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Procurement Contract

Procurement Contract. SAP Best Practices. Purpose, Benefits, and Key Process Steps. Purpose This scenario deals with the use of contracts in procurement activities. Benefits Reduced procurement costs Securing of supplies Transparency of supplier agreements Key Process Steps

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Procurement Contract

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  1. Procurement Contract SAP Best Practices

  2. Purpose, Benefits, and Key Process Steps • Purpose • This scenario deals with the use of contracts in procurement activities. • Benefits • Reduced procurement costs • Securing of supplies • Transparency of supplier agreements Key Process Steps • Creating a basic agreement (quantity contract) • Creating a purchase requisition • Assigning requisition and creating purchase order • Approval of purchase orders • Contract monitoring • Goods receipt • Invoice receipt by line item • Outgoing payment

  3. Required SAP Applications and Company Roles • Required SAP Applications • Enhancement package 5 for SAP ERP 6.0 • Company Roles • Purchaser • Purchasing Manager • Warehouse Clerk • Accounts Payable Accountant

  4. Detailed Process Description • Procurement Contract • This scenario deals with the use of contracts in procurement activities. Contracts are agreements with the vendor to supply materials or services under negotiated conditions and within a certain period. • Contracts are differentiated as follows: • Quantity contracts: An agreement that a company will order a certain quantity of a product during a specified period. • Value contracts: A contract in which the purchase of goods or services up to a total value is agreed. • In source determination, contracts replace the purchasing info records and can be assigned in the source list as the fixed source for MRP. • Target groups are purchasing managers as well as buyers • Purchase requisitions and purchase orders are created after the contract, if they do not exist yet.

  5. No Yes Process Flow Diagram Procurement Contract Event MRP Generated Procurement Needs A Need for Material is Identified Need for Contract Material Arrival at Plant Dock Purchaser Value or Quantity Contracts Report Create Procurement Contract Purchase Requisition Assign Requisition to Contract and Create Purchase Order Monitor Contracts Total Net Order Value > Threshold (e.g. EUR, USD, 500) Procurement Contract Released PO Purchasing Manager Approval of Purchase Order Released PO Warehouse Clerk Goods Receipt with Reference to PO Accounts PayableAccountant GR/IR PPV Small differences Use tax of actual payable amount Invoice Receipt by Line Item Accounts Payable (158) MRP = Material Requirements Planning, PO = Purchase Order

  6. Diagram Connection Legend <Function> Hardcopy / Document External to SAP Financial Actuals Business Activity / Event Budget Planning Unit Process Manual Process Process Reference Existing Version / Data Sub-Process Reference Process Decision System Pass/Fail Decision

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