Procurement and Purchasing in sap MM
1. What are
the special stocks used in MM?
- Special stocks are stocks that are managed
separately regardless of whether they belong to your company. The company
manages a material by using a data record, which contains all the required
information. The different types of special stocks are as follows:
- Sales order stock
- Returnable packaging with customer
- Consignment stock at customer
- Vendor consignment stock
- Returnable transport packaging
- Subcontracting
- Pipeline
2.
What are the differences between
company-owned special stocks and externally-owned special stocks?
·
The differences between company-owned special stocks and externally-owned
special stocks are listed in the following table:
|
Company-Owned Special Stocks |
Externally-Owned Special Stocks |
|
Stocks
that belong to the company but are stored with the wholesaler or the customer
are called company-owned special stocks. |
Stocks
that belong to the wholesaler or the customer but are stored at the company
are called externally-owned special stocks. |
|
Company-owned
special stocks are managed at the production level. |
Externally-owned
special stocks are managed at the place where they are stored. |
3. Why is
negative stock needed in an organization?
Organizations need negative stock when a material is shipped to a
customer and production is not confirmed or there is not enough stock to
satisfy the requirement. The system still allows the issuing of the material,
and inventory shows a negative quantity of stock until the production of the
material is confirmed.
4. What are
special procurement types?
In a normal purchasing system, the
customer purchases the goods from the wholesaler/retailer and the possession of
the goods transfers from the wholesaler/retailer to the customer. This might
not be the case with special procurement types, where the transfer of goods may
not necessarily be from the wholesaler/retailer to the customer directly. For
example, you might order a good for a friend of yours, who, in turn, purchases
the good from the wholesaler/retailer and then transfers the good to you. The
friend is the third party involved in this process. Therefore, the possession
of the good indirectly transfers to the customer. This type of procurement is
called the special procurement type. The special procurement type defines the
external procurement or in-house production of the material. The following list
shows the special procurement types available in the SAP system:
·
Consignment
·
Subcontracting
·
Stock transfer using the stock transport order (STO)
·
Production in another plant
·
Third-party processing
·
Returnable transport packaging
·
Pipeline handling
5. Define
consignment stock. What are the main features of consignment stock?
Consignment, in a general sense, is the
act of holding the ownership of materials but storing the materials at some
other premises until the materials are sold or shifted somewhere else. The
stored materials are known as consignment stock in the SAP system. Therefore,
stock that is stored at the customer's premises but is the supplier's property
until the stock is transferred to the customer's stock list is called the
consignment stock. The main features of the consignment stock are as follows:
·
You can combine the consignment stock with your available stock at any point in
time.
·
You can evaluate the consignment stock in any currency.
·
The price of the consignment stock fluctuates. This means that you can
determine the price of the consignment according to the market conditions.
·
You can price the consignment stock in any unit.
·
You can use different features of purchasing, such as discounts, in the
consignment stock.
·
The consignment stock is evaluated at a price quoted by different vendors.
·
Prior to ordering a material from a vendor or posting a goods receipt to the consignment
stock, you need to obtain the consignment price. If the consignment material is
ordered from several vendors, the system maintains the consignment stock of
each vendor separately. The reason the system maintains the consignment stock
separately is that the price of the consignment stock may vary from one vendor
to another.
·
The consignment information (info) record contains the consignment price
required for the purpose of material valuation and accounting.
7. How are the consignment stocks created?
Consignment stocks are created in the normal purchase order (PO) or
requisition, but the main thing to consider is that you must enter the K
category for the consignment item. As a result, the goods issued are posted to
consignment stores and the invoice receipt is not generated.
8. Define the
consignment cycle?
·
Consignment cycle is similar to the purchase cycle, except that when you create
goods receipts of the consignment stocks, only quantity (QTY) is updated and no
accounting documents are created. Once the goods are utilized, consignment is
settled. The value of the consumed or issued consignment stocks is taken from
the active purchase info record.
9. How is
consignment material procured?
Consignment material is procured through purchase requisitions, POs, and
outline agreements.
10. How can we
see the consignment stocks in SAP?
You can see the consignment stocks in
SAP by using the following functions:
·
Display consignment info record
·
Display the stock overview
·
Display consignment stocks
11. How can we
take consignment stocks into our own stock?
You can take consignment stocks from
the vendor into your own stock by performing the following steps:
·
Select Goods Movement > Transfer Posting to display the
initial screen.
·
Enter the plant name and the location where you want to store the materials.
·
Select Movement Type > Transfer Posting > Consignment >
Consignment to Own.
·
Select Continue to display the collective entry screen.
·
Enter the name of the vendor, the materials, and the quantity of materials.
·
Enter the receiving storage location if you want to store the materials in
another storage location.
·
Post the document. This makes the vendor liable to change the storage location
of the materials.
12. Can we do
the physical inventory check of consignment stocks?
Yes, you can do the physical inventory
check of consignment stocks. To do the physical inventory check, perform the
following operations:
·
Create a physical inventory document
·
Enter the physical inventory count
·
Post the inventory differences
13. How can
you do invoicing in case of consignment stocks?
You can invoice in the case of consignment
stocks by performing either of the following:
·
Invoice with PO
·
Invoice without PO
14. What do
you mean by subcontracting?
Subcontracting can be defined as the processing of materials by an
external supplier.
15. How
is subcontracting used in case of MM?
Subcontracting is the process by which
the vendor receives the materials to produce the end product. Subcontracting
involves the following procedures:
·
You order the end product by using the subcontract order. The components that
the vendor needs to manufacture the end product are mentioned in the PO.
·
During the inventory management process, the components are posted to the stock
of material provided to the vendor. Later, the components are supplied to the
vendor.
·
The vendor then processes the service and delivers the materials ordered. The
consumption of the components is posted.
·
If, after posting the goods receipt, the vendor notifies you that the quantity
of the components actually consumed is different than planned in the PO, you
must make an adjustment.
·
The vendor then charges for the service, for which the invoice is posted in
Invoice verification.
16. What
information does the subcontracting info records contain?
A subcontracting info record consists of ordering information related to
subcontract orders. For example, if you entered into a contract with an outside
source for the assembly of a component, the subcontracting info record would
contain the price specified by the vendor for the assembly work.
17. How do we
create subcontracting PO?
·
Perform the following steps to create a subcontracting PO:
o Enter the material
to order and the category of the item for subcontracting (L) in the order item.
o Press the Enter key
to display the screen for component processing.
o In the component
processing screen, enter the components required by the vendor to manufacture
the ordered material (end product). When entering the components, you need to
take care of the following points:
o You do not need to
enter the date required for the components. The system proposes this date when
you press the Enter key. It is calculated as follows:
§
Delivery date of the item (planned delivery time)
o If you do not wish
the quantity of the components to be altered, even if the order quantity of the
end product is changed, then set the indicated field to fixed quantity.
o If you want to
allocate a particular batch of the component to the vendor for the manufacture
of the ordered material, enter the desired batch.
o To determine whether
or not the components are available on the date required, select Component
List > Component Availability.
o When you enter a
bill of material as the material in the subcontract order, the components are
automatically created.
o You can also
determine the components in the bill of material at a later date (for example,
if the bill of material is subsequently changed) by selecting Item >
Go to > Components > New BOM Explosion. The existing entry of the
components is removed and again determined in the bill of material.
o Save the PO.
·
When you print the PO, the components are printed per order item.
18. How can we
view the stocks provided to vendor?
The stocks of material provided to a vendor can be viewed by using the
SC Stock Monitoring for Vendor report. The report can be accessed by selecting Purchase
Order > Reporting > SC Stocks per Vendor from
the menu. With this report, the current status of the stocks, planned issues,
and planned receipts can be viewed.
19. How are
components (materials) provided to vendor?
The components, or rather the
quantities of the components required to manufacture the end product, are
provided in the stock of material to be provided to the vendor. The stock of
material provided to the vendor is the total valuated stock that is available
for MRP. The total valuated stock is managed at the plant level, at the site of
the vendor. This stock can be either an unrestricted-use or quality-inspection
stock. The unrestricted-use stock refers to the valuated stock of a material
that is owned by the company and does not have any restrictions on its usage.
The quality-inspection stock is intended to be used only for quality
inspection. The components can be provided to a vendor in the following ways:
·
Posting the components from the unrestricted-use stock
· Receiving the components from another vendor
20. How
are components consumed in case of subcontracting?
In subcontracting, the end product is ordered by using a subcontract
order. The materials or components required by the vendor to manufacture the
end product are mentioned in the PO. The components are posted to the stock of
the material provided to the vendor during inventory management. When the
components are supplied to the vendor, the vendor manufactures the end product
and delivers it. At this point, the goods receipt is posted with a reference to
the subcontract order. The goods receipt also contains the posting of the
consumption of the components from the stock of material provided to the
vendor. If the components consumed by the vendor are more or less than that
specified in the PO, an adjustment needs to be posted to correct the
consumption of components.
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