Training by Studyuuu for SAP MM

Training by Studyuuu for SAP MM
Training by Studyuuu for SAP MM

Sunday, 6 October 2019

Procurement Life Cycle: - Simple Explanation


Procurement Cycle: - Simple Explanation

For Video Explanation, please go to YouTube-  Studyuuu SAPMM


Requirements:

Procurement cycle always starts with the requirements of the company and based on that next process will starts.

if we are starting any new business or Manufacturing industry, then first we will think about requirements like is this machine really required or is it helpful for production.

Eg: What is required to start- Machining tools, cutting tools, brushing tools'

Funds related to Equipment- Capital cost- which will be based on physical equipment
Gathering of all requirements and spend will be done in the first phase of procurement cycle.

DOA- Spend Approvals:

Cost will be decided by the company and higher or lower prices should be approved by stakeholders (Clients)

Any rejection/Approval process will be done in this phase.


Suppliers Selection:

Once the spend is approved/ rejected then next phase will be supplier selection

RFQ process will help to find the correct suppliers with less cost and remaining terms as per the company.

Criteria:
Price/Payment terms/Lead time

Supplier rejection/Acceptance will be done in this phase- RFQ process helps to accept or reject the supplier.

RFQ:

Normally sourcing will do all these activities, whereas buyer will create PO based on vendor selected in RFQ process.

For full RFQ process- kindly go through --studyuuu.com and search for RFQ

Evaluation:

Maximum of 3 vendor to send for RFQ process

Mention deadline for quotation and evaluate the terms like price/net terms/lead time

System automatically calculates all the conditions and gives the correct supplier to procure goods.
Send the rejection or approval to vendor

Contract/PO:

Based on the selection from vendor- we need to create the contract/PO

PO/Contract should be created based on the quotation from supplier and depends on the requirements we need to decide Contract/PO.

Net terms/Lead time/Price needs to be updated as per the quote provided by vendor at the time of vendor selection

Order Delivery/Follow Up:

Once PO is created then PO copy should be shared to vendor/Supplier

Delivery follow up should be done with supplier.

Any delay/shipping problems needs to be discussed with vendor.

We should ensure shipping takes place very safely without any delays.

Goods receipt:

Once the delivery is done, then GR needs to be posted with respect to the quantity received.
Normally plant-Stakeholder persons will be posting GR

Any defect/damaged quantity needs to be rejected from the vendor and appropriate action should be taken care by buyer.

Communication takes place between stakeholders and buyers regarding this shipment.

Invoice receipt:

Once GR is done, Invoice should be posted with respect to GR

Invoice will be sent by vendor to APAY team in every company, depends on the tools you were using they need to post in respective PO.

3-Way Match:

3- way match will be for material
PO/Goods receipt/Invoice receipt
Price and quantity should be seen in PO for verification
Goods receipt: Quantity will be main issue/ should be equal to PO.
Invoice receipt: Price in invoice should be equal to PO price.

2-Way match:

2- Way match will be for service
PO/IR
PO price needs to be checked with invoice.


For Video Explanation, please go to YouTube-  Studyuuu SAPMM

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