the data so that it matches the vendor's excise invoice, if necessary. 5. Save the goods receipt. We can also enter a freight supplier if the condition type for delivery costs allows to do. FSBP Link: S.No.
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Major Process
Sub Process
Minor Process
FSBP Document
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MM Business Blueprint
1
Procurement
GRN & Reversal J CL_FSBP_MM_GRN_ 0011_1.0.doc
Goods issue A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a reduction in Warehouse stock. The Inventory Management system supports the following types of goods issues: 1. 2. 3. 4. 5. 6. 7.
Issues to Plant for Consumption Issues to Agencies on chargeable basis Issues to Agencies on Returnable basis Issues to Employees/departments on Returnable basis like Tools Issue of LPG/Oxygen Cylinders Scrapping and withdrawal of material for sampling Return deliveries to vendors
FSBP Link: S.No.
1
Major Process
Sub Process
Goods Issue
Goods Issue
Minor Process
FSBP Document
J CL_FSBP_MM_GIS_ 0012_1.0.doc
Stock transfer A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfers can occur either within the same plant or between two plants. There are two methods of stock transfer. One-Step Procedure:
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MM Business Blueprint
During a one-step stock transfer, the system creates issue of stock at sender plant & receipt of stocks at receiver plant with in the same step.
Two-Step Procedure: During two step process, system transfers material from issuing plant to stock in transit. At receiver plant after receipt document is posted stock in transit gets transferred to receiver plant.
FSBP Link: S.No.
Major Process
1
Procurement
Sub Process
Minor Process
FSBP Document
Stock Transport Order J CL_FSBP_MM_STO_ 0014_1.0.doc
Transfer posting A transfer posting is a general term for stock transfers and changes in stock type or stock category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not. Transfer posting process as follow: 1) 2) 3) 4) 5) 6) 7) 8)
Select Goods movement - Transfer posting. Enter the data on the initial screen: Enter the header data. Select the movement type Transfer posting - Stock to stock or Reverse tfr. posting Stock to stock plus the required stock types. Maintain the data on the collective entry screen: Only enter a receiving storage location if the material should be stored in another storage location. Enter the items. Check the data on the overview screen and post the document
All the transfer postings will be done in one step in Janki Corp Ltd. Reservations With this component, a request to the Warehouse to keep materials ready for withdrawal at a later date and for a certain purpose can be made.
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MM Business Blueprint A reservation for goods issue can be requested by various departments for various account assignment objects (such as cost centre, order, asset, etc.). The purpose of a reservation is to ensure that a material will be available when it is needed. It also serves to simplify and accelerate the goods issue process and prepare the tasks at the point of goods issue. It is also important that Material Requirements Planning (MRP) takes reservations into account. It means that required materials are procured in time if they are out of stock. In SAP the user department specifying where the material is required, what quantity is required, and when it is required can create a Reservation. While running the material planning, based on the Reservation, the system will generate a Purchase requisition automatically, if there is no enough stock on the required day. Reservations do not block the stock from being issued to any other requirement. In SAP standard movement types are defined to differentiate between the various types of goods movement described above. The following is the list of some of the commonly used movement types that will be used in Janki Corp Ltd.
Movement type
Description
Remarks
101
GR goods receipt for Purchase Order (B) & Order (F)
A purchase required
102
Reversal / Cancellation of GR for Purchase Order (B) & Order (F)
122 / 123
Return delivery to supplier or to production
201 /202
Goods Issue for a Cost centre
261 / 262
Goods issue to an order
This refers to issue to all orders like, maintenance order, Production order. The movement type will be picked automatically when the concerned orders are confirmed.
309 /310
Transfer Posting from material to material
This will be used when transfer of stock from one valuation to another valuation type is required.
311 /312
Transfer Posting from Storage
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Order
reference
is
You can use this movement type to differentiate between cancellations and return
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MM Business Blueprint location to storage location 351 / 352
Transfer Posting – Plant to Plant (MM Route)
451/452
Returns from Customer(without shipping)
501 / 502
Goods Receipt for Others
541
Transfer Posting unrestricted use stock to Stock of material provided to Subcontractor
542
Reversal of Transfer Posting unrestricted use stock to Stock of material provided to Subcontractor
543 / 544
Consumption of Materials Subcontractor Stock
551/552
Scrapping stock
561/562
Initial entry of stock balances
This movement type will be used to migrate the opening stock balance into SAP; there is a provision to enter the value of the goods movement.
701
phys.inv
Used in postings
Physical
inventory
702
phys.inv
Used in postings
Physical
inventory
from
This is used when returns are posted without reference to a return delivery.
at
Unrestricted
4.5 Physical Inventory
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MM Business Blueprint In SAP R/3, physical inventory can be carried out both for a company’s own stock and for special stock. Inventory for a company’s stock and for special stocks (such as consignment stock at customer, external consignment stock from vendor, or returnable packaging) must be taken separately (in different physical inventory documents), however. Note that the blocked stock returns and the stock in transfer cannot be inventoried. If these stocks are still to be counted in a physical inventory, these must be transfer posted to other stocks capable of inclusion in a physical inventory. The stock in a Warehouse can be divided into stock types. In the standard system, a physical inventory can be carried out for the following stock types:
Unrestricted-use Quality inspection stock Blocked stock
Inventory of all stock types mentioned can be taken in a single transaction. For the materials to be inventoried, one item is created in the physical inventory document for every stock type. Physical inventory takes place at storage location level. A separate physical inventory document is created for every storage location. If a material does not exist in a storage location, this means that no goods movement has ever taken place for the material in the storage location. The material, therefore, has never had any stock in this storage location. The material does not exist at stock management level in the storage location. It is therefore not possible to carry out a physical inventory for the material in this storage location. This is not to be confused with a material for which a goods movement has taken place and for which the stock balance is currently zero. A physical inventory must be carried out in this case, since storage location data is not deleted when the stock balance is zero. SAP R/3 supports the following physical inventory procedures:
Periodic inventory Continuous inventory Cycle counting Inventory sampling
Periodic Inventory In a periodic inventory, all stocks of the company are physically counted on the balance sheet key date. In this case, every material must be counted. During counting, the entire Warehouse must be blocked for material movements. Continuous Inventory In the continuous inventory procedure, stocks are counted continuously during the entire fiscal year. In this case, it is important to ensure that every material is physically counted at least once during the year.
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MM Business Blueprint
Cycle Counting Cycle counting is a method of physical inventory where inventory is counted at regular intervals within a fiscal year. These intervals (or cycles) depend on the cycle counting indicator set for the materials. The Cycle Counting Method of Physical Inventory allows fastmoving items to be counted more frequently than slow-moving items. Inventory Sampling In MM Inventory sampling randomly selected stocks of the company are physically counted on the balance sheet key date. If the variances between the result of the count and the book inventory balance are small enough, it is presumed that the book inventory balances for the other stocks are correct.
4.5.1
Purpose
This component allows you to carry out a physical inventory of your company’s Warehouse stocks for balance sheet purposes.
4.5.2
Master Data Material master
4.5.3
Features with respect to Janki Corp Ltd.
In Janki Corp Ltd, all stocks are physically counted on the balance sheet key date. Visibility of inventory differences with every inventory count across plants is available. Inventory counting is done for every material, storage location in the plant. Posting of difference can be controlled through authorizations.
4.5.4
Business Process
The physical inventory procedure is carried out in three steps: 1. Creating a Physical Inventory Document 2. Entering the Physical Inventory Count 3. Posting inventory differences You can also group together individual phases and carry them out in a single step, as follows:
Posting the physical inventory count without reference to a physical inventory document In this step, the following are combined: – A physical inventory document is created.
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MM Business Blueprint
– The count is posted. Posting the physical inventory count and inventory differences If a physical inventory document exists, the following are combined in this step: – The count is posted. – Any inventory differences are posted. Posting the physical inventory count without reference to a physical inventory document In this step, the following are combined: – A physical inventory document is created – The count is posted any inventory differences are posted
FSBP Link: S.No.
Major Process
Sub Process
1
Physical Inventory
Physical Inventory
Minor Process
FSBP Document
J CL_FSBP_MM_PIN_ 0010_1.0.doc
4.6 Material Valuation Material Valuation is not an independent application area, since most Material Valuation functions take place automatically in the SAP System. Depending on how a company is structured, tasks that have to be carried out manually belong to either Inventory Management or Invoice Verification. Material Valuation represents a link between Materials Management (MM) and Financial Accounting (FI), since it updates the G/L accounts in Financial Accounting. Material Valuation serves the following purposes:
Adjusting material prices to market prices Performing revaluations Executing balance sheet valuation
Material Valuation is basically controlled by two factors:
System settings Material master record
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MM Business Blueprint
System setting Plant level materials will be valuated. Movement types will decide which are relevant for financial posting Material Master Record As a rule, a material master record is created for every material. The information contained in this record includes valuation data for the material. When maintaining the material master record, Must decide the following: Whether a particular material should be valuated at all Whether different sub-stocks of a material should be valuated differently
Whether the stock of a material should be valuated at a constant price (standard price) or whether the price should change in accordance with the delivered price (moving average price) Which G/L account the stock value of a material should be managed in The stock quantity and value of a material and the material price are also recorded in the material master record. In the These goods
SAP System, there are two types of price control: Standard price Moving average price two types of price control differ in how they handle price variances resulting from receipts or invoice receipts.
Valuation using a standard price has the following features: All inventory postings are carried out at the standard price Variances are posted to price difference accounts Variances are updated Price changes can be monitored Valuation using a moving average price results in the following: Goods receipts are posted at the goods receipt value. The price in the material master is adjusted to the delivered price. Price differences occur only in exceptional circumstances. Manual price changes are usually unnecessary. However, they are possible. Data on a material is valuated using the following structure: Valuation area Valuation area = one plant
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MM Business Blueprint The stocks of a particular material in this individual plant are valuated together. Stocks in other plants are not included in this valuation area.
Valuation class
You group together different materials with similar properties into valuation classes so that you do not have to manage a separate stock account for every material. Which valuation class a material can be assigned to depends on the material type. You can define the following assignments in Customizing:
All materials with the same material type are assigned to just one valuation class. Different materials with the same material type are assigned to different valuation classes. Materials with different material types are assigned to a single valuation class.
A material is assigned to a valuation class in the material master record. The system checks whether the material type allows the material to be assigned to the valuation class specified. The system refers to the valuation class of a material to determine which stock account to post to when a posting is made for this material. Material type You assign every material to a material type when you create it. Examples of material types in the standard system include raw materials, operating supplies and finished products. The material type controls the properties of a material and which data must be maintained for the material. The following control features are important for valuation:
Is the material managed by quantity? Is the material managed by value? Which price control type may be used for the material? Which valuation class can the material be assigned to?
Movement type For every material movement, there is a movement type in the SAP System. The movement type controls the properties of the movement, for example, which entries you must make when entering a material movement, and which updates are carried out when the movement is posted. The following control features are important for valuation:
Does the material movement cause the quantity to be updated? Does the material movement cause the value to be updated? Does the material movement lead to postings in Accounting? Is the material movement relevant for LIFO/FIFO valuation?
1. Reason for movement type field is used for addressing many issues-for employees,contractors etc.since it is a configurational value, the same has to be mentioned.
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MM Business Blueprint
901 : New movement type for the issue of materials on chargeable basis The Reason for movement will be used to identify that material is issued to agency on chargeable basis.
4.6.1
Master Data
4.6.2
Material master
Features with respect to Janki Corp Ltd..
In Janki Corp Ltd.
4.6.3
All Materials will be valuated at moving average price. All stock valuation will be online across location at plant level.
Business Process
Material Valuation is not an independent application area, since most Material Valuation functions take place automatically in the SAP System.
All the materials will be created in the system with accounting & costing views which needs to be valuated either with price control S or V. Initial price will be updated in material master while creation. Based on receipts value moving average price will keep on getting updated online for every receipt. Material having standard price will have moving average price updation only for statistical purpose. Every issue will be with corresponding price in the material master with relevant financial posting.
4.7 Logistics Invoice Verification In Materials Management, Logistics Invoice Verification has the following features:
It completes the material procurement process, which has started with the purchase requisition and resulted in a goods receipt. It allows invoices that do not originate in materials procurement (such as services, expenses, course costs) to be processed. It allows credit memos to be processed, either as invoice reversals or return deliveries.
S.No.
Wipro Ltd.
Attachment
Description
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MM Business Blueprint
1
Tolerance limit
C:\Documents and Settings\wipro\Desktop\Tollerence limit.xls
An invoice can be processed in Logistics Invoice Verification in various ways:
Invoice Verification Online You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and values) suggested by the system with that in the invoice and making any necessary corrections. You then post the invoice. In the SAP R/3 System, a distinction is made between the following types of invoices: Invoices with purchase order reference. All the items in a purchase order can be settled. With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together, regardless of whether an item has been received in several partial deliveries. Invoices with goods receipt reference. Each goods receipt is settled separately. Invoices without purchase order reference. Invoices can be posted directly to G/L accounts or material accounts.
Document Parking When company receives an invoice, enter the data in the system, and save the invoice document. The system does not make any postings. Parked documents can be changed. When finished changing the document, can post the parked document.
Invoice Verification in the Background When receive an invoice, only enter the total amount of the invoice and match the invoice up with another system document. The system then checks the invoice in the background. If no errors occur, the system posts the invoice in the background. If errors do occur, the system saves the invoice and then has to process it in a separate step. An invoice contains various information, such as:
Who issued the invoice? Which transaction does the invoice refer to? How much tax do you have to pay?
One of the basic questions is the invoice reference, which enables you to clearly allocate the invoice to a business transaction. If such a reference exists, the system uses "knowledge" that it already has and proposes the appropriate values when verifying the invoice, for example:
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MM Business Blueprint
Agreed terms of payment Quantities to be invoiced Amounts expected for each item
If the vendor invoice contains different information, you can overwrite the data proposed. The system checks whether your entries are allowed and display a warning or error message if anything is incorrect. Delivery costs are costs that are invoiced for a delivery over and above the value of the delivery itself. This includes freight charges, customs duty, or other costs. There are the following types of delivery costs: Planned Delivery Costs Planned delivery costs are entered in the purchase order on an item basis. Provisions are set up for the relevant costs at goods receipt. The delivery costs planned in the purchase order are referenced when the invoice is entered. The provisions are cleared. The values proposed for the items come from the purchase order history. Unplanned Delivery Costs Unplanned delivery costs are only entered when the invoice is entered. No provision is made at goods receipt. Will be at Header Level. Logistics invoice verification facilitates four different activities:
Invoice The vendor invoices for the goods that have ordered from the company. Passing the same bill submitted by him. Credit memo The vendor has invoiced too much for the last delivery, for example, less than the agreed quantity was delivered and that at the agreed total price, or returned part of a delivery to the vendor due to quality problems. Subsequent debit Already received & posted an invoice from vendor for all the goods received. Subsequently, freight costs are to be taken into account; however, the invoice quantity remains the same. Subsequent credit Already received a credit memo from vendor for all the goods received. Subsequently, freight costs are to be credited to company; however, the credit memo quantity remains the same.
In Logistics Invoice Verification – as in other applications – the SAP system often needs to retrieve stored data at many points, change this data where necessary, or add new information.
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MM Business Blueprint Depending on the type of information, the data in the SAP System is stored in different master records, such as the material master record or the vendor master record. This central data storage function avoids redundant data and ensures that the different departments use the most up-to-date information from various departments (Material Requirements Planning, Purchasing, Inventory Management, Quality Management, Logistics Invoice Verification, and so on).
4.7.1
Purpose
Logistics Invoice Verification is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting. Visibility across MM & FI module on the status of invoices is online. Material price changes are adjusted in inventory valuation at the time of invoice posting. GR based invoice verification ensures document flow & data consistency.
4.7.2
Master Data Material master Vendor master Accounting data
4.7.3
Features with respect to Janki Corp Ltd.
In Janki Corp Ltd.
All the Purchase Orders, except import, will be created with GR based invoice verification. Payments to the vendor will be exactly as per the pricing structure of the Purchasing document. It will ensure multiple vendor payment for against same PO like material payment to one vendor, freight payment to another vendor, loading charges to third vendor etc. Invoice posting can be online to ensure on time payment to vendors. Subsequent debit & Credits can be posted to vendor with reference already paid invoices. Unplanned delivery cost can be posted to inventory to availability of stocks while making the payment to vendor.
4.7.4
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Business Process
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MM Business Blueprint Receive an invoice from the vendor referring to a purchase order and a goods receipt, for example. When first call up the application, enter the company code that work in. All further transactions are then posted in this company code. If you want to switch to a different company code, can do this during processing. Entering a vendor invoice involves: 1. 2. 3. 4.
Choosing the Transaction. Entering Document Header Data. Allocating Invoices. Processing Invoice Items.
The last step is not mandatory. If there is no balance or if the variances are within the tolerance limits set, can post the invoice immediately after entering the allocation data. If the system cannot post the invoice, can check the invoice items and change them. When post without checking the invoice items, variances in individual items can cancel each other out. The following accounts are particularly important for Invoice Verification: Vendor Accounts There is a separate account in the sub-ledger for each vendor that all amounts concerning this vendor are posted to. Making a posting to the vendor account is not the same as making a payment; payment is only made when the Financial Accounting department posts the vendor's payment to a bank account. Stock Accounts In the R/3 System, there is no separate account for each material. Instead, different materials with similar features are grouped together in a common account (for example, raw materials: acids). The account relevant for a material is defined in the material master record when a material is created. The system only posts to the stock account when a price difference occurs for an invoice. GR/IR Clearing Accounts The GR/IR clearing account is an "intermediate" account between the stock account and the vendor account. At goods receipt, the net invoice amount expected is posted to the stock account. The offsetting entry is posted to the GR/IR clearing account. This posting is then cleared by an offsetting entry on the vendor account at invoice receipt. Tax Accounts The system makes postings to special tax accounts when invoices include tax. Price Differences Accounts Price differences have to be posted to a price difference s account if price differences have occurred in an invoice and when invoices are posted net and no posting can be made to the stock account.
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MM Business Blueprint
Freight Clearing Account The stock account is debited with the planned delivery costs at goods receipt and the system makes the offsetting posting to a freight clearing account. This posting is then cleared by an offsetting entry to the vendor account at invoice receipt. This process in details is covered by FI blue print. The parking of invoices is done by purchasing department. Incoming Invoices are verified in terms of their content, prices and arithmetic by the accounts department and then are posted in the system.
5 INTERFACE REQUIREMENT Weigh Bridge Interface Weigh Bridge interface is currently used for weighing of Raw materials and finished goods. The Goods Receipt for Raw materials is carried out after approval of reading from Weigh Bridge. Transport vendor wise goods receipt is carried out considering the allowed tolerance. Weigh Bridge interface requires development in SAP to record the readings from the weighbridge which will be stored. Upon approval of these readings a goods receipt will be posted in the system.
6 STANDARD INFORMATION SYSTEM SAP as standard functionality offers various module wise reports for various analysis & help in decision making for the business organization. List of such standard reports is given below:
T Code
Transaction code description
AC05 AC06 MB03 MB24 MB25 MB51 MB52 MB53 MB5B MB5T ME04
List Processing: Service Master List Display: Service Master Display Material Document Reservation List Reservation List Material Doc. List List of Warehouse Stocks on Hand Display Plant Stock Availability Stocks for Posting Date Stock in transit CC Changes to Source List
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MM Business Blueprint ME05 ME06 ME1E ME1L ME1M ME1P ME1W ME2B ME2C ME2J ME2K ME2L ME2M ME2N ME2O ME2S ME2V ME2W ME5A ME5F ME5J ME5K ME80 ME81 ME82 MELB MI07 MI08 MI20 MIBC MC.9 MC40 MC41 MC42 MC43 MC44 MC45 MC46 MC47 MC48 MC49 MC50
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Generate Source List Analyze Source List Quotation Price History Info Records Per Vendor Info Records per Material Purchase Order Price History Info Records Per Material Group POs by Requirement Tracking Number Purchase Orders by Material Group Purchase Orders for Project Purch. Orders by Account Assignment Purchase Orders by Vendor Purchase Orders by Material Purchase Orders by PO Number SC Stock Monitoring (Vendor) Services per Purchase Order GR Forecast Purchase Orders for Supplying Plant Purchase Requisitions: List Display Release Reminder: Purch. Requisition Purchase Requisitions for Project Requisitions by Account Assignment Purchasing Reporting Analysis of Order Values Archived Purchasing Documents Purch. Transactions by Tracking No. Process List of Differences Create List of Differences with Doc. Print List of Differences ABC Analysis for Cycle Counting INVCO: Material Anal.Selection,Stoc INVCO: ABC Analysis of Usage Values INVCO: ABC Analysis of Reqmt Values INVCO: Range of Coverage by Usg.Val. INVCO: Range Of Coverage By Reqmts INVCO: Analysis of Inventory Turnover INVCO: Analysis of Usage Values INVCO: Analysis of Slow-Moving Items INVCO: Analysis of Reqmt Values INVCO: Anal. of Current Stock Values INVCO: Mean Stock Values INVCO: Analysis of Dead Stock
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© Wipro Limited, 2010, All Rights Reserved. This document is proprietary to Wipro Infotech, a division of Wipro Limited. You may not modify, copy, reproduce, republish, upload, post, transmit or distribute any material from this document, in any form or by any means, nor may you modify or create derivative works based on the text of any file, or any part thereof for public, private or commercial use, without prior written permission from Wipro Limited.
MM Business Blueprint
7 ANNEXURES 7.1 Annexure 1 – GAPS
S.No.
1
GAPS
J CL_MM_ISSUETRAC KER_V1.0.xls
7.2 Annexure 2- FRICE requirements During the discussions within Janki Corp Ltd, team attached a list of reports identified as requirement. S.No.
1
Reports
J CL DEVLOPMENT_LIST.xlsx
7.3 Annexure 3-BBP Workshop
S.No.
Attachment
1
S.No.
Description
MOM
Attachment
Description
1
Wipro Ltd.
Page 69 of 70
© Wipro Limited, 2010, All Rights Reserved. This document is proprietary to Wipro Infotech, a division of Wipro Limited. You may not modify, copy, reproduce, republish, upload, post, transmit or distribute any material from this document, in any form or by any means, nor may you modify or create derivative works based on the text of any file, or any part thereof for public, private or commercial use, without prior written permission from Wipro Limited.
MM Business Blueprint
FSBP Tracker
Wipro Ltd.
Page 70 of 70
© Wipro Limited, 2010, All Rights Reserved. This document is proprietary to Wipro Infotech, a division of Wipro Limited. You may not modify, copy, reproduce, republish, upload, post, transmit or distribute any material from this document, in any form or by any means, nor may you modify or create derivative works based on the text of any file, or any part thereof for public, private or commercial use, without prior written permission from Wipro Limited.
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