M Business Blue Print Sample

SAP MM BLUE PRINT_SAMPLE G.V.
SHIVAKKUMAR
Project: ZZZ Model Company
SAP MM BUSINESS BLUE PRINT_SAMPLE

Materials Management
Version 1.0
Please use my link to download the SAP articles:-

http://gvshivakkumar.blogspot.in/?view=flipcard
http://www.sapfunctional.com/WM/Configuration/Index.htm
http://www.sapfunctional.com/WM/WMQ1.htm
http://www.sapfunctional.com/MM/MMQ1.htm
http://www.mediafire.com/view/hdfm84rmkq7h495/SAP_INTEGRATION_BETWEEN_MM+SD+PP.docx
http://www.mediafire.com/view/29trlg8qtn8z0nj/SAP_FI-MM_and_FI-SD_Integration.docx
http://www.mediafire.com/view/cxajoijh3j5s6es/Materials_Management_Step_by_Step_Configuration.docx
http://www.mediafire.com/view/svz777fpr8w0o2e/Systematic_Approach_to_Run_SAP_Implementation-Support-
Maintenance_Project.docx
http://www.mediafire.com/view/3cq2e2etbq0uty5/SD_Blue_Print_Document_Sample.docx
http://www.mediafire.com/view/lcf45t12n4899nx/SAP_Workflow_for_MM_Purchase_order.docx
G.V.SHIVAKKUMAR
Venkatesansivakumar@yahoo.co.in
Document Information
ZZZ MODEL GROUP Version 1.0

MM MODULE G.V.SHIVAKKUMAR
VENKATESANSIVAKUMAR@YAHOO.CO.IN
SAP MM BLUE PRINT_SAMPLE G.V.SHIVAKKUMAR
Document Owner: G.V.Shivakkumar
Document Distribution
Distribution
Name Organization
Date
Document History
All revisions made to this document are listed here in chronological order.
Versio Brief Pag Author Reviewed Approve Released Release

n No. Descripti e by d by
by date
on No
1.0 Initial G.V.Shivakkum 25.06.20
Version ar 14
Contents
1. INTRODUCTION...................................................................................................... 1

1.1 OBJECTIVE OF THIS REPORT.................................................................................1

1.2 ORGANIZATION OVERVIEW...................................................................................1
1.2.1 ABOUT ZZZ CHEMICALS........................................................................................1
1.2.2 ABOUT ZZZ POLYMERS..........................................................................................2
1.3 MATERIALS MANAGEMENT AT ZZZ....................................................................3
2. ORGANIZATIONAL ELEMENTS IN MM........................................................ 6
2.1.1 PLANTS.....................................................................................................................6
2.1.2 PURCHASE ORGANIZATIONS...................................................................................7
2.1.3 PURCHASING GROUPS.............................................................................................8
2.1.4 STORAGE LOCATIONS..............................................................................................9
2.1.5 WAREHOUSE..........................................................................................................11
3. PROCESS ARCHITECTURE.............................................................................. 19
3.1 MATERIAL MASTER...............................................................................................19

3.1.1 THE MATERIAL TYPES IDENTIFIED FOR ZZZ........................................................19
3.1.2 ASSUMPTIONS........................................................................................................20
3.1.3 UNIT OF MEASUREMENT.......................................................................................20
3.2 VENDOR MASTER..................................................................................................21
3.2.1 ASSUMPTIONS........................................................................................................21
3.3 BATCH MANAGEMENT..........................................................................................21
3.4 EXCISE MASTERS..................................................................................................22
4. PROCUREMENT.....................................................................................................23
4.1 PURCHASE REQUISITION.....................................................................................24

4.1.1 PROCESS FLOW.....................................................................................................24
4.2 REQUEST FOR QUOTATION (RFQ)...................................................................25
4.2.1 PROCESS FLOW.....................................................................................................25
4.3 VENDOR QUOTATION AND BID EVALUATION...................................................26
4.3.1 PROCESS FLOW.....................................................................................................26
4.3.2 GAPS / ISSUES IDENTIFIED AND SOLUTIONS.......................................................28
4.3.3 FORMS AND REPORTS REQUIRED..........................................................................28
4.4 PURCHASE ORDER STOCK ITEMS......................................................................28
4.4.1 PROCESS FLOW.....................................................................................................28
4.4.2 EXCEPTIONS AND VARIATIONS..............................................................................31
4.4.4 CONDITIONS IN PURCHASE ORDER......................................................................31
4.4.5 DELIVERY COSTS IN PURCHASE ORDERS............................................................32
4.4.6 EXCISE AND SALES TAX RELATED DETAILS..........................................................32
4.4.7 ACCOUNT ASSIGNED PO (CONSUMPTION ORDERS)..........................................33
4.4.8 ASSET PURCHASE..................................................................................................33
4.4.9 RELEASE PROCEDURE FOR PURCHASE ORDER...................................................33

4.4.10 FORMS AND REPORTS REQUIRED........................................................................34
4.5 HIGH SEA SALES...................................................................................................34
5. INVENTORY MANAGEMENT........................................................................... 36
5.1 MATERIAL RECEIPT...............................................................................................36

5.1.1 GOODS RECEIPT PROCEDURE..............................................................................37
5.1.2 EXCISE DETAILS TO BE CAPTURED AT GOODS RECEIPT FROM VENDOR.............47
5.1.3 GAPS / ISSUES IDENTIFIED AND SOLUTIONS.......................................................48
5.1.5 INTERFACES............................................................................................................48
5.2 MATERIAL ISSUES (CONSUMPTION).................................................................48
5.2.1 TRANSFER POSTINGS............................................................................................49
5.2.2 PLANT TO PLANT TRANSFERS...............................................................................50
5.2.3 TRANSFER OF MATERIAL FROM MANUFACTURING PLANT TO STOCKING PLANT
OR C&F (WITH EXCISE INVOICE).....................................................................................50
5.2.4 MATERIAL TRANSFER FROM STORAGE LOCATION TO STORAGE LOCATION......51
5.2.5 MATERIAL TO MATERIAL TRANSFER.....................................................................51
5.2.6 STOCK TO STOCK..................................................................................................51
5.2.7 BIN TO BIN TRANSFER..........................................................................................52
5.3 MATERIAL RETURNS.............................................................................................52
5.3.1 MATERIAL RETURN TO VENDOR...........................................................................52
5.3.2 MATERIAL RETURN TO STORES............................................................................53
5.4 MATERIAL RESERVATION.....................................................................................53
5.5 STOCK TRANSFER ORDER...................................................................................55
5.5.1 CHARACTERISTICS OF A STOCK TRANSFER ORDER............................................55
5.5.2 PROCESSING OF STOCK TRANSFERS BETWEEN THE TWO PLANTS...................56
5.6 VENDOR EVALUATION...........................................................................................57
5.6.1 ASSUMPTION..........................................................................................................62
5.7 PHYSICAL INVENTORY..........................................................................................62
5.7.1 PHYSICAL INVENTORY IN WAREHOUSE MANAGEMENT.......................................63
5.7.3 AUTHORISATION REQUIREMENTS.........................................................................65
5.8 LOGISTICS INVOICE VERIFICATION / BILL PASSING.....................................65
5.8.1 PROCESS FLOW......................................................................................................66
6. EXCISE JVS.............................................................................................................68
7. SCRAP IDENTIFICATION...................................................................................70
7.1.1 PROCESS FLOW......................................................................................................70

8. INFORMATION SYSTEM IN MM....................................................................71
9. LIST OF ABAP DEVELOPMENTS...................................................................72
9.1 FORMS & REPORTS..............................................................................................72

9.2 DATA MIGRATION STRATEGY..............................................................................72
9.2.1 MASTER DATA........................................................................................................72
9.2.2 BALANCES..............................................................................................................72

1.Introduction
Objective of this report
The report initially gives an overview of the Materials management Module
purview along with CIN and Warehouse Management. This would essentially
help in defining the boundaries of the module and also in identifying the
activities to be performed within Materials management Module in SAP.
Subsequently, the report discusses in detail, the proposed coverage of SAP at
ZZZ, in terms of organisational entities and business processes. Each
business process has been described with all the variations. The authorisation
requirements would be identified and configured during the configuration
phase
Organization Overview
ZZZ Group SAP implementation spans the following two group companies:
ZZZ Chemicals Limited
ZZZ Polymers Limited
1.1.1 About ZZZ Chemicals
ZZZ Chemicals Ltd. is in the business of manufacturing and marketing of

petroleum products
It serves the following market segments:
The industrial market consisting of industrial users of oils who buy the
products in bulk on regular basis. These include private sector as well
as public sector companies.
The retail market consisting of small users of oils to whom products are
sold through multiple levels of demand chain (C&F Agents, Dealers and
Retailers).
Export market
The product categories of ZZZ are:

Specialty oils, with a focus on Industrial customers, consisting of:
Transformer oils
Light Liquid Paraffin
Heavy Liquid Paraffin

White Oils
Speciality Oils
Lube Oils with a focus on retail users
ZZZ has about 350 stock keeping units, consisting of Product, Grade, Brand
and Pack size.
ZZZs business units are:
Head office in Mumbai
Two factories Thane and Silvassa
One packing unit at Mahape
Five branch offices
About 40 C&F Agents spread all over India
1.1.2 About ZZZ Polymers
ZZZ Polymers Ltd. is situated in Coimbatore and in engaged in the business

of manufacturing and selling petroleum products and polymers catering to
the requirement of telecom industry, pharmaceutical & cosmetic industry as
well as manufacturing emulsifiable waxes & emulsions for textile industry.
Presently about 80% of the turnover is for Export products viz.: CFC,
Transformer Oils, White Oil and Petroleum Jelly. The domestic market demand
involves emulsifiable wax BW 300 and small quantities of CFC, Petroleum Jelly
and Optical Fibre Jelly. SPL employs about 75 people.
ZZZ GROUP - 2 -PAGE 2 OF 83AAG SAP MM BUSINESS BLUE

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MM MODULE BLUE PRINT_SAMPLE PAGE 2
VENKATESANSIVAKUMAR@YAHOO.CO.IN - 2 -OF 83
Materials Management at Savita

The Material Management Module has multiple processes broadly divided into
Procurement, Good Receipt and Inventory Management across businesses in
ZZZ Group.
Purchasing is a component of Materials Management (MM). 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 purchasing module deals with the:
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
Purchasing communicates with other modules in the SAP System to

ensure a constant flow of information. For example, it works side by
side with the following modules like Controlling (CO), Financial
Accounting (FI), Sales and Distribution (SD), Quality Control (QM).
Inventory Management component of Material management deals with the

following tasks:
Management of material stocks on a quantity and value basis
Planning, Entry, and Documentation of all Goods Movements
Carrying out the Physical Inventory.
Logistics Invoice Verification is a part of Materials Management (MM). It 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,
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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.
SAP R/3 Materials Management

BASIC DATA PURCHASING Third-party
SD
Material Purchase requisition order
Special stock MRP
Batch Direct requisition

PP
Purchasing information system

Release procedures Requirements
Vendor/one-time
customer RFQ/Quotation
Material/service PM Service /
Vendor evaluation
Purchasing Price comparisons spare parts
info record Price comparison list
Service Purchasing QM Inspection lot

specifications Purchase orders
Outline agreements
G/L accounts
Texts Scheduling agreements FI
Mail Cash management
Communication INVENTORY MANAGEMENT and forecast
Classification
Goods receipt/issue AM Fixed assets
Transfer posting
Quantities and values
Conditions Physical inventory
Cost center /
Storage bins CO
Budget
INVOICE VERIFICATION
Check and post WM Ware house
Price update
management
Mat erials Manage ment SAP R/3 Materials

Management Mater ials
P lanning
P ur chasing
P ur chase Im por ts P O
Or der
Inv oic e V er ifi ca tio n Mas ter Da ta

Inve n tor y Ma na gem e nt
Material
Goods B atches
Issue V endors
Invoice G/L accounts
Receipt Goods Receip t Tr ansfer S torage bins
P osting
Fin an cial a nd C os t S ales an d

Acco u nti ng Distr ib ut io n
Business Process Scope:

The Materials Management (MM) module will cover the following business
processes:
Organization Structure (Related to Materials)
Consumption Based MRP Planning of material either based on Reorder Point
or Forecast based.

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Purchase Requisition Processing Generation of Requisitions for materials

and services based on MRP, Real time (manual), sales order and projects.
RFQ/Quotation Processing Generation of Request for Quotation (RFQ),
Quotation processing and comparison.
Purchase Order Processing Creating Purchase Orders (PO) for materials and
services with respect to PR, Quotation, Contracts, direct PO, Stock Transfer
Order, Sub-Contracting, Releasing the PO to vendors.
Vendor Evaluation Vendor Evaluation based on Quality and reliability
parameters.
Inventory Management Managing material receipt, Issues and transfers in
the plants, and Physical Inventory.
Inventory Valuation Material Valuation based on moving average price and
standard price based on inventory transactions.
Invoice Verification Bill passing for the vendors for materials and services,
Credit Note

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2.Organizational elements in MM
2.1.1 Plants
The Plant is an operating area within a company where there is stock

movement. Each of the manufacturing locations and C & F locations shall be
identified as a Plant in SAP. For the purposes of valuation of inventory at ZZZ
Group, the Plant is defined as the Valuation Level within SAP where materials
will be valued.
The plant is embedded in the organizational structure as follows:
The Plant is assigned to a single Company code. A Company code can have
several plants. As ZZZ has two companies i.e. ZZZ Chemical and ZZZ
Polymer each companies will have their own set of Plants.
Several Storage Locations in which material stocks are managed can belong
to a plant. A plant can have one or more storage locations.
A Plant can be assigned to several combinations of Sales Organisation and
Distribution Channel. (will be mentioned normally-Details in the SD blue print)
A Plant can have several Shipping Points. A Shipping Point can be assigned to
several Plants (will be mentioned normally-Details in the SD blue print).
A plant has an Address, Language, and Country.
A plant has its own material master data. You can maintain data at plant level
for the following views on a material master record in particular: MRP,
Purchasing, Storage, Work scheduling, Production resources/tools,
Forecasting, Quality management, Sales, Accounting and Costing.
The plant plays an important role in Material Valuation, Inventory
Management, MRP, Production, and Costing & Plant Maintenance.
The list of plants attached to ZZZ Chemicals Limited as under:
ZZZ Chemicals
Trichy Plant - 1100
Madras Plant - 1200
Salem Plant - 1300
Outside Storage - 1400
Delhi Branch - 1500

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8 Windmills - 1701 1708

43 C & F Locations - 1601 1643
Head Office - 1800
The list of plants attached to Savita Polymers Company is as under:

ZZZ
mohali Plant - 2100
SSSS Plant - 2200
Head Office - 2300
Outside Location - 2400
Dependencies
One additional logical plant of Head office has to be created as the
procurement activities for ZZZ chemical and ZZZ polymer is handled
centrally from head office.
SSSS Plant 2200 attached to company ZZZ will be used only for managing
initial assets and inventory. Transactions for this plant will not be mapped.
The procurement of administrative and Service items at head office will have
to be identified as per the companies.
All the material stored in the outside locations will have to be identified as
per the company code and will be accounted in one Plant for each company
code i.e. Outside Locations
For identification of stock at various Storage Locations and tanks within the
storage locations will done through ware house management.
As materials are stored at C&F and each C&F has its own valuation, the same
will be created as Plants.
2.1.2 Purchase Organizations
A Purchase Organization is an organizational unit within logistics in SAP R/3,

which subdivides an enterprise to facilitate efficient and effective Purchasing.
A Purchase Organization procures materials and services, negotiates

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conditions of purchase with vendors, and bears responsibility for such

transactions.
A Purchasing Organization can be divided into several purchasing groups that
are responsible for different operational areas. Each purchasing organization
has its own
Vendor Master Data
Purchase Info Records
Conditions for Pricing
Purchasing Organisation for ZZZ Group: ZZZ group will have one Central
Purchase Organisation which will be responsible for procurement for ZZZ
Chemical and ZZZ Polymers.
ZZZ Group will also have plant wise Decentralised Purchase Organisation to
cater miscellaneous procurement handled independently by each plant.
T001 - Central Purchase Org (handled by Head office)
C001 - Decentralised P org for Trichy
C002 - Decentralised P org for Mohali
C003 - Decentralised P org for Salem
C003 - Central P org for ZZZ
P001 - Decentralised P org for Mangalore
These purchasing organisations will cater to all the procurement activities

required for the plants.
For example all the plant specific raw materials/spares/tools etc. will be
bought by the plant procurement department using the respective purchasing
organisation.
2.1.3 Purchasing Groups
The purchasing organisation is further subdivided into purchasing groups

(buyer groups), which are responsible for day-to-day buying activities. A
purchasing group is an entity, which communicates with the vendor.

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The purchasing group is internally responsible for the procurement of a

material or an external service and as a rule the principal channel for a
company's dealings with its vendors.
Purchasing groups for Savita Group
H01 - Imports Presently the person Responsible are Mr xxxxl and yyyyy
H02 - RM Domestic, Packing and Transport Presently the person responsible
Mr cccc
H03 - Engineering & capital & consumables purchase Presently the person
responsible Mr ffffff
H04 For administrative purchases
P01 Trichy Plant Presently the person responsible is Plant Head Trichy
P02 Salem Plant Presently the person responsible is Plant Head Salem
P03 Mangalore Plant Presently the person responsible is Plant Head
Mangalore
P03 Madras Plant Presently the person responsible is Plant Head Madras
2.1.4 Storage Locations
A storage location is the place where stock is physically kept within a plant.
A storage location has the following attributes:
There shall one or more storage locations within a plant.
A storage location has its code and description.
It is possible to store material data specific to a storage location.
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 location are always created for a plant
Storage Locations for Savita Group are

Plant: Trichy 1100
CODE Description
1100 Tank Farm
L001 TG-3
L002 Hydrocarbon
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CODE Description
L003 M TOP Plant.
L004 Behind New Godown
L005 New Tank Farm
L006 LLP Godown
L007 OIL-1 Tank Area
L008 Near Weigh BRIDGE.
L009 PM Speciality Open
L010 Scrap
L011 Rejected Speciality
L012 Rejected Lubes.
L013 Engineering Stores
L014 R&D
L015 TO Godown.
L016 Lube Plant
L017 Lube open
L018 New warehouse I
L019 New warehouse 2
Plant: Mohali 1200

CODE Description
1200 Tank Farm
L101 Scrap
L102 Rejected
L103 Engineering Stores
L104 Trading Stores
L105 FG/PM Stores
L106 Returnable Stores.
Plant: Salem 1300

CODE Description
1300 Tank Farm
L201 Shed adjoining to unit II
L202 Area behind Unit I / II
L203 FG Drums storage BSR
L204 Unit No. 1
L205 Unit No. 2
L206 Rear end road
L207 New BSR -Road
L208 Area OPP .to Unit I & II
L209 Unit NO.2
L210 Unit NO. 1

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L211 Engg. Stores

L212 Utility Block
L213 Scrap
Plant: Outside location 1400

CODE Description
1400 Tank Farm
Plant: Madras 2100

CODE Description
2100 Tank Farm
L301 CFC PLANT
L302 CFC PLANT OPEN YARD
L303 CFC SHED NO.1
L304 CFC SHED NO.2
L305 MCW PLANT
L306 MCW PLANT OPEN YARD
L307 TBS SHED
L308 RAW MATERIAL WAREHOUSE
L309 RAW MATERIAL WAREHOUSE OPEN YARD
L310 PPD WAREHOUSE
L311 E.WAX PLANT
L312 OFC PLANT & POWDER ROOM
L313 PETRO.JELLY PLANT OPEN YARD
L314 PETRO.JELLY PLANT
L315 BFP
L316 BFP OPEN YARD
L317 D.G.ROOM
L318 ENGG.STORES
L319 ENGG.STORES OPEN YARD
Plant: Outside location 2400 (SPL)
CODE Description
2400 Tank Farm
Dependencies
Each plant will have minimum one storage location to monitor inventory
related transaction
For ZZZ company
Delhi Plant, C & F Plants, Wind Mill Plants and HO will have one Storage
location each
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For ZZZ company
Salem Plant and HO will have one storage location
2.1.5 Warehouse
The Warehouse Management (WM) application provides flexible, automated

support to assist you in processing all goods movements and in maintaining
current stock inventories in your warehousing complex.
WM supports warehousing processes by making it possible for you to
Define and manage complex warehousing structures
Optimize material flow using advanced put away and picking

techniques
Process goods receipts, goods issues and stock transfers quickly and
easily
For ZZZ Group Ware house structure is as follows
For Trichy Plant Storage Location Tanks

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Plant Code TRICHY

1100
Storage TANK FARM

Location 1100
Storage Type TANK

110
Section Bonded Ex-Bonded

B01 E01
Bins Tank Tanks

B001 B067 E001 E067

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For Mohali Plant Storage Location Tanks
Plant Code Mohali

1200
Storage Tank Farm

Location 1200
Storage Type Tank

120
Receiving
Section R01
Bins Tanks
R101 R126

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For Salem Plant Storage Location Tanks
Plant Code Salem

1300
Storage Tank Farm

Location 1300
Storage Type Tank

130

B01 E01
Bins Tank Tanks

B201 B229 E201 E229

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For Outside Plant Storage Location Tanks

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Plant Code Outside

1400
Storage Tank Farm

Location 1400
Storage Type
Andheri JNPT BPT New Out Out
141 142 143 Mum Tank Tank
144 145 146
Section Bonded Ex Bonded

B01 E01
Bins Tank Tanks

B900 B999 E900 E999

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For Madras Plant Storage Location Tanks
Plant Code Madras

2100
Storage Tank Farm

Location 2100
Storage Type Tank

210

B01 E01
Bins Tank Tanks

B301 B350 E301 E350
Assumptions
1. In ZZZ Group Ware House Management will activated only for Tanks in
the respective plants.
2. All the tanks will be created as BIN.

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Process Architecture
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.
Material master is integrated with
Material Management
Production Planning
Sales and Distribution
Accounting and Controlling
Creation of material code is always with reference to the material type for
which it is created Material number generation is at the Level of Material
Type.
Each material type will be identified with a different number range

series.
Uniform material codification has to be maintained across all the plants
of ZZZ
Material code has to be maintained on which CENVAT is allowed as per

CIN requirement.
2.1.6 The material types identified for ZZZ
Raw Materials
Stores and Spares
Packing Material
Semi-Finished goods (Intermediate Goods)
Finished goods
Scrap
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Trading goods
Engineering for capital goods
Administration
2.1.7 Assumptions
1. ZZZ will follow the external numbering for material codification system.
2. The numbering will be restricted to maximum 6 characters
3. Material Code will unique across all plants
4. Raw material e.g. Base oil will be batch managed
5. Raw Material, Stores and Spares, Packing Material and Trading Goods
will have Moving Average Price (MAP)
6. Semi Finished, Finished and Scraps goods will have Standard Price (SP)
7. If the same material is sourced from local and foreign vendors, it will
have a separate code and valuations
8. Bonded and Ex-bonded material will have a unique code and hence
one valuation
9. Each material type will have a valuation class and a G/L A/c linked to it
for inventory postings
2.1.8 Unit of Measurement
Following Units of measurement can be maintained in material master.
Base Unit of Measurement
Sales Unit of measurement
Ordering Unit of measurement
Issue Unit of measurement
For any entry of UOM other than base unit of measurement, a conversion
factor with respect to the base UOM will have to be maintained. At The
material transactions the appropriate conversion will be carried out. For e.g.
base UOM is KG however Issue UOM is L & the Conversion rate is 1kg=2L
then if 100kg of material is issued the stock will be reduced by 200L.The
stock overview report can be seen in both UOMs.

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SAP standard reports provide the information in the Base Unit of

Measurement.
The relation between base unit of measure and alternative unit of measure
has to be identified properly and relationship will be unique for the material.
The material cannot have multiple values for an alternative unit of measure
with respect to the base unit of measure.
For ZZZ
Base oils the base unit of measurement will be Litres.
The base UOM will be unique for a material for all the plants.
Vendor Master
Vendor shall be created for the Purchasing Organisation and company code
wherein its going to be used. The various Account groups, which shall be
used to create a vendor, are:
Domestic Vendors
Import Vendors
Service Vendors
Employees
FI vendors
For advanced licence tracking
2.1.9 Assumptions
1. Vendor numbering will be alpha-numeric linked to Account Groups and the

number ranges will be externally generated with separate no. range
assigned to various account groups
2. If a vendor is supplying from multiple location, separate vendor codes

shall be created for each of the vendor location.
3. Dummy Vendors will be created for each of the Advance License. A

separate reconciliation account will be identified for these type of vendors
created per advance license

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4. The vendors are maintained at company code and purchasing

organisation level and cannot be identified by plant level.
Batch Management
Certain raw materials in stores be batch managed. For these materials, batch
numbering shall be externally assigned. Material having similar
characteristics but slight difference in specifications shall be managed with
activation of batch management.
Batch will be at plant level, while transferring the material from one plant to
another; same batch number shall be identified at the receiving plant.
Batches will be identified manually during issue. There will be no batch for
SFG. All FGs except lubes will be batch managed.
The batches Number will be captured at the time of GRN preparation which
will be entered manually. Batch number can be maintained as vendor wise,
make wise, date wise etc. as per requirement.
Savita will use vessel wise batch numbers for imports raw material
Excise Masters
Following India-specific (from statutory standpoint) masters need to be
created in SAP
Chapter ID Descriptions
Material Chapter ID combination
Material Assessable values
Modvat determination
Vendor Excise details
Customer Excise details
Excise rates
Exceptional Excise rates
Additional Excise rates

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3.Procurement
In SAP the procurement process can be broadly defined as per the eight steps
defined below. In ZZZ the Material requirement planning (MRP) of raw
material will be derived based on Bill of Material of finished goods. The
forecast for the finished goods will be indicated in the Sales and operation
planning (SOP). The requirement of the raw material will be net of the
available stock, open purchase order and open purchase requisition. The
details of processes of MRP and SOP will be covered in PP and SD blueprint
Procurement Cycle Summary
Purch. req.
8 Payment processing 1 Determination of Req.

Invoice
Purch. ord.
? 10
20
30
2 Source determination
7 Invoice verification Procurement
6 Goods receipt
Purchase 3 Vendor selection
Order
10
20
30
5 PO monitoring 4 PO processing

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Purchase Requisition
A Purchase Requisition is an internal document, which is a request or
instruction to Purchasing Department to procure a certain quantity of a
material or services so that it is available at a certain point in time.
The following shall be the source of Purchase Requisition (PR):
MRP (Materials requirement planning including reorder /forecast)
Manual
Maintenance Order
Purchase Requisition to RFQ/PO

Create
Create P
Purchase
urchase Requisition
Requisition
Info. Records
MR
MRPP Manually
Ma nually
Determine
Determine Source
Source
Vendor
Vendor
Release
Release
Budget
Assign
Assign &
&PProcess
rocess RFQ
PO
3.1.1 Process Flow
From MRP:
For Raw materials, Packing materials and Stores and Spares the Purchase
Requisition will be automatically created through MRP run. Raw material and
Packing material requirement will be based on the BOM of FG and SFG. In
case of Stores and Spares the material requirement will be based on reorder
point, which will be defined in the Material Masters.
Manual:

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The user can also create a Manual Requisition for specific requirement and
will be created by authorised personnel.
From Maintenance Order:

System will automatically generate the PR for the non stock able items in the
order.
Document types for Purchase Requisitions NB- Purchase requisitions

Request for Quotation (RFQ)
RFQ to Purchase Order
Create
Create RFQ
RFQ
Through
Through PR
PR Manually
Manually
Receive
Receive Quotations
Quotations
Vendor
Vendor
Quotations
Quotations Comparison
Comparison
Process
Process PO
PO
3.1.2 Process Flow
Request for Quotations are the enquiries issued to the identified vendors for
receiving the Price quote of required materials.
RFQs will be issued to each of the approved vendors for a particular material.
Based on the numbers of vendors the same number of RFQs will be issued
i.e. A unique RFQ will be issued to each of the approved vendors for a
particular material.

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RFQ will be created with reference to the Purchase requisition if it exists as

per the PR procedure earlier defined e.g. PR created manually or through
MRP. RFQs also will be created without any reference if no PR exists.
Each individual RFQ created will have Header and Item Information.
Header Information will capture vendor details based on the Vendor

Master and General Information in the form Text.
Item Information will capture the details of the material, the quantity
required and delivery dates.
In the RFQ the user will identify the following details
Purchasing Organisation
Purchase Group
Deadline for Submission of quotation
Material and Quantity
Plant for which the material is required
All the RFQ issued to different vendors for the procurement of the same
material will be identified with a same and unique collective number. The
collective number will be identified by the user as it will form a base for
comparison of quotation from different vendors for the same material
A tracking number also can be identified by the user for each of the RFQs for
the his operating convenience
There shall be RFQ document type: AN
Vendor Quotation and Bid evaluation

3.1.3 Process Flow
Quotations will be received from the vendors based on the RFQ sent to them.
The Quotations will have the various pricing conditions quoted by the vendor
for the material specified in RFQ.
The quotation received will be entered in the system with reference to RFQ
issued. The RFQ and quotation will be identified with the same number.

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The detail price break up will be identified in the quotation. For e.g. some of
the details are stated below.
Basic Rate
Discount
Packing and Forwarding
Excise Duty
VAT
Freight (Inward and Outward)
Assumptions
The above price break-up will be the form pricing condition in the Price
Schema which will be attached in the Vendor master.
Quotation compare
The quotation compare will be based on the collective number identified in
the RFQ. All the RFQ identified with a unique collective number will be
compared. The system will calculate the net effective price after taking into
consideration the secondary elements in the price i.e. Discount, Freight,
packing etc.
The system will consider the taxation during calculate the effective / net
price. I.e. The net price will be net of excise, but the sales tax will not be
taken into account.
All quotation comparisons will be on the net landed price. If the user wants to
refer the detail pricing of each quotation, then on the same screen the user
will have to click on the quotation and the data will be furnished.
All the quotations also can be compared with reference to ideal quotation
which will have a best price.
The system will rank the compared quotation based on the landed price.

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Based on the RFQ generated in the SAP, the vendor sends his quotation this
is captured in the RFQ made for the vendor in the SAP.
The details of the quote, i.e. the conditions (like Basic price, freight, discounts
etc) are keyed into the system. Quotations received from the various
suppliers shall be entered into the system with reference to RFQ generated in
the system. Quotation comparison can be carried out using various
Quotation numbers or using the Collective number.
In SAP the RFQ & Quotations shall have the same number.
The quotation shall be compared based on the pricing conditions

entered in the system.
3.1.4 Gaps / Issues Identified and Solutions
The system does not compare the quotations based on payment terms, Inco
terms and technical aspects of the material.
3.1.5 Forms and reports required
Report on Quotation Compare will have to be developed.
Purchase order Stock items

A purchase order is a formal request to a vendor to supply certain goods or
services under certain conditions.
3.1.6 Process Flow
A purchase order is a formal request to a vendor to supply certain goods or

services under certain conditions.
The user will create Purchase Order can be created with reference to the RFQ
or Last Purchase Order, this will help the system to copy all the details in the
RFQ on to the purchase order and the relation of the RFQ and the purchase
order is set in the system
If purchase order is created with reference the vendor details e.g. Vendor
Address, Payment Terms, Inco terms will be copied from the vendor master.

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Purchase Order can also be created with out any reference, in this case the
user will have to enter all the details e.g. Vendor, material, pricing condition
etc
Purchase Order will be made by ZZZ Group for those material for which the
price is negotiated for each transaction are subject to change for ever new
transaction e.g. Base Oils , Additives etc.
For a particular transaction if the Payment Terms and Inco term are different
from the vendor master, the same can be changed in the Purchase order.
The pricing related conditions will be copied from the RFQ and also can be
independently maintained in the Purchase Orders. The pricing conditions shall
be assigned a value either in percentage terms, value terms or per quantity
basis.
The different conditions (primary and secondary price elements) get

defaulted in the Quotations or purchase order based on the pricing schema
attached to the schema group field of vendor master. New pricing conditions
can also be added and existing condition shall be changed only before first
goods receipt entry posted against PO.
Material and Vendor related Excise and Sales tax details shall be identified
using the Tax Code at the Item level in PO. The tax codes will have to be
entered in the PO at the item level and contain the following information:
Excise Duty
Additional Excise duty
Special Excise duty
Sales Tax applicable / VAT related condition
Surcharges over tax as applicable for a specific region
Turnover tax
The excise duty shall be populated in the PO based on the Excise masters
maintained for the material code in the CIN version of SAP to be entered in

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the PO at an item level. Excise rate master and material excise detail has to
be maintained for proper excise duty calculation and CENVAT claim.
The user shall specify the Plant, Purchasing organisation, Purchasing group,
Material code, quantity of the material in the purchase order.
Over delivery tolerances will be maintained in the purchase order as per the
requirements for e.g. imported material where excess receipts are expected
to certain extent. In case if there is an excess stock receipt beyond the over
delivery tolerance identified in PO, receipts can be made only after changing
the quantities in PO.
Header text and Item text shall be maintained to communicate the vendor
regarding specific terms and conditions which are specific to the purchase
Savita will have the following document types for a purchase order.
Import Purchase Order
Domestic Purchase Order this will cover Subcontracting also
Engineering, IT, Laboratory Non Stock Purchases and Services
Stock Transfer Order
Asset PO
Service PO
The number ranges will be different for each of the above document types
and company code this will help the user identify the Purchase order at a
glance.
The system will create a purchase order number which will be system
generated and the series of the number will based on the document type
and Company Code which is specified during creation of the purchase order.
The PO will be amended for quantity as per the receiving plant on the receipt
of the material before the GRN

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Condition types for CVD, Cess on CVD, Basic customs duty, Cess on customs
duty and ADC will be percentage based and in foreign currency for which the
invoice verification for delivery costs will be made in INR.
All the condition types will be copied to the new PO from the old PO along
with the percentage or value or quantity based rate.
The unwanted condition types will be deleted from the new PO.
All the secondary cost conditions will be identified in the PO with some
vendor as no condition can be added nor the value can be changed once a
GRN is prepared.
Contracts will be prepared on the secondary vendors for transportation,

barging, CHA, insurance, etc and will be only used as reference; no data will
be copied from the contract in the PO by the system.
The secondary vendors will be changed at the time of GRN if different than
that identified in the PO.
Importing against Advance License: If the import receipts are against an

Advance License where no Custom Duty and CVD has to be paid, the amount
liable against the Custom and CVD conditions will to be identified against a
Dummy Vendor in the PO. This vendor number will be same as AL number,
which will be same as the Advance License Number. For creation of these
liabilities, all the duties and taxes will be identified in the PO (like any normal
import PO). This vendor will be credited with the duty liability and which will
be subsequently settled against an income clearing account.
On the sales side, a report will be generated to track exports obligations to

help Finance create the necessary entries.
The details of the same is explained in FI Blueprint
3.1.7 Exceptions and Variations
Retrospective Amendments are not available in SAP. The changes made to PO

will not affect the GRN which is posted before the changes. The changes shall
be affected only to the subsequent document posted after the changes.
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Purchase Order Print layout will be developed
3.1.9 Conditions in Purchase Order
Condition types are the various cost carrier components in P.O that determine
the value with which the Material is valuated & how the reimbursement for
the same is being carried out. Conditions for import and local procurement
will be different.
ZZZ will have the following condition
Basic Price
Discount
Surcharge
Freight
Cess i.e. Market Cess for NMMC
Survey Charges
Insurance
Barging
Clearing and Forwarding
Wharfage
Pricing procedure is a summation of the condition type in a set sequence

which helps the system calculate the net price
There will two pricing procedure for ZZZ i.e. Local and Imports
3.1.10 Delivery Costs in Purchase Orders
The secondary vendor for freight, Insurance and clearing will be identified in
the Purchase order against the specific condition type. The secondary vendor
can be changed during the good receipt stage also.
The delivery condition charges shall be booked to a separate account code at

the time of Goods receipt. It is necessary to identify the Freight, Clearing,
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Insurance vendor in the PO for the proper valuation of the material at the
GRN stage. However at the time of preparation of GRN, the actual vendor to
whom the payment is to be made can also be identified. In case if the
transportation charges have to be paid to the material vendor than in
delivery condition the vendor field can be left blank & the freight gets
automatically allocated to the Material Vendor
Freight Supplier can be changed at the GRN stage only if the planned
delivery conditions have been identified in PO. However the value of
the delivery cost can be changed vat the time of bill passing only.
Delivery Charges cannot be changed /amended in GRN
Any changes in the value of delivery charges (e.g. freight, Clearing,

Insurance) can be carried out at the time of invoice verification. Thus
vendor can be paid based on the actual invoice amount.
3.1.11 Excise and Sales tax related Details
User shall identify relevant tax codes in PO based on which the Excise Duty
and Sales Tax shall be calculated.
The user needs to select correct tax code in the PO
The user needs to select correct document type (order type) in the PO.
The tax code shall be identified at item level in the PO
TDS shall be calculated in the Financial Accounting system. Please

refer to the Business Blueprint of Financial Accounting for details
regarding TDS.
Excise and Sales Tax (VAT) will posted to a different account and will
not be posted to the stock account
3.1.12 Account Assigned PO (Consumption Orders)
Account Assigned PO will be used in case of materials which are non-coded

e.g. Engineering, Stationery, Laboratory items, Administration and other
consumable where the stock tracking for such material is not required and a
cost centre can be directly debited for its consumption.
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Specific requirement of any department can be booked using the account

assigned PO and identifying a cost centre linked to the department in the PO.
At the time of Goods receipt for such materials, stock of the material
will not be updated and directly the total cost of the procured material
shall be debited to an identified account assignment i.e. cost centre
Mechanical, Civil, Electrical or internal order.
3.1.13 Asset Purchase
All the asset purchases shall be linked to the asset class. Such PO shall be
account assigned to an Asset. Finance department shall provide the required
details to the purchase department regarding the Asset class and Asset
number, which need to be identified in the asset PO.
All asset purchases shall be account assigned PO with account assignment as

Asset. Before raising Asset PO, FI will provide the Asset number.
3.1.14 Release Procedure for Purchase Order
Release procedures will be defined for the following documents:
Purchase Requisition
Purchase Orders
In case of Purchase Requisitions only Engineering Purchase Requisitions will

follow a release procedure as the engineering specification are to be vetted
out.
In case of Purchase Order the entire PO will follow a Release Procedure.

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

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High Sea Sales

ZZZ will use the High Sea Sales scenario for the sale of base oil. The process
flow will be as shown below
The PO has to be amended as the sales order will be prepared after the PO.
The existing line item has to be deleted / modified and new line item will be
added with reference to the PR generated from the Sales Order.
A statistical GRN will be made in the system causing the following accounting
entries:

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Dr. Cost of Goods Sold

Cr. GR/IR Account
This entry will eliminate the need for taking the material into stock, making
customer delivery and posting goods issue.
Customer invoice can be raised once the statistical GRN and the invoice
verification are posted.

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4.Inventory Management
Material Receipt
A goods receipt is a goods movement with which the receipt of goods
from a vendor or from production is posted. A goods receipt leads to
increase of material stock.
Material shall be received at the plants or the delivery address other
than the plant identified in the PO.
In case of Subcontracting PO, the finished goods shall be received at
the plants from where raw material was issued for processing.
Goods Receipt
Unrestricted Use stock MVT 101
Blocked stock (Valuated ) MVT 101 (S)
Non-Stock material
Cost centre
Stock Project
Other
Consumption
Conditional GR blocked stock MVT 103

acceptance
Vendor

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4.1.1 Goods Receipt Procedure
In Goods receipt is done using Movement Type 101, Stock is directly

posted to unrestricted stock or quality inspection stock and vendor can
be paid after invoice verification.
Both rejection and acceptance cannot be done for the material on

which quality management is not activated. The system can not allow
posting accepted quantity and rejected quantity simultaneously in
single posting and for such condition two step goods receipt procedure
is to be followed.
Irrespective of the procedure followed,
No material shall be received without any reference of the PO
ZZZ can use single step goods for material like spares, regular
consumable items etc.
Any changes to the PO shall be reflected before preparation of GR
There shall be only one internal number range for the all types of
Goods Receipt across all the plants.
Goods Receipt for Local Material

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Scenario IA: Good receipt of Excisable Material
CENVAT related details should be captured by the user before

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

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Part II entries will be generated at the time of Excise Invoice Verify and
post.
In case if Excise Invoice is captured after GR, Part I and Part II entries
will be updated at the time of Excise Invoice Verify and Post
If Excise Invoice has not accompanied the material, the material can
be received into unrestricted stock. Whenever Excise invoice comes,
Excise Invoice is captured after GR, Part I and Part II entries will be
updated at the time of Excise Invoice Verify and Post. Invoice
verification can be entered only after the excise invoice verified &
posted.
If Vendor has not given the excise invoice for excisable material, then
user has to change the PO as non excisable before posting of goods
receipt and vendor invoice.
Scenario IA: Good receipt of Non Excisable Material
If the material is not excisable then user shall prepare the GRN using
movement 101 without use of CIN Excise Module.
The following accounting entry will be passed in the Financial Accounts
Dr. RM/PM Stock Account

Cr. GR/IR Account
Cr. Freight Clearing Account
Excise Entry for revenue purchases
Dr. Cenvat BED/ AED/ SED Account
Cr. Cenvat Clearing Account
Excise Entry for Capital purchases
Dr. Cenvat BED/ AED/ SED Account
Dr. Cenvat on hold Account
Goods Receipt for Import Material
Import good receipts will be carried out either at the outside storage location
or directly at the Manufacturing Plant
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Amendments will have to done in the PO, for quantity splitting as per
receiving plant and any other condition if required
The break up of the pricing elements (i.e. freight, Barging, CVD etc) will be
copied from the last PO
If the material is received at Outside Storage location, Stock transfer Order

will be used to transfer the material to the manufacturing plant.

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Scenario IIA: Goods Receipt for imports at Outside Storage Locations
Preparation of PO
Release of PO
The invoice verification shall be carried out for CVD before the goods
receipt of the material in the system.
Posting of invoice verification for duty charges as delivery costs
The excise invoice (i.e. CVD) shall be captured and posted in CIN.
The GRN shall be prepared with respect to PO.
Posting of part 2 in dummy excise registration
Preparing of Transfer order & confirmation for warehouse
Placing in Bin
Scenario IIB: Goods Receipt for imports directly at Manufacturing Plant
Preparation of PO
Release of PO
The invoice verification shall be carried out for CVD before the goods
receipt of the material in the system.
Posting of invoice verification for duty charges as delivery costs
The excise invoice (i.e. CVD) shall be captured and posted in CIN.
The GRN shall be prepared with respect to PO.
Posting of part 2 in respective plants excise registration
Preparing of Transfer order & confirmation for warehouse
Placing in Bin
Accounting Entry:
Invoice Verification for Custom Duty when material not purchased
against Advance License
Dr. Cenvat Clearing Account
Dr. Custom Clearing Account
Cr. Vendor Account
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Invoice Verification for Custom Duty when material purchased

against Advance License.
Dr. Custom Clearing Account
Cr. License Vendor Account (Recon A/c-adv license receivable
A/c)
Goods receipt when the material is not purchased against advance

License
Dr. Stock Account
Cr. GR/ IR Account
Cr. Custom Clearing Account
Goods receipt when the material is purchased against advance
License
Dr. Stock Account
Cr. GR/ IR Account
Cr. Custom Clearing Account
Capture Excise Part II when the material is not purchased against
advance License
Dr. BED Account
Dr. Cess Account
Invoice Verification for Foreign Vendor
On receipt of vendor bill the following entry will be passed:
Dr. GR/IR Account
Cr. Vendor Account
Scenario IIC: Goods Receipt for imports in Manufacturing Plant from
Outside Storage Locations (Stock Transport Order)
Creation of Stock transport order with supplying plant as Outside

Storage Location and receiving Plant as Manufacturing Plant
Creation of Replenishment Delivery
Preparing of Transfer order and Confirmation for warehouse
Creation of Post Good issue to reduce the inventory at Outside Storage
Location
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Pro-forma Invoice
Excise Invoice at Supplying Plant (i.e. Outside Storage Locations)
Good receipt at Receiving Plant (i.e. Manufacturing Plant)
Preparing of Transfer order and Confirmation for warehouse
Excise Invoice post and capture in receiving plant
Scenario IID: Weigh Bridge Interface
Other Good Receipts

Scenario III: Goods Receipt for Assets Material / Spares
The cycle of local /import GRN holds good for capital materials.
The type of material (Asset) shall be specified while capturing the
excise invoice.
The GRN shall be prepared with respect to excise invoice. The system
shall update RG23C Part I after the GRN has been posted.
The excise invoice shall be posted and the system shall pass an entry
for claiming 50% Modvat for the current year updating RG23C Part II. In
the subsequent year remaining 50% Modvat shall be claimed.
Scenario IV: Goods Receipt for Consumable materials
The regular GRN cycle holds well for the consumable materials with the
exception that system shall not update the stock of the material.
It shall be assumed that the material is consumed after good receipt no
separate goods issue transaction needs to be carried out.
Accounting entries in FI at the time of GRN
Dr. Consumption A/c
Cr. GR/IR Clearing A/c
Scenario V: Goods Receipt for Production Order

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Goods shall be received in the concerned plant and storage location

with respect to production order. This shall result into converting of
stocks from work in progress to semi finished material or finished good.
This shall result into increase of stocks in the storage location.
Accounting entries in FI at the time of GRN
Dr. FG inventory A/c
Cr. Factory output A/c / Cost of production A/c
Scenario VI: Goods Receipt against Returnable Gate Pass
Service PO will be created for the repairs to be made along with the
charges
The inventory of the asset eg pump or motor will be generated against
a non valuated material code
A transfer posting to the subcontractor stock will be entered in SAP to
keep a track of the stock
The material will be sent out of the gate against a printed copy of
Returnable gate pass from SAP
On receipt of the repaired asset the transfer posting made earlier will
be reversed
Service entry sheet will be posted for the repair charges and the
invoice verification will be done for the same. The GRN for the services
will be posted automatically in the background.
Scenario VII: Goods Receipt for Subcontracting Purchase Order and
Material received in Plant and transferred to Subcontractor

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

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The PO shall be prepared on the subcontractor for the End Product

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

subcontracting PO through transfer posting. This will result in the
posting and identification of stocks at the vendor location. The raw

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materials can also be received directly at the subcontractor by posting

a GRN for the PO in which the subcontractor has been identified in the
delivery address of the PO.
No Accounting transactions shall take place when stocks (components)

are transferred to the vendor location.
A 57F4 document (Excise Challan) shall be generated and printed

(optional) based on the transfer-posting document in CIN.
On the receipt of the End Product from the vendor (subcontractor) at

plant, the GRN shall the prepared with respect to the subcontracting
PO and 57F4 document.
This shall result in the posting of the consumption entries for the
components lying at the vendor location.
The 57F4 document shall be reconciled & completed in CIN after final
receipt of the End Product.
Logistics Invoice Verification shall be carried out for the labour charges
for the end product supplied by the Vendor.
The subcontracting PO shall have the Labour charges as the price

component.
4.1.2 Excise details to be captured at goods receipt from vendor
User would capture excise-related details at the time of preparing the

GR. User will enter the Vendors Excise Invoice details in the GRN
transaction. At the time of GR, RG23 A or C Part I will get updated.
Part II entries will be generated at the time of Excise Invoice Verify and
Post stage which will be done after GR
In case if Excise Invoice is captured after GR, Part I and Part II entries
will be updated at the time of Excise Invoice Verify and Post.
If Excise Invoice has not accompanied the material, the material can
be received into GR Blocked stock. The GR block stock shall not update
the total valuated stock and will not be available for usage. Whenever

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Excise invoice comes, the material can be taken to unrestricted stock

from GR block stock. However, from unrestricted stock the material
cannot be moved back to GR block stock.
If Excise Invoice has not accompanied the material and material is

required for use in production the user can post the goods receipt and
subsequently post the CENVAT with the reference of PO and goods
receipt material document number.
4.1.3 Gaps / Issues Identified and Solutions
As per standard SAP only two weights can be captured in the GRN out of
which one is actual GRN quantity the other one can be either BOE/ BL
quantity or actual quantity received at the dock. Development will be done to
capture four different weights.
Transport vendor and the barge vendor will be changed at the time of GRN if
different than that identified in the PO.
Report for outturn i.e. the weights captured at the different stages will
be developed
Returnable Gate Pass
Non Returnable Gate Pass
4.1.5 Interfaces
Weigh Bridge Interface will be developed to meet the business requirement of

identifying the quantity in weight and volume of the raw materials (e.g. Oils)
which are received in Tankers.
Material Issues (Consumption)

A goods issue (GI) is a good movement with which a material withdrawal or
material issue, a material consumption or a shipment of good to a customer
is posted. A good Issue leads to reduction of the stocks. Material shall be
issued to various departments. The issues can be specific against a

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production order, maintenance order or generally to a cost centre against a

reservation. The consumption entries shall get posted at the time of goods
issue. Other than high value maintenance spares, all materials will be
charged to consumption as soon as it issued from the main stores. In certain
cases the material is issued to production or cost centre but is not identified
as consumption. For e.g. materials issued to shop floor locations, for such
cases, a separate storage location will be identified in the system for tracking
the stock on the shop floor. High value maintenance spares such as chemical
& fluxes shall be transferred from Main Stores storage location to the Shop
floor location. Hence, the issues for production/ cost centre from the main
storage will be shown as transfer posting from storage location to storage. No
accounting entries shall be generated for the transfer posting. On charging
the materials to a work order or cost centre, issue to production order/cost
centre will be recorded. Thus exact consumption quantity will be recorded for
the production order. For other products, which can be issued, as per exact
requirement, a material issue to production order will be carried out from the
main storage location directly.
Negative stocks shall not be allowed in the system.

The materials such as chemicals, oils, engineering goods shall be stored in
the defined stores and directly issued to the production order or cost centre if
required.
The materials such as high value maintenance spares shall be stored in the
engineering stores and transferred to the shop location and subsequently the
issue shall be booked against maintenance order or cost centre if required.
If stores want to issue material other than originally planned in the
reservation then material has to be changed in the reservation with the
required alternative material.
There shall be only one internal number range for all types of Goods Issue
and Transfer Posting documents across all the plants.
When the material is issued against the production order the following
accounting entries will take place in FI
Dr. RM stock A/c
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Cr. Inventory Change A/c
4.1.6 Transfer Postings
During the normal business activity it may be essential to move the material
physical from one place to the other within the same company code, or within
the same plant or move it from one stock type to another or from one
material to another. These can be done in SAP by transfer posting.
The major material transfers that can be carried out in SAP are
Plant to Plant
Storage Location to Storage Location
Stock to Stock i.e. unrestricted to blocked
Batch to Batch
Bin to Bin
Material to Material.
4.1.7 Plant to plant transfers
If the material is transferred from one plant to another of the same

company code Stock transport orders STO will be used wherein the
transfers are carried out using the Sales functionality of Delivery.
Transportation cost will be included in the PO and cost of transportation

will be loaded onto the stock valuation of the material at the receiving
location.
STO will be used to transfer the material from Trichy / Mohali to the
C&F agents. In the STO the MAP (Moving Average Price) will defaulted
as the Basic price and the transport cost will be identified as one of
the price
If material is moving from one plant to another plant. The excise

invoice needs to be prepared in CIN for the transfer of the excisable
material. Excise will be debited at originating plant and same amount

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shall get credited at the receiving plant by capturing excise invoice

details of the issuing plant.
4.1.8 Transfer of material from Manufacturing Plant to Stocking

Plant or C&F (with Excise invoice)
The transfer shall be carried out using Stock Transport Order (STO) with
outbound delivery for finished goods. STO shall be created in the MM
module by the supplying plant for the receiving plant. Based on the
STO, delivery shall be carried out in Sales and Distribution (SD) module
of SAP. The excise invoice will also be prepared at the time of good
delivery. The material shall be received in the receiving plant using
movement type 101 in Materials Management. Till such time goods
shall be tracked as stock-in-transit.
Stocking Plant or C&F can maintain the finished goods stock in

batches, which are received from manufacturing plant.
Stocking Plant or C&F can only avail the CENVAT mentioned in the
excise invoice received from manufacturing plant.
4.1.9 Material Transfer from Storage Location to Storage Location
The material can be transfer from one location to another within the
plant. This transaction does not involve accounting entry for the
material.
ZZZ can use this transaction to transfer the material form material
inspection storage location to stores. Similarly the materials like spares
that are issued to the specific departments can be transferred from
stores to the specific departments and subsequently the consumption
can be booked for the material if required.
4.1.10 Material to Material Transfer
If a material changes over time in such a way that it no longer

corresponds to the features defined in the material master record, but

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to the features of a different material, the user can carry out transfer
posting from material to material.
A transfer posting from material to material results in the transferred

quantity being managed under a different material number. A material
master record must exist for the receiving material.
Parallel to the material document, an accounting document is posted.

The issuing material master record determines the value of the
transfer posting.
The material to material transfer should be done in consultation with

accounts as it involves accounting entries being posted for the
material.
Both the materials should have the same base unit of measure
4.1.11 Stock to stock
When the quality inspection posting is completed the material transfers from
Quality stock to Unrestricted use stock. Similarly it is also possible to move
unrestricted use stock to a specific sales order stock or specific project
stock.
4.1.12 Bin to Bin transfer
As with all stock movements, to transfer stock from one storage bin to
another storage bin within a warehouse number you first create a transfer
order.
To transfer stock of a material from one storage type to another, you can
display the bin stock of the source storage type (same as with the bin status
report). From this display you can select the stock to be transferred and
create the respective transfer orders.
ZZZ will use the bin to bin transfer posting for transferring the material from
bonded to ex bonded location.
The quantity of material in the bonded and the ex bonded location can be
reviewed in the bin status report for the section type bonded or ex bonded
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Material Returns
A goods return procedure can be divided in following steps:
Return to vendor after good receipt or if the material fails in the
production
Return of excess material to stores/storage location from production or
cost centre
4.1.13 Material Return To vendor
Material can be returned back to the vendor if the quality department has
rejected it or the material has been returned from the production department
due to some defects.
The material shall be returned to the vendor using the
Return to vendor movement type in SAP or
Creating a Return PO
Return movement, user can send back the material of a single
document (GRN). The return document shall refer to the GRN
document against which the material was received.
The excise duty shall be reversed and gate pass shall be generated using the
Excise for other movement transaction of SAP.
Using the Return PO, user can send many materials back to vendor. However,
the return PO will not refer to any specific GRN or material document.
The excise duty shall be reversed and gate pass shall be generated using the
Excise for other movement transaction of SAP. The user shall manually enter
the excise duty.
For vendor returns,
If the bill of the vendor has been passed and later the material is
rejected on shop floor, the vendor liability is not reduced automatically.
At the time of vendor return, system credits the stock account and
debits the GR/IR account but vendor does not get debited
automatically.
A separate FI entry needs to be passed in financial accounting system
if the vendor is not providing with the replacement for the rejected
material.
If the vendor is replacing the rejected material, create the FI entry for
debiting the vendor liability. Create a new PO for the replacement
material and carry out the receipt and bill passing procedure for the
same.
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4.1.14 Material Return to Stores
Material can be returned back to the stores from Production. Two different
options are available to receive back the material that has been issued.
The material can be returned back and the consumption can be reversed
using the reference of the original issue document. However, in this route full
quantity of a material, which was issued, is returned back and part quantity
return is not possible. But the consumption reversal entries and the value
attached to it are based on the original issue document.
Second route is returning the material without the reference of the original
issue document. In this case material will be posted at moving average price
of the material at that point of time. This procedure can also be used for
scrap return and serviceable items from shop floor.
ZZZ to give the layouts & formats
Material Reservation
With this component, user makes a request to the warehouse to keep
materials ready for withdrawal at a later date and for a certain purpose. This
simplifies and accelerates the goods receipt process. 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 reservations are taken into account by Material
Requirements Planning (MRP), which means that required materials are
procured in time if they are out of stock. The system makes reservations at
plant level.
When production / maintenance order is created, the components of order
from the storage location are reserved automatically. User cannot manually
process automatic reservations. For example, it is not possible to change
reservations for an order directly. User has to change the components in the
order. The system then updates the reservation.
ZZZ can use the material reservation for raw materials, spares and
engineering stores materials related items to take care of non-availability of
the material. If the material stock goes below the reserved quantity, the
system will result into generation of Purchase Requisition after running the
MRP, based on the reorder level / material planning norms set in the material
master.

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Flow Diagram for Goods Issue
Reservation Goods Issue

for material
Manual reservations, Stock Update
Automatic Reservations Consumption A/C

For Production
When a reservation is entered, the following events occur in the system:
The system creates a reservation document, which serves as proof of

the request.
In the material master record, total stock and unrestricted-use stock of

the material remain unchanged. Reserved stock is increased by the
reserved quantity and can be seen in the stock overview (MMBE).
In MRP, available stock is reduced by the reserved quantity. This is

visible in the current stock/requirements list (MD04). The reservation
causes an entry to be made in the requirements planning file.
Note: The procedure of creating the reservation does not mean hard
reservation of the material. If the stock exists for the material, it can be
issued to another entity irrespective of the material is reserved or not,
i.e. system does not take into the consideration the priority of the
reserved materials.
By transfer posting however the material may be allocated from

unrestricted use stock to specific sales order or project stocks.
The purpose of reservation is only limited to consider the stocks of the

materials for MRP purpose and create Purchase Requisition for the
material to avoid the situation of non-availability of the material.
All the reservations get automatically closed after the material is

issued to the order or reservation.
All the open reservations for which the materials have not to be issued
must be closed manually.

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All the reservations that are created automatically for production order
must be closed (if open material issue exists) during final confirmation
of the order.
On periodic basis the open reservations may be closed.
Stock transfer Order
The material transfers from one plant to another plant or C&F will be
supported by the stock transfer order. The stock transfer orders are purely for
material movement within ZZZ group or to the C&Fs and not to be issued to
any external vendor of ZZZ.
Definition: In stock transfer processing, goods are procured and supplied

within a company. One plant orders the goods internally on another plant
(receiving plant/issuing plant). The goods are procured with a special type of
purchase order with SAP i.e. the stock transport order. User can request and
monitor the transfer of goods with a stock transport order. The delivery can
be processed in Inventory Management or in Sales and Distribution (SD
Shipping). The delivery should be processed through SD to take care of the
billing.
When transferring the raw material, semi finished goods like oil for packing to
Mohali; finished goods to C&F, spares etc. from one plant to another or
various depots, the stock transfer order shall be used.
The requesting plant shall raise the stock transport order on the supplying
plant for example, in case of transfer of oil for packing from Trichy to Mohali;
Mohali will raise a Stock Transport Order, which is a form of a purchase order
on Trichy, the material to be transferred using the stock transport route needs
to be maintained in the Sales area view of the plants.
The material shall be transferred at the current valuation rate of the material
in the supplying plant. While transferring the common raw material between
the plants, excise will be debited in one plant and shall be credited in the
receiving plant.

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4.1.16 Characteristics of a Stock Transfer Order
The quantity posted from stock of the sending plant is first of all managed as
stock in transit of the receiving plant. Only once the goods receipt has been
entered the quantity is posted to the unrestricted-use stock of the receiving
plant. This enables the quantity "on the road" to be monitored. Additional
Delivery costs can be entered in the stock transport order.
4.1.17 Processing of Stock Transfers between the Two Plants

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Insurance Declaration to the insurance company will be carried out outside

the SAP system. SAP will not provide any information regarding the insurance
declarations.
Vendor Evaluation
The vendor evaluation shall be carried out for particular criteria such as
quality, delivery and quantity. The quality score shall be generated based on
the usage decision specified in QM module and the score related to a delivery
shall be generated based on the deviation between actual delivery date and
planned delivery date. The score related to quantity reliability shall be

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generated based on the deviation between goods receipt quantity and order
quantity.
Data required for vendor evaluation
TIME PERIOD: The days to be considered for vendor evaluation e.g. 365 or
180 days. The system shall consider the history data pertaining to last 12 or
6 months from the date of evaluation.
WEIGHTAGE: The weightage to be specified for each evaluation criteria.

(Could be equal or unequal)
E.g. Price: 30
Quality: 20
Delivery: 50
Total: 100 %
Each criterion can have more than one sub criteria
E.g. On time delivery: 60
Quantity reliability: 40
Each criteria /sub criteria shall have different scoring pattern based on the
deviation of each criteria/sub criteria from the standard.
E.g. On time delivery
For the above criteria the scoring pattern can be assumed like
Percentage Score for

Deviation Evaluation
99 1
80 20
60 40
40 60
20 80
00 100
-20 80
-40 60
-60 40
-80 20
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Percentage Score for

Deviation Evaluation
-100 1
Explanation: a) if the deviation of the actual delivery date and planned

delivery date is 80%, the vendor shall score 20. b) If the deviation of the
actual delivery date and planned delivery date is 40%, the vendor shall
score 60.
The max (+/-) Deviation permitted for a material shall be specified in the
purchasing value key configuration. The purchasing value key has to be
maintained in the material master e.g. Key A1: 20 days as delivery variance
The A1 key denotes if the vendor delivers a material before/after 20 days

from the planned delivery date then the vendor shall be awarded zero score.
If the vendor delivers a material 5 days after planned delivery date, the score
shall be based on the percentage deviation with respect to 20 days i.e. 5X
100/20 = 25%. The system shall find out from the configuration the nearest
value if percentage deviation for the said criteria and allocate a score. In the
mentioned scenario vendor shall score 80.
The vendor evaluation for price level as criteria is calculated as follows
To determine a vendor's price level, the system compares the vendor's

effective price with the market price for the material.
The system first checks whether the buyer has maintained a market
price for the material. (Special condition record)
If not, the system calculates the market price, which is equal to the
average of the effective prices for all vendors supplying this material.
The system then applies the effective price for the vendor from the
conditions.
The vendor's effective price is then compared with the market price
and the percentage variance determined.
The system then assigns a score to the variance in accordance with the
settings made in Customizing.

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The limitation of the vendor evaluation for price criteria is that system
does not take into consideration PO price but it always compares
material market price with effective price maintained in the info
Record.
The vendor evaluation for quantity reliability as criteria is as follows:
When goods are received against a purchase order, the system checks
whether the quantity received are the same as the quantity ordered. If
this is not so, the system works out the difference and converts it into
a percentage variance using the following formula:
GR quantity - order quantity / order quantity x 100
The system issues a score for this percentage variance as defined in

Customizing.
The new score is then included in the vendor's previous score for the
sub criterion. To calculate the new score for the sub criterion from the
already existing composite score and this new individual score the
system applies the smoothing factor Quantity variance defined in
Customizing.
When user run a new evaluation, the system calculates the average of
the individual scores for all materials to obtain a score for the vendor
for adherence to the confirmation date.
Min. delivery quantity % specified in the material master purchasing

value key plays an important role in the evaluation. The min. delivery
qty. % signifies that min. qty. to be delivered in the order for the goods
receipt to be included in the evaluation. In this way, user can prevent a
vendor from receiving a good score for a punctual delivery, where the
quantity delivered was insufficient. If this value is not maintained in
purchasing value key of material master, the system shall pick up the
average value specified in the customisation irrespective of material
and vendor.
The score for on time delivery shall be calculated as under

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At the time of a goods receipt against a purchase order, the system

checks whether the delivery was on time or late:
GR date - delivery date / delivery date = date variance
If the delivery was on time, the system checks whether a minimum

delivery quantity is to be taken into account.
It checks the Minimum delivery quantity/standardising value for

delivery time variance from material indicator.
If the indicator has been selected, it checks whether a value has been
maintained in the material master record:
If a value exists, it is used. If no value exists, the value from the

Minimum delivery percentage field is used. If there no such value in
this case either, goods receipts of fractions of the order quantity are
included in the calculation of the score.
If the indicator has not been selected, the value from the Minimum
delivery percentage field is used. If no value exists, goods receipts of
fractions of the order quantity are included in the calculation of the
score.
If the minimum delivery quantity is not reached, the system does not
determine a score for the goods receipt.
If the minimum delivery quantity is reached and the delivery date adhered to,
the variance is zero and the system awards the highest points score for the
relevant goods receipt.
If the delivery is not on time, the system calculates the date variance
in days and converts it into a percentage variance.
In the process, the system searches for the standardising value as

follows:
It checks the Minimum delivery quantity/standardising value for

delivery time variance from material indicator.

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The system then awards the score user defined in Customizing for this
percentage variance. The new score is then included in the vendor's
previous score for the sub criterion. To calculate the new score for the
sub criterion from the already existing composite score and this new
individual score the system applies the smoothing factor Date variance
defined in Customizing. When user run a new evaluation, the system
calculates the average of the individual scores for all the materials to
obtain a score for the vendors on-time delivery performance.
If a goods receipt covers several schedule lines, the Vendor Evaluation

system performs this calculation for each schedule line.
The score for incoming goods receipt subjected to inspection is calculated as

follows:
If a material is subject to incoming inspection, part of the delivered

material is checked by the quality assurance department when goods
are received against a purchase order.
An inspection lot is created. After the inspection or testing, the person

responsible in Quality Management then enters a result and makes a
decision as to whether the material can be used. (Usage decision code
has a value attached to it. based on which the score will be calculated.
minimum score has to be one)
All the incoming inspection lots are stored in a file with their scores.
When user run an automatic re-evaluation for a vendor, the system

selects all the incoming inspection lots for the vendor that lies within
the validity period and calculates the average of the score.
The result is the vendor's score for the quality of goods received.
The data required from ZZZ for carrying out vendor evaluation:
Market price for each material and score to be awarded based on the
percentage deviation that shall be considered as a reference for
calculating the deviation of the vendors average price for evaluation.

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Usage decision codes with the respective quality scores. (Taken care in
quality module)
Purchasing value key (material) specifying the maximum deviation

permitted for a material in terms of days and values in terms of
percentage of deviation and respective score (please refer the above
mentioned table with the example). Please note that purchasing value
key can have under delivery / over delivery tolerance along with
maximum tolerable deviation allowed for a delivery.
Purchasing value key is used in Material master with each of the Item
code.
4.1.18 Assumption
All the criterias & sub criteria are with weightage will be finalised on
discussion in the configuration phase. Vendor rating will be calculated for a
vendor and purchasing organisation combination
Vendor evaluation can happen only after the required customizing is

complete. There has to be enough transactional data in SAP for same.
Physical Inventory
There are various physical inventory methods available in SAP
Periodic inventory
Cycle counting
ZZZ will be using periodic physical inventory method

The physical inventory process can be single step, two steps or three steps,
ZZZ to use single step procedure.
Three step procedure:

Periodic Physical inventory procedure shall be carried out in the
system; User will create a physical verification document in SAP
system. Based on the actual physical stock, user shall enter the actual

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count of material with reference to the physical verification document

number. The same document shall be printed for easy verification.
In case of differences, material can be recounted.
The posting of the differences shall be a separate activity based on

which the stocks shall be reorganised- both quantity and value terms.
The posting of differences in the inventory shall be booked to a
separate account code. The posting of differences will be subject to
approval of the higher authority.
Stocks shall be blocked for Posting during Physical inventory process.
Posting Block indicates that no goods movements involving the

materials listed in the physical inventory document can be posted for
the duration of a physical inventory count.
Single step procedure:
User will enter the actual physical stock in the system (MI10) the
system will create the PID and post the difference at the same time in
the background. An accounting document will be generated along with
the PID.
4.1.20 Physical Inventory in Warehouse Management
This component allows you to carry out a physical inventory of your

companys warehouse stocks for balance sheet purposes.
Integration with MM as the physical inventory process will be updating the

base document / reference document in MM. The physical inventory
differences should be cleared both in WM and MM.
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 fast-moving items to be
counted more frequently than slow-moving items.

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Regardless of the physical inventory method, the process of physical

inventory can be divided into three phases:
1. Physical Inventory Preparation
Create a physical inventory document.
Blocking Materials for Posting
Print and distribute the physical inventory document.
2. Physical Inventory Count
Counting stocks
Entering the result of the count on the physical inventory document

printout
3. Physical Inventory Analysis
Entering the result of the count into the system
Initiating a recount, if necessary
Posting inventory differences
Procedure for Physical Inventory in Warehouse Management - SAP

Scenarios
S. No Procedures TCODE Input Output
1 Create a Physical LI01N Inventory

Inventory document document
2 Activate Physical LX22 Inventory document Inventory

Inventory document
3 Print count sheet LI04 Inventory document Inventory

document

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S. No Procedures TCODE Input Output
4 Inventory count LX26 Inventory document Inventory

document
5 Entering count results LI11N Inventory document Inventory

document
6 Change count results LI12N Inventory document Inventory

document
7 Recount on need basis LI14 Inventory document Inventory

document
8 Generate difference LX17 Inventory document Inventory

report document
9 Differences clearing in LI20 Inventory document Inventory

WM document
10 Differences posting in LI21 Inventory document Inventory

Inventory Management document
The process of physical inventory in WM will only be used for the

materials/storage locations for which the WM is activated for all the other
materials/storage locations the normal inventory management physical
inventory process will be used.
4.1.22 Authorisation Requirements
Only the concerned staff should be authorised. Write-off authorization should

be with the senior management only.

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Logistics Invoice Verification / Bill Passing

This is the last part of the procurement cycle; the vendor invoice is verified
and entered in the system. ZZZ Accounts department will carry out this as
detailed in the FI blue print.
4.1.23 Process flow
ZZZ shall use Logistics Invoice Verification (LIV) and no changes in the
proposed account codes shall be carried out.
Bill Passing or Logistics Invoice Verification shall be GR based Invoice

Verification default. Only in certain exceptional cases like Import PO,
the LIV can be PO based.
The import PO bill passing shall be carried out based on the exchange
rate of the posting date. It is assumed that the Exchange rate
conversions will be entered on periodic basis (daily recommended) to
reflect the exact rate on the date of posting. The defaulted rate cannot
be changed in the LIV transaction.
Invoices presented by the supplier can have variances from the system
proposed values. The user can accept the rate differences by
increasing the rate as proposed by the system. However, system
identifies such invoices as having variances and checks for the various
tolerance limits identified in the system.
If there are differences between the amount proposed by the system

and the actual amount in the vendor invoice, user can change the
amount and post these differences. The system cannot provide the
reason for such differences.
To accept the difference, user shall change the value suggested by the
system
Quantity Changes is not recommended by the system
While posting the invoice, the system will post the differences to the
Stock account if the material is having the price control as moving
average and the stock is available. The system also updates the
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purchase order history with the changed data. If the stock is

unavailable the differences are posted to the Price difference account.
Invoices containing variances within defined tolerance limits shall be

accepted by the system. Invoices exceeding the Tolerances limits shall
get blocked for payment.
The various parameters on which the invoice can be blocked are Price,
Quantity, and Order Price Unit Variance and Delivery variance.
Blocking based on Delivery Date Variance (Value variance based on

delivery date variance) is not required.
ZZZ shall keep 5% upper tolerance limits to avoid unnecessary
blocking in case of increasing in price, tax, freight etc.
All the blocked invoices need to be released before the payment can
be made against the blocked invoice in FI. Invoices shall be released in
a separate transaction. User shall cancel the blocking indicator that
was set when the invoice was posted. The authorisation of the
transaction shall be controlled through authorisation profile of SAP.
The differences arising due to foreign currency exchange rate variation

at the time of Invoice Verification (not Bill Payment) shall get loaded to
inventory (if there is sufficient stock coverage). Foreign Currency
Exchange variations can be identified only at the IV stage. (And not at
GR stage). In case of insufficient stock, the differences will go to Price
difference account.
Credit note on vendor shall be generated through FI module if Bill has

been passed and paid to the vendor and later the adjustment needs to
be paid.

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5.Excise JVs
Excise JVs can be used for the following functions:
Scrapping of material,
Posting any difference in excise amount arising out of wrong data

entry,
Making adjustment postings for materials not used in Production,
Making adjustment postings for money transferred to PLA and
Making adjustment postings for additional excise paid by vendors.
Adjustment of CENVAT at later date (say disputed matters).
Each plant and C&F shall be identified as excise group in SAP. The
excise registers are maintained at excise group level.
The external locations will be attached to a dummy plant which will

have a dummy excise registration and excise group
Accounting Entries for excise in FI during Scrapping through material write off
Dr. Cenvat clearing A/c

Cr. BED A/c
Cr. Ecess A/c
Accounting Entry when liability is more than Cenvat Receivable during

utilization
Dr. Cenvat Payable Account

Cr. Cenvat RG23 A/C BED/AED/Ecess account
Cr. PLA BED account
Cr. PLA Ecess account
Cr. PLA AED account
Creation of TR6 Challan
Dr. PLA BED account

Dr. PLA Ecess account
Dr. PLA AED account
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Cr. PLA on hold account
Payment of excise Duty
Dr. PLA on hold account
Cr. Bank account
Accounting Entry when liability is less than Cenvat Receivable during

utilization
Dr. Cenvat Payable Account
Cr. Cenvat RG23 A/C BED/AED/Ecess account
The accounting entries for additional excise through excise JV will be similar
to the entries as in the case of excise entries for GRN of local or import
purchase.
The accounting entries for reducing the excess duty posted wrongly through
the other adjustment transaction of excise JV will be same as that of the
scrapping entries shown above.

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6.Scrap Identification
6.1.1 Process flow
In some cases material gets rejected or becomes useless due to expiry or

damage. The scrap shall be identified as non-valuated material in the system.
A separate material code shall be maintained for each material to be treated
as a scrap in the system. Scrap yard or store shall receive scrap, as a scrap
material or from cost centre. Scrap shall be tracked only on quantity basis.
Non-stock material will be brought into stocks just before the sale transaction
occurs. In ZZZ such kind of materials can undergo following treatment
Material is scrapped but can be sold: The sale of scrap will be handled
through SD module of SAP.
Material is destroyed
The material that has to be scrapped will be reduced from the stock using the
scrap movement. Stock will be reduced and the cost of the destroyed
material shall be accounted in a special account code and a cost centre
CENVAT claimed for all such materials will have to be reversed using Excise JV
with reference to the original excise invoice number.
The sources of scrap material will be:
production returns unfit for regular use/ unfit for return to vendor
non salvage sales returns
Customer returns beyond repairs
Inspection sample from QM department
Damaged stocks in warehouse
Accounting Entries in FI during Scrapping
Dr. Scrap A/c
Cr. Stock A/c

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7.Information System in MM
The following reporting requirements are met directly from standard SAP.
Materials receipt and consumption report
Total inventory summary Report
Pending Purchase order Status
Pending Purchase requisition Status
Purchasing Value Analysis
Pending non approved stock (identified as quality inspection stock)
Stock statement/Weekly / Monthly
Quotation analysis
Monthly stock of various items
Receipt of FG Weekly /Monthly (standard SAP material Document

listing)
Vendor Evaluation Report

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8.List of ABAP Developments

Forms & Reports
The following reports and layouts are planned:
Material shortage report i.e. actual GRN quantity vs. BOE quantity or
delivery challan quantity
Exception Report for overdue quantity i.e. PO for which the delivery
date has expired and open quantity exists
Quotation comparison report with price break-up, payment terms, Inco

terms
Outturn i.e. weight report captured at different stages
PO layout
Contract layout
PR status report along with RFQ no, PO no, Release details
Bonded BOE number against Ex bonded BOE number for STO
Stock out report for a period
GRN quantity Vs BOE quantity for a PO with 2% variation in quantity

with ED and Ecess values and the total PO quantity
Control chart report for time tracking for each activity
Returnable Gate Pass
Non Returnable Gate Pass
Data Migration Strategy

The following data will be programmatically transferred to SAP:
8.1.1 Master Data
Material Master
Vendor Master
Purchasing Info records

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8.1.2 Balances
Inventory
Dear Friends,
Based on Request from our friends... prepared SAP MM Business
blue print document. Hope it is useful for all. Thanks.
Regards,
G.V.Shivakkumar

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M Business Blue Print Sample

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SAP MM BLUE PRINT_SAMPLE G.V.

Project: ZZZ Model Company

SAP MM BUSINESS BLUE PRINT_SAMPLE

Please use my link to download the SAP articles:-

ZZZ MODEL GROUP Version 1.0

Document Owner: G.V.Shivakkumar

Versio Brief Pag Author Reviewed Approve Released Release

ZZZ MODEL GROUP Version 1.0

1.1 OBJECTIVE OF THIS REPORT.................................................................................1

2. ORGANIZATIONAL ELEMENTS IN MM........................................................ 6

3.1 MATERIAL MASTER...............................................................................................19

4.1 PURCHASE REQUISITION.....................................................................................24

4.4.9 RELEASE PROCEDURE FOR PURCHASE ORDER...................................................33

5.1 MATERIAL RECEIPT...............................................................................................36

7.1.1 PROCESS FLOW......................................................................................................70

8. INFORMATION SYSTEM IN MM....................................................................71

9. LIST OF ABAP DEVELOPMENTS...................................................................72

9.1 FORMS & REPORTS..............................................................................................72

ZZZ MODEL GROUP Version 1.0

ZZZ Polymers Limited

1.1.1 About ZZZ Chemicals

ZZZ Chemicals Ltd. is in the business of manufacturing and marketing of

The product categories of ZZZ are:

Light Liquid Paraffin

Heavy Liquid Paraffin

Lube Oils with a focus on retail users

Head office in Mumbai

Two factories Thane and Silvassa

One packing unit at Mahape

Five branch offices

About 40 C&F Agents spread all over India

1.1.2 About ZZZ Polymers

ZZZ Polymers Ltd. is situated in Coimbatore and in engaged in the business

ZZZ GROUP - 2 -PAGE 2 OF 83AAG SAP MM BUSINESS BLUE

Materials Management at Savita

Purchasing is a component of Materials Management (MM). The Materials

The purchasing module deals with the:

External procurement of materials and services

Determination of possible sources of supply for a requirement

Purchasing communicates with other modules in the SAP System to

Inventory Management component of Material management deals with the

Management of material stocks on a quantity and value basis

Planning, Entry, and Documentation of all Goods Movements

Carrying out the Physical Inventory.

Logistics Invoice Verification is a part of Materials Management (MM). It is

SAP R/3 Materials Management

Purchasing information system

Service Purchasing QM Inspection lot

Mat erials Manage ment SAP R/3 Materials

Inv oic e V er ifi ca tio n Mas ter Da ta

Fin an cial a nd C os t S ales an d

Business Process Scope:

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Purchase Requisition Processing Generation of Requisitions for materials

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The Plant is an operating area within a company where there is stock

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8 Windmills - 1701 1708

The list of plants attached to Savita Polymers Company is as under:

2.1.2 Purchase Organizations

A Purchase Organization is an organizational unit within logistics in SAP R/3,

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conditions of purchase with vendors, and bears responsibility for such