ERS/Auto PO process through Inventory Management and Source Determination-SAP MM
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Inventory management Concept:
we all know that in procurement -SAP, Purchase requisitions/Orders will be created automatically. One of the process is MRP, but here we discuss about only purchase orders which will be created automatically by inventory management process and Source determination process
Here we mainly discuss on 2 factors, how the PO will be created by inventory method and requirement.
Many cases clients will not request to create a purchase order especially in terms of inventory, they will be receiving the goods from the vendor as a monthly contract with vendor-Not official contract, as per the requirements and urgency stakeholders will be ordering directly from the vendor without purchase order and in this cases we need PO for the payment purpose. PO is the mandatory document for posting or paying the invoice. So, after receiving the goods GR needs to be posted and requirement is like while posting GR- the SAP should create a PO automatically as per the GR data mentioned by stakeholders.
To possible the above requirements we need to make and assign few settings in our system, so that requirement will get possible to do this.
Material- While posting GR- we will be entering the material and every material there will be a purchasing tab which we can maintain the auto PO filed check – which is mandatory for auto PO process.
Vendor- every purchase order contains a vendor and if a PO is creating automatically then that should be with vendor and vendor -purchasing view also contains auto PO option, through which we need to select the option for the further process.
If you are maintain auto PO for 100 materials with 50 vendors then all the materials and vendors should contain this settings in master data to create PO’s automatically, you can use MASS option to update the data for 100 materials and 50 vendors at one time.
PIR- Mandatory, though we are creating PO automatically its good to create PIR manually because PO should pick the price automatically without any interruption, if not while doing MIGO/MB01-system will popup the error to maintain the price- always price in PO will be taken from PIR and PR price will be taken from material master.
Back end settings to make auto PO-
Along with the front-end settings, we need to make few back-end settings lines which document type should be created automatically and what are movement types needs to be supported for auto PO’s.
These settings will be always available in the backend and not in front end.
Define default values for Document types-
Here we need to define the T-code in which system should be accept the auto PO’s and what is the order type it should create while creating.
To maintain these functionalities, it’s a setting to be done in purchasing tab.
Create PO automatically-
Here we need define the movement types 101 and 161, where 101 is for Goods receipt for normal order and 161 is for return order for the vendor.
In these settings will define the two movement types and maintain the auto PO selection for both, then based on the movement type we enter system will choose to accept it that auto PO will be created based on the input.
Let’s think you have received the goods to plant without purchase order based on the request from stakeholder and now we need to maintain the invoice in the SAP for that we need to create PO but here auto PO should work.
Now we know the quantity and the vendor we received from and we made backend and front-end settings for the above scenario to work.
Now go to MB01- mention the movement type, plant and system will check for movement type settings and show the popup of auto PO creation and once enter we need to maintain the material/vendor/storage location/quantity and just execute, so that system will enter the next screen and it will pick the price from PIR and will be saved in the next screen.
Once this step is completed, system will create PO automatically and you can check by going to ME2L by entering material and vendor.
We have successfully created the auto PO process through inventory.
Source Determination for Auto PO-
Above we have learnt the auto PO process through inventory and now this process teaches through source determination.
We all creation of PO takes more time because it should go for many approvals and its time taking process but we cannot stop the production because of approvals, so for that there is an exception for particular materials with specific vendors, we can make those materials and vendors for auto PO process, so that only for those materials it’s possible to create auto PO from only from those vendors which we are maintained as auto PO check option.
In this process stakeholders will just create the PR’s with source of supply vendor- Where the vendor number will be updated automatically and how and all will be explained below.
Once everything is updated in PR’s then we can create auto PO’s at a time and its very easy to execute all at a time and SLA and approvals will be not determined for this type of processes.
Material- If we are creating auto PO then material master -purchasing view auto PO option needs to be selected as a mandatory field and vendor master purchasing view should be checked with auto PO tab and PIR is mandatory as a source and vendor will pick in PR automatically.
Once everything is ok then PR will be created for process further.
Material: Material master purchase view should be checked
Vendor: vendor master purchasing view auto PO should be checked
PIR: PIR is mandatory for the purpose of source of supply purpose and price purpose
Back end settings to make auto PO:
There is no back-end settings for Auto PO with source determination, but we can maintain source list if we have many vendors for that material.
Once everything is maintained like material, vendor, PIR then PR should be created with source determination check which will be available in the top of the screen.
Once that check is done then enter the material, quantity, plant and purchase group and press, so that vendor will be picked automatically in the PR vendor tab.
To process auto PO – go to ME59N and enter the material and vendor, so that it will show all the open orders for that vendor and just execute all the PR’s, so that PO will be created automatically.
ERS- Evaluated Receipt Settlement
ERS is a method where several companies and vendors will prefer because of fast payment transactions to the vendors from APAY side and few of the exceptions and advantages are there for ERS.
Before vendor entering ERS, there is process of concept where vendor will send the goods as per the PO copy, but he will not send the invoice after the goods delivered.
The requester will post the GR and system will post the IR with respect to GR and PO, ERS explains Invoice will be posted automatically once the GR is posted and payment will made as per that fastly.
Normally this is the duty of Accounts payables to run the MRRL to post the invoices automatically as per the GR and PO and if they are issuing any errors while posting then SAP MM consultant will come into picture to resolve the issues.
Vendor master should contain Autoevaulated GR Del ERS tab and Autoevaulated GR Settlement along with GR based invoice.
We need to select all the 3 tabs, so that while creating PR/PO ERS tab will popup in the invoice screen and the vendor is eligible for ERS payment method.
We can find those above settings in vendor master -Purchasing tab and its mandatory for the selection of process.
PIR is optional and if we maintain price will pick from PIR or else we need to maintain manually.
PR should be created and check in invoice screen ERS is popping up or not, and if not popping then check the vendor master settings and if everything id ok then create a PO.
Here PO is created as per the PR and Tax code is mandatory in PO because tax will be calculated automatically and where invoice will post automatically as per that.
Payment terms is mandatory in PO while creating ERS PO, because its payment related and here everything is automatic, so for being that payment terms and tax code is mandatory in PO.
Once the PO is created maintain the GR, Where GR will be posted manually and with respect to PO.
Once GR is done to post the invoice automatically, we need to run the MRRL screen, where you need to select the material or vendor for processing the automatic invoice.
Once this is done, IR will be created in all the PO’s and with respect to GR.
Now with respect to payment terms payment will be made to vendor and we can check the status in FBL1N.
Small Concept for GR:
Under tolerance and over tolerance can be adjusted while doing MIGO, Normally if we order PO for 100 quantity for that we need to post 100 as GR but incise if we received 110 then what’s the procedure, and lets think you need that extra 10 quantity also.
This scenario is quite often to receive in any plants, once they receive go to PO and delivery tab and maintain the over tolerance quantity as 10%, so that GR we can post for 110 quantity and after we can change quantity in PR/PO.
Let’s think we don’t want to receive the less quantity then ordered quantity in PO, then we can make these settings in PO that under tolerance acceptance, maintain as 0% tolerance so that MIGO should be posted with full quantity as ordered in PO.
Please let me know any concept in required to post, currently I’m writing blog for Account Determination
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