PTP cycle

Determination of requirements ME51N

PTP cycle starts with the first step- determination of requirements. This is nothing but the creation of
PR. PR is the document that is created by the material handler to the buyer stating the details of the
requirement- Quantity of material/services that needs to be procured. PR can be created automatically
via MRP or manually via the t code ME51N.

Determination of source of supply XK01/MK01/ME01

Next step is the determination of source of supply. Buyer will investigate into the market and find the
potential suppliers. This involves the creation of vendor master XK01/MK01 and source list ME01.

RFQ ME41

Next step is the creation of RFQ ME41.

RFQ is the formal request given by the buyer to the vendor for asking the quote(price) for the quantity
of material/service. Buyer will be creating multiple RFQ with the vendors.

Quotation maintenance ME47

The Quotation given by the vendor is maintained in ME47.

Comparison of quotation ME49

In this step, buyer will be comparing the quotations to find the least cost one (T code ME49.).

Once the comparison is done, the rejection indicator is set for the quotations having higher price and
buyer will send the acceptance letter to the successful bidder and rejection letter to the rest of the
vendors.

Creation of outline agreements

Outline agreements are long terms contracts maintained between the buyer and vendor so as to reduce
risk and for a consistent source of supply.

Outline agreements are of two types:

1. Contracts ME31K
2. Scheduling agreements ME31L

Contracts are of two types:

1. Quantity contract: MK- document type

Quantity contract is an outline agreement which is maintained between the buyer and vendor
and the vendor agrees to supply the specified quantity of goods/services to the buyer within the
specified interval of time.
2. Value contract: WK- document type
 Value contract is an outline agreement which is maintained between the buyer and vendor and
the vendor agrees to supply the specified value of goods/services to the buyer within the
specified interval of time.

Scheduling agreement:

Scheduling agreement is a long term outline agreement between vendor and ordering party over a
predefined material or service which are procured on predetermined dates over a framework of time.
Scheduling agreement can be created by following two steps:

 Creating scheduling agreement ME31L.

 Maintain scheduling lines for the agreement ME38.

Creation of PO ME21N

PO is the official document given by the buyer to the vendor for the supply of goods and service.

This is equal to the scheduling agreement.

PO release ME29N

Once the PO is created by the buyer, it may be approved by different stake holders.

The PO approval process is called as PO release.

PO follow up and inbound delivery VL31N

In this step, the buyer will follow up with the vendor for the supply of goods.

Buyer will be sending the reminder letters to the vendor (based on the purchasing value key in the MMR
and PO)

Once the shipment has been completed from the vendor’s premises, we can have created the inbound
delivery (VL31N) or ASN if the buyer has given the access to the vendor. This helps in planning for the
inventory controller. This gives an idea when and how much quantity of goods are going to be received
on a particular date.

Goods receipt: MIGO

In this step, the goods are received against the PO.

Here, the quantity and value is updated.

Quantity is updated via material document.

Material document will have movement type to indicate the nature of the movement of the material.
101- Goods receipt against PO, 102- reversal of 101

122, 161- Return delivery.

501- Goods receipt without PO

Value is updated via accounting document.

Accounting document is created simultaneously once the material document is posted. This is done via
MM-FI integration.

Invoice verification MIRO

This step is a 3-way match process where the quantity and value mentioned in the PO is compared with
the Goods receipt quantity against price and quantity mentioned in the physical copy of invoice given by
the vendor. IV will be done by the accounts payable department.

In this step, the invoice documents are created.

MR8M –Cancellation of the IV document

MIR4- Display of the IV document.

Payment to the vendor

This is the final step in PTP cycle. This is done by the accounts payable department/ banking
department.