BPML-MM

SAP AG 2003, Title of Presentation, Speaker Name / 6

SRSL Organizational Structures

Plants-Munoli

Company Code-1000

Sugar Plant (1101) Dist Plant(1103)Power Plant (1102)

Yellow:Mfg PlantsYellow:Mfg Plants

Ash:Logical PlantsAsh:Logical Plants

BGM Depot (1801) CAL Depot(1802)

Export(1901)

Storage LocationsVarious store Locations identified are

1. General Stores2. Finished Goods Stores3. Bagasse Yard4. Compost Yard5. Coal Yard6. Press Mud7. Raw Sugar8. Packing9. Sulphur10. Lime 11. Oxygen12. Tools & Tackles 13. Molasses Tanks14. R.S. 15. Ethanol16. Diesel

17. Scrap18. Bamboo mats & Bamboo19. Project Items20. Power 21. Steam

The same will allocated according to the requirements

Purchase Organisation:A central Purchase Organisation shall be created which shall be responsible for Central Purchases made by Mumbai- Corporate Purchase office and Belgaum Purchase office. This organisation shall be across company codes and will serve all the Plants.

For unit / Plant Purchases, a separate Purchase organisation will be created for each Plant and will cater to the respective Plants

Purchasing Groups Different purchasing groups identified are:

1. Mr. Josesh Fernandes2. Mr. Umesh Malvia3. Mr. Dharmesh Rana4. Mr. Umesh Yelgi5. Mr. S.N. Akki6. Mr. Adam Pakali7. Mr. Sayed

Material Types1. RAW Material 2. Finished goods 3. Packing Material4. Trading Goods5. Consumables6. Tools and spares7. Capital items8. Service Items9. Semi Finished

Material Group The following Material groups are identified 1. Machinery spares 2 Electrical 3 Tools 4 Hardware 5 Iron & steel 6 Rubber goods 7 Welding materials 8 Bearings 9 Civil goods paints & varnishes 10 Pipes and fittings 11 Oil & lubricants 12 Jointing materials 13 General materials 14 Manufacturing materials

15 Vehicle stores 16 Fuel 17 Other materials. 18 Turnkey base job (sugar plant) 19 Stationary materials. 20 Repaired materials. 21 Turnkey base (distillery) 22 Cane harvesting & transportation materials. 23 Distillery materials. 24. Sugarcane 25. Sugar 26. Packing materials 27. Molasses 28. Rectified Spirit 29. Ethanol

Material CodeMaterial Coding will be decided mutually

4.1Master Data MaintenanceDefinition of Process

Maintaining the following master data:1. Materials2. Services3. Vendors4. Purchasing Info Records5. Source List

Existing Process (AS-IS)

Master data is maintained for the following Materials Vendors (Farmers/ Transporters/Harvesters) Source list

Business Requirements

The following master data is required. Material, Vendor, Purchase info records, Source list have to be maintained in SAP R/3.

To-Be SAP R/3 provides functionality for maintaining the following master data:MaterialsServicesVendors/FarmersPurchasing Info RecordsSource List

Flow Chart NA

Gap Analysis AReports NA

4.1.1 Sub-Process Scope: Maintenance of Material MasterDefinition of Process

The material master is the central master record for logistics. For example, data for sales, production and procurement are stored in the same master record but can be related to different organizational unitsMaintenance of Raw materials, Packing, Finished material etc.in the material master for day to day transactions and Modifications when ever required


At COMPANY Material details are maintained for Raw materials, Packing, Finished material etc. Materials are maintained in the material master for day to day transactions and to maintain information


All materials and their related information should be maintained in SAP. Re-order level should be maintained for Raw and Spares material. Quality checks are to be in place for all the materials

To-Be SAP Standard Material types shall be used for all the materials. For example FERT, ROH, PIPE, HALB, VERP, etc.Materials with the same basic attributes are grouped together and assigned to a material type. The material type also decides - Whether the material number can be assigned internally or externally Which screens appear and in what sequence Which departmental data you may enterWhat procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both (for Semi-finish)At COMPANY on material Industry wise, Material type wise, material group, valuation, Class, Storage location, Quality, Classification views are maintained. Only for Raw material and packing material MRP views are maintained1. Material coding for all material types will be provided as per the requirement.

2. Material groups are maintained in order to meet the analysis & reporting requirements

Flow Chart NAGap Analysis AReports NA

4.1.2 Sub Process Scope: Service Master MaintenanceDefinition of Process

. Maintenance of Service master for day to day transactions and Modifications when ever required


Services are procured for Plant maintenance. for Maintenance of Equipments, Plant and machinery


The same should be captured in the system

To-Be Service masters shall be maintained for various Services with Description, Category and Unit of Measure using the ‘Master Data Maintenance’ in ‘External Services management’ of Materials management Module.Following critical information shall be maintained in the service master record:1. Service Number, which gives a unique identification to the service. This shall be internally generated by the system.2. Service Category, which describes whether a service is an internal service or a service to be procured externally, or services performed for third parties. In conjunction with the organizational (maintenance) status of the service master, the maintenance views can be controlled i.e. whether a service master can have – a basic data view, controlling view, sales & distribution view. Based on the type of service, the service category shall be maintained. 3. Description which describes the service in briefExamples of Services for which Master records shall be created:1. Annual Maintenance Contracts2. Repairs in COMPANY premises3. Repairs outside


4.1.3 Sub Process Scope: Maintenance of Vendor MasterDefinition of Process

Vendor Master Records contains all the information necessary for any contact with a certain vendor, in particular for conducting business transactions


The following details for Vendor are Maintained at COMPANY like Vendor code, Farmer code Address, Contact Number, e-mail ID, Payment Terms and conditions etc.


Vendor Master with all the necessary data should be maintained

To-Be Vendor Master Data shall be maintained at the following levels: General data Company Code Data Purchase Organisation DataThe following Groups also will me maintained Service vendors Farmers Import Vendors Domestic Vendors

One time Vendor Internal Vendor


4.1.4 Purchase Info RecordsDefinition of Process

Purchasing Info records shall store vendor - material details for various types of procurement like standard, sub-contracting, etc


At COMPANY, Purchase Info Records are Maintained for Raw Materials, Consumable and Engineering materials


Provision Should be made to capture the same in the system

To-Be These info record details shall be maintained for a Plant and Purchasing Organization. Details like Prices & other conditions, under and over delivery tolerances, are stored in these records. The information in the latest purchasing info record for a combination of vendor and material for that purchasing organization and plant shall always be defaulted when creating a Purchase Order. Purchasing info records shall be created manually or automatically. Manual Creation shall be done when a purchasing info record doesn’t exist already for a vendor – material combination for a purchasing organization and plant. Manual Update shall be done. When there are changes in the values of the Purchasing Info Records. Automatic Updation/Creation shall be done at the time of creation of Request for Quotation, Quotation or Purchase Order for those records, which already exist. Provision for deleting obsolete info records shall be provided.

Flow Chart NAGap Analysis

A

Reports Ref Reporting section 4.7

4.1.5 Source List MaintenanceDefinition of Process

The source list shall be used to maintain the possible sources of supply of material for a given period or to block a possible source of supply for a specific period or to completely block the external procurement of a material


At COMPANY standard source Lists is Maintained

Business Requirement

Allowed (and disallowed) sources of a material for a certain

s predefined period should be Maintained

To-Be 1. A Source List shall be created automatically or manually.2. Automatic creation of a record in the source list for a particular material is done when a purchasing info record is created. Source list shall also be automatically created when an outline agreement is created.3. Manual maintenance shall be done when a new source / new material is identified.

Flow Chart NAGap Analysis AReports Ref Reporting section 4.7

4.1.6 Sub-Process Scope: Maintenance of Conditions for Procuring MaterialsDefinition of Process

Maintaining of Oricing conditions like Gross Price, Net price, Taxes applicable etc


All applicable Pricing Conditions are maintained at COMPANY


Same to incorporated in the system

To-Be Pricing conditions shall be maintained in the purchasing info records or in the header or item level as applicable.Vendor, Material and other factors that determine the Excise duty shall be maintained through the CIN Module of SAP R/3. Tax condition records can be maintained in the system for various levels of taxes, like central and state level, which will be automatically determined during a transaction depending upon the receiving plant and the vendor’s locationsThe Planned Freight costs shall be booked in the same Purchase Order for which the procurement is to be done. In cases where the Material carrying party is different from the one on whom the PO is raised the Freight Vendor shall also be maintained in the same PO.Service Tax will be maintained as condition type


4.1.7Payment TermsDefinition of Process

Defining Various Payments required for Procurement activities

Existing There are different payment terms existing

Process (AS-IS)Business Requirements

The same should be captured in the system.

To-Be COMPANY shall use the standard payment terms wherever possible. Wherever required, specific payment terms shall be defined in the system


4.2 MRPDefinition of Process

Material Requirements Planning activities involved in creating an external procurement plan for all the materials in a plant or company


Planning is done as of now for Spares, routines & Packing Material.


Planning to be done on the basis of reorder level. Automatic triggering of PR’s to be done based on MRP for the above Materials.

To-Be This Business Requirement is taken care of by MRP/CBP SAPConsumption Based Planning: - Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. It is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.All the materials should be classified under MRP/CBP. Accordingly MRP type should be assigned to the Material. If a material falls under CBP, Re-order level (ROL) is to be identified with maximum stock level. When MRP is run, the system will check the current stock levels against the re-order level. If the stock level is less than the ROL then a procurement proposal is raised up to the Maximum stock level quantity.In consumption-based planning, the following MRP (Material Requirement Planning) procedures are available:Reorder point procedure Forecast-based planning Time-phased materials planning


4.3 Procurement Processes4.3.1 Procurement of Goods (Spares & Routines)Definition of Process

The Spares and Routines material procured is owned by COMPANY. All subsequent activities of stock management and delivery are the responsibilities of COMPANY


Purchase Requisitions are generated by concerned departments and forwarded to Purchase.Purchase Dept Sends enquires, Receives Quotations, Compares Prices and Negotiates/renegotiates prices.And Purchase orders are sent to respective vendors based on which materials are received. Vendors invoice is verified with goods receipt and forwarded to finance department.


Same has to be captured in the system

To-Be The process of Stock material procurement starts with the raising of the Purchase Requisition (PR) for a specific material. The PR can be raised via the MRP run or ad hoc manual creation. From a MRP run, MRP controller will firm and convert plan orders to a PR

The fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR.

The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO

The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor.

When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will require the quantity to be changed at GR creation level

IM storage location /bin location of goods to will be done manually.

For materials managed in batches, the system automatically assigns a batch number to the batch if no external batch number is entered.

For the category of Stock material with expiration management, the auto assigned batch number will be the material expiry date in the format of YYYYMMDD. In this category of goods, if the vendor batch number is entered, the system will not auto assigned the batch number and instead use the vendor batch number as the material batch number.

Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly.

Note: Cash Purchases will be decided in consultation with FICO requirements

Flow Chart

Gap Analysis A- only Retrospective amendments are not available in SAPReports Ref Reporting section 4.7

4.3.2 Procurement of Non-Stocked Material (Consumable)Definition of Process

Non-stocked materials are not held in stock because they are consumed immediately. Example of non-stocked materials can be stationery


Purchase Requisitions are generated by concerned departments and forwarded to Purchase.Purchase Dept Sends enquires, Receives Quotations, Compares Prices and Negotiates/renegotiates prices.And Purchase orders are sent to respective vendors based on which materials are received. Then the material is issued to the respective indenter with out

stocking at stores.Vendors invoice is verified with goods receipt and forwarded to finance department.


Same has to be captured in the system

To-Be The process of procurement for non-stocked material starts with the manual creation of the Purchase Requisition (PR) for a specific non-stocked material. The type of procurement will be to expense using the account assignment category ‘K’. The goods will be procured and expensed to a cost center. The corresponding expense GL and cost center will be automatically determined by the system.

If there are available materials on hand for the requisition then it will be issued out manually to the requester. If not, the requested material will need to be procured. The buyer will perform the sourcing activities with existing standard order or execute a call for quotations exercise and vendor selection.

At this stage, if a standing order exists for the order item then the vendor will be informed to initiate the goods delivery. If there is no standing order in place, the buyer can do the procurement via ad-hoc Purchase Order (PO) or choose to negotiate a Blanket Order.

The Blanket Order is created by using the Framework Order (FO) document type. And in this case, the item category to use is ‘B’ for Limit. The stipulated validity periods in which the materials to be delivered as well as the amount limit can be defined in the FO. Alternative, the ad-hoc PO can also be created with reference to the PR.

Both the PO and FO will be subjected for approval via workflow. The approver will receive and release the PO or FO via Workflow. After approval, the PO or FO will be faxed or sent electronically to the vendor.

When goods arrived, the correct items and quantities will be received with reference to the PO or FO. The goods receipt process is required for items ordered via the PO. No goods receipt process is required for FO.

Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or

changing the PO. Once the invoice is released, the Finance department will make payment accordingly. As for invoice items entered with reference to the FO, there will be a validity period and limit check. The system will return a warning message if these values are exceeded.

Flow Chart


VendorSRSL

SAP R/3

Procurement for Consumable Material

Create purchase order

Assign account assignment duringpurchase order creation (eg. Cost Center)

Post goods reciept

Invoice verification

Is goods receipt necessary?

Y

N

Gap Analysis AReports Ref Reporting section 4.7

4.3.3 Procurement of ServicesDefinition of Process

Services are regarded as being consumed at the time of their performance. It can be performed internally or procured externally (outsourced). Examples of services include AMC, Motor Servicing and construction etc


Services are procured by COMPANY depending on the services requested by Requester Dept.AMC exist for the maintenance of Equipments, in which the Company supplies material. Payment is done on yearly basis

Business Same has to be captured in the system

RequirementsTo-Be The process for the procurement of services starts with the manual

creation of the Purchase Requisition (PR). The type of procurement will be to expense using the account assignment category ‘K’. The service will be procured and expensed to a cost center. Services will be represented either by using service master or material master (material type ZSV). If service master is used then the item category ‘D’ for Service is entered. For this, the service number will need to be entered and the corresponding expense GL and cost center will be referred to according to the service master record. The overall limit also needs to be defined for the order item.

The PR will be subjected for approval via workflow. The approver will receive and release the PR from their Work Flow. Once the PR is approved, the fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR.

Next, the Purchase Order (PO) will be created with reference to the PR. The PO will be subjected for approval via workflow. The approver will receive and release the PO from their workflow. After approval, the PO will be faxed or sent electronically to the vendor.

For PO using service master, the services performed are entered using the service entry sheet. For PO using material master, it will be captured in the normal Goods Receipt (GR) transaction.

Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. For PO using material master, the invoice items might be blocked when the entries go beyond certain tolerance limit configuration. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly.

As for invoice items entered with reference to PO using service master, there will be a limit check. The system will return a warning message if these values are exceeded.

Flow Chart


VendorSRSL Mfg Plant

SAP R/3

Procurement of External Services

Create ServicePurchase Order

Invoice Verification with TDS deduction

Creation and AcceptingService Entry Sheet

TDS Challan Payment (FI - outgoing payment)

Vendor Advance Payment with

TDS deduction

Vendor Advance Payment with

TDS deduction

Update the TDS Challan No,House Bank, Date of Payment

Generate & Print TDS Certificate Vendor wise / Section wise

Prepare the cheque / TDS Challan manually &

Submit to House Bank

Generate the TDS Annual Return Section wise

Receive the TDS Challan from House Bank

TDS Certificate sent toVendor

TDS Process

Message output


4.3.4 Procurement of Packing MaterialDefinition of Process

The material of packing is the supporting material that facilitates the packing of the main components (sugar). For example –Gunny /PP bags, box, etc. These materials can be procured by COMPANY

and provided to the subcontractor or used by Stores during shipment packing or internal co-packing


Same as Procurement Spares & Routines.


Packing Material Procurement has to Captured in the system

To-Be The process of procurement for packing material starts with the creation of the Purchase Requisition (PR) for a specific packing material. The PR can be raised via the MRP run or ad-hoc manual creation. Packing material is planned as BOM (bill of material) dependent demand requirements of the finished goods. Depending of the demand for the finished goods, the corresponding quantity of packing material is calculated based on the BOM and shortage is proposed for replenishment.

The type of procurement will be to expense using the account assignment category ‘K’. The goods will be procured and expensed to a cost center. The corresponding expense GL and cost center will be automatically determined by the system.


The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Material pricing will be maintained in info record or retrieved from the material master standard price. Source of supply determined at PR is automatically assigned to the PO.

Instead of to COMPANY Stores, the goods can be specified to be delivered directly to the subcontractor. In this case, the delivery address in the PO will need to be amended accordingly. This is accomplished by selecting the ‘SC Vendor’ indicator in the PO and specifying the subcontracting vendor code. This will cause the material to directly get posted to ‘material provided to vendor’ upon goods receipt.

The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval; the purchase order will be mailed, faxed or sent electronically to the vendor.

If the goods are delivered direct to the subcontractor, upon receiving the goods, the subcontractor will need to inform the Stores. Upon receiving this arrival information from subcontractor, Goods Receipt will be posted. The material is posted direct to the stock of ‘material provided to vendor’.

When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will

require the quantity to be changed at GR creation level

IM storage location /bin location of goods to will be done manually

Finally at the logistics invoice verification stage, invoice items are entered with referenced to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly.

Flow Chart Same as Routines& SparesGap Analysis AReports Ref Reporting section 4.7

4.3.5 Procurement of AssetsDefinition of Process

Assets are Procured and maintained by COMPANY


Assets are Procured based the Management decision and same has be maintained by COMPANY in various locations


Asset Procurement has to Captured in the system

To-Be The process of procurement for asset starts with the ad-hoc manual creation of the Purchase Requisition (PR). The PR will function as an item requisition request document.

The account assignment category ‘A’ for asset has to be specified for the order item. At this stage, an asset number has to be provided by the Finance department and input to the PR. The estimated price of the asset acquisition (based on draft quotation

or previous purchases) will be entered in the PR.

A budget check based on the asset number and estimated price will be applied to the PR. If the purchase amount is close to the budget deficits, the system displays an appropriate warning message. If a root budget unit does not have enough funds to cover the subordinate budget amounts, the system displays an error log.

The PR will be subjected for approval via workflow. The approver will receive and release the PR from workflow Once the PR has been approved, the buyer will perform the sourcing activities with a call for quotations exercise and vendor selection.

After the vendor is selected, the PR is converted to the Purchase Order (PO) with the selected vendor. There will also be a budget check applied for the PO. This is a formality check if there is no price or quantity change from that of the PR. The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval; the purchase order will be mailed, faxed or sent electronically to the vendor.

When the asset arrived, the correct items and quantities will be received with reference to PO in the Goods Receipt (GR) transaction and the relevant documents will be handed over to Finance for asset tagging. Asset with serial number will have the serial number maintained in the asset master.


Capitalization of asset will be at logistic invoice verification stage.

Note: Asset Transfers will handled by FICO module

Flow Chart Same as Regular Purchase except asset No assignmentGap Analysis AReports Ref Reporting section 4.7

4.3.6 Procurement of SubcontractingDefinition of Process

This is the procurement of subcontracting service to a finished/end product from a constituent range of component materials.

The subcontracting services can be procured from an external

vendor or performed internally within COMPANY


COMPANY needs to get its material processed from Service providers due to lack of that capability / capacity with in COMPANY. After processing, COMPANY will take back the entire processed material. The Subcontracting charges are settled to the Vendor through normal Payment Procedure


Subcontracting Procurement has to Captured in the system

To-Be The process of procurement for subcontracting starts with the creation of the Purchase Requisition (PR) for the finished/end product. The PR can be raised via the MRP run or ad-hoc manual creation.

The item category ‘L’ for subcontracting will need to be specified in the order item. If a Bill of Material (BOM) of the component materials required exists, then BOM will be automatically exploded to its individual components in the PR.

The fixed vendor from source list or info record will be used for automatic source determination and assignment of the subcontractor to the PR.

The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO. The net price denotes the service charge for the packing work.

The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the PO will be faxed or sent electronically to the vendor.

The components are then issued to the external subcontractor via the system.

If the subcontracting is done in-house, an internal vendor representing the packing entity will represent the subcontractor.

For internal subcontract work, the outbound delivery is not required. Instead components are moved to the work site storage location for the packing to commence.

The stocks to be provided to the subcontractor will be monitored under stock overview as ‘material provided to vendor’. This stock type is managed at plant level (not storage location) which means the stock remains valuated at plant level (although it is no longer stored in COMPANY). Alternatively this can be viewed as WIP (work in progress) stock.

For internal subcontracting, the receiving of the finished goods into stock will be via inventory transaction movements.

But for external subcontractor When the finished goods arrived from the external subcontractor, the correct items and quantities will be received with reference to the PO document that had been created earlier.

IM storage location /bin location of goods to will be done manually

During GR, the components consumed according to the amount of finished goods received will be proposed according for back flushing. This consumption of components will happen automatically upon the execution of the GR. This will mean that the increase of finished goods will automatically reduce the components quantity correspondingly.

If variances occur in the consumption of components materials by the subcontractor during the packing job, the amount of any over or under-consumption must be adjusted/reflected back in the stock.

Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. The Finance department will make payment accordingly.

Flow Chart


Subcontracting without Payment of Excise Duty

SRSLSubcontractor

Transfer of Components to Subcontractor

Create Subcontracting Challan

Post Goods Receipt

SAP R/3

Create SubcontractingPurchase Order

Reconcile Subcontracting Challan

SubcontractProcessing

Complete / Reversal / Re-credit Subcontracting

Challan

LogisticsInvoice Verification

Annexture IV entry

MessageOutput


4.3.7 Stock transport order/Depot SalesDefinition of Process

Stock can be cross - replenished between plants. The stock transfer can be from one plant to another plant within the same company (intra-company)

A stock transfer will either be initiated from within Stores or from the sales & marketing (sales from Depot).


SCOMPANY moves goods from one plant to another plant depending on the requirementSales from Depots are also taking place


Stock Transfers and Depot sales has to Captured in the system

To-Be For transfer initiated from sales & marketing and also whereby shipment is required over a distance, the Stock Transport Order (STO) will be used as the request for transfer to the Stores to execute the delivery.

The Stock Transport Order (STO) will be used for intra-company

plant-to-plant stock transfer. Apart from its function as the request for the source plant Stores to execute the delivery, it will also act as the same document for the destination plant to plan the inbound delivery of the goods.

The process starts with the creation of STO, which is a form of Purchase Order (PO) of the document type UB. In STO, instead of an external vendor, the source plant functions as the supplier of the stock.

With the shipping data for plants involved in the transfer appropriately configured, the shipping information such as shipping point, loading group etc will be automatically determined by the system and appear under the new Shipping tab in PO. When the Shipping tab and its relevant information appear in the PO, a SD delivery (Outbound Delivery) can be created based on the PO.

The STO will be subjected for approval via workflow. The approver will receive and release the STO from workflow

The Outbound Delivery will be created with reference to the PO. Stores will pick, pack and post goods issue of the material with reference to the Outbound Delivery document. Material will be posted and appear in stock overview as goods in-transit during the shipment period.

The destination plant can use the listing of goods in-transit and STO to plan for the incoming goods.

When goods arrived, the correct items and quantities will be received with reference to the STO document that had been created earlier.


For materials managed in batches, the system will take the origin batch number

Flow Chart

SAP AG 2005, Title of Presentation / Speaker Name / 2

SRSLSAP R/3

Create Outbound Delivery

MFG. Plant

Change Outbound Delivery

Create Stock Transfer Order

Print Excise Invoice

Create Excise Invoice

Goods Receipt for Purchase order

Create Billing document

Depot Plant

RG23D entry

Internal Procurement (Stock transfer to Depot w ith Delivery)

Organizational ElementsPlantStorage LocationPurchase OrganizationPurchase GroupCompany Code

Influencing factorsCustomer attached to Plant

Delivery Type and Checking Rule Assignment for Order Type and Supplying Plant

Delivery Tyoe NL attachedTo Proforma Inv. Type JEX

Master Data requirementCustomerVendor Material


4.3.8 IMPORTS Definition of Process

This process Procurement of Imported Materials shows you how to handle the Countervailing duty (CVD) on imports, which is levied in place of excise duty. Unlike other forms of customs duties, such as basic customs duty or special customs duty, you can credit CVD paid on imports to your CENVAT account.

Existing Imports Procurement is presently there in COMPANY for Sugar,

Process (AS-IS)

Coal, Machineries


Same to captured in SAP

To-Be Import PO will be raised based on PR. This PO is without GR based IV

This PO will be identified with clear Material Code & associated costs related to import Purchase that need to be loaded in to Inventory

When the purchase order is issued in a foreign currency, the system calculates the net value based on the rate defined in the exchange rate table. You can choose to overwrite this exchange rate in the purchase order.

The PO will be subjected for approval via workflowThis PO will be identified with Customs duty related ConditionsThe Customs duty, Cess., shall be identified as Delivery costsCHA charges shall be based on % basisShipping notification will be used to Calculate ETA of MaterialsNo Inspection Process at the time of Material Receipt.Note: Customs Office and CHA will be identified as Domestic VendorsUser cannot amend the PO for delivery charges once GR is made.Inspections charges / Transportation charges if any identified will be brought as PO condition on% Basis. Hence separate PO shall be raised on the Vendor out side the system for reference

Flow Chart


4.3.9 CAPITAL PURCHASE Definition of Process

The Capital Items business is processed differently as far as excise duty is concerned. Manufacturing Plants are allowed to set off excise duty on purchases of capital items against excise duty on outputs. However, unlike with raw materials, you can only set off

half of the duty in the first year, and the rest in any year after that


Capital Procurements are made at COMPANY


Same to be captured in the system

To-Be The Budget for Capital Items will monitor using Internal Functionality of FI.Different PO type will be maintained for this.Other than this regular Procurement (Routine Purchase) process will be applicable to thisThis main feature is 50% of Cenvat credit in the first year

Flow Chart


Procurement of Capital Material to Manufacturing Plant

VendorSRSL

SAP R/3

Create Purchase Order

Logistics Invoice Verification

Post Goods Receipt And

Post CENVAT – Part I and IIOnly 50% CENVAT is availed

Part I entry

Balance 50% CENVATto be transferred to RG23C

subsequent fiscal year

Release Purchase OrderMessageOutput


4.3.10 Procurement of Trading Goods Definition of Process

In COMPANY apart from own production and sales activities, lots of trading activities also take place. To fulfill that requirement, this Process is taken up. For such trading scenario there will not be any Excise Duty related entries and also there will not be any

Excise registers. There is a possibility of Sales Tax being applicable on some products.


Trade Sale are happening COMPANY


Same has to Captured in SAP system

To-Be

The process of Trading material procurement starts with the raising of the Purchase Requisition (PR) for a specific material. The PR can be raised via the MRP run or ad hoc manual creation. From a MRP run, MRP controller will firm and convert plan orders to a PR


The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO

The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor.

When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will require the quantity to be changed at GR creation level




Flow Chart


4.3.11 P007 Procurement of Consignment Goods (Ethanol, Molasses)Definition of Process

Consignment goods are stock made available by the vendor (Sugar Plant) which is stored on COMPANY’s (Power Plant, Distillery Plant) premises but remains the vendor’s property until withdrawn for use or transferred to the COMPANY’s own valuated stock

Existing Presently Power Plant & Distillery Plant consumes Molasses &

Process (AS-IS)

Ethanol produced from Sugar Plant, which comes in Pipeline.


Same has to captured in The SAP system

To-Be The procurement of vendor consignment goods starts with the creation of the Purchase Order (PO) for a consignment material. The item category ‘K’ for vendor consignment will need to be specified in the order item.

If a particular material is under consignment from a specific vendor (Sugar plant), this Vendor-material will need to be indicated as such by creating and using the vendor consignment info record. At the same time, the procurement type for the material under material master MRP view will also be indicated as type ‘K’. Both the setup will prevent any accidental omission of the ‘K’ indicator during PO creation for a consignment material to a vendor.

The material’s consignment price as agreed with vendor is maintained in the consignment info record.

In the PO, the confirmation control key will be automatically set to initiate the use of the Inbound Delivery document.

The PO will be subjected for approval via workflow. The approver will receive and release the PO. From workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor.

The correct items and quantities will be received with reference to the PO.


No invoice will be expected from vendor for consignment stock as the vendor is not able to track material consumption directly. Instead on a regular basis, a consignment settlement report that monitors all the withdrawals and returns from consignment stock will be generated. This provides the vendor a liability statement as well as the basis to enable the Finance department to proceed with payments.

Flow Chart Same as Regular procurementGap Analysis AReports Ref Reporting section 4.7

4.3.12 ContractsDefinition of Process

Contracts are long-term agreements with the supplier, for the supply of materials or the contribution of services, with pre- determined conditions within a certain period.


Contracts are presently available with COMPANY for certain vendors


Same to be Capture in the System.

To-BeIn SAP, Quantity contracts (definition of a delivery volume by supplier materials to those conditions were agreed upon firmly) Value contracts (definition of a value boundary for the material procurement according to the agreed upon conditions) This Process starts with the purchase organization entering in to a basic agreement with a supplier, in form of a quantity /value contract. In this contract the material (or material group) and the quantity or Service is defined. Based on a purchase requisition; the quantity contract is assigned as source of supply. In the next step the purchase requisition is transferred into a purchase order. After entry of the incoming goods the invoice verification takes place.

Flow Chart


4.3.13 Miscellaneous ProcurementsDefinition of Process

COMPANY procures certain materials /services like Rent, AMC etc, which are supposed to be paid monthly/quarterly


Same as above


Same to be Capture in the System.

To-Be For these cases PO shall be raised using a normal PO or Framework order in SAP.For identifying the billing dates, the Invoice plans shall be configured in the systemThis plans defaults all the billing date within specified period in the PO, on which liability to Vendor can be booked.For this type GR is not mandatory but will be created for information purpose

Flow Chart NA.Gap Analysis AReports Ref Reporting section 4.7

4.4.1 Receiving (Goods Receipt)Definition of Process

This process applies to goods receipt for all storage locations.


Good s Receipt Process exists. Based on this only Payments are made


Same to be Capture in the System .The supplier should get the Intimation of receipt of material, status of goods.

To-Be The goods receipt transaction will be posted using IM movement type with reference to a Purchase Order, Stock Transport Order or Inbound Delivery document. During posting, batch information for batch-managed stock will be required. This will largely be batch information pertaining to the production date of the goods or direct entry of the expiry date itself.

The transaction is able to generate a goods receipt slip for manual reference.

The materials, which require quality inspection, will be defaulted to Quality Inspection during the GRN. The Stock is transferred to the unrestricted use thru quality procedures. The quality decision when made the stock gets transferred into unrestricted use stock or blocked stock. The quantity posted in Blocked stock will not be

usable unless cleared for quality reasons. The control for these transactions can be done through the authorizations for the users.

Flow Chart Ref flow chart of Procurement of Spares and routines.Gap Analysis AReports Ref Reporting section 4.7

4.4.2. Goods Issue Definition of Process

Issuing Process of Material to the Plant/Departments


Goods issue to Production/ Plant maintenance /other Departments are performed in COMPANY


Goods issue Process has to be captured in the system

To-Be This is a standard feature of SAP


4.4.3 Goods Issue to Cost CenterDefinition of Process

Goods Issue Process to the Cost Centre


Goods issue Cost centre/other Departments are performed in COMPANY


Goods issue to cost centre Process has to be captured in the system

To-Be For Non-stocked material, upon goods receipt, the stock is immediately expensed off and charged to a cost center. Since non-stocked items are not quantity managed, they will not be visible

logistically after being expensed off.

Additionally Stock material stock can also be expensed off direct from stock and issued to a cost center. This can be the case for staff sales

The process starts with the identification of all stocks that are to be issued to a cost center. This is followed by executing the goods issue via IM stock movement from the source storage location. In this movement the cost center need to be entered.Upon issuance, the cost will be reallocated to the new cost center

Flow Chart Ref Flow chart of Procurement of ConsumablesGap Analysis AReports Ref Reporting section 4.7

4.4.4 Stock Transfer Storage Location to Storage LocationDefinition of Process

Stock can be replenished between storage locations within the same plant. The stock transfer can be from a storage location to another storage location in the same Stores and plant..

Transfers can be based on purpose of replenishment. The transfers are initiated within Stores.


Stock Transfers are taking place in COMPANY with in the Same Plant


Same to be Captured in the System

To-Be Stock transfer from storage location to storage location within same Stores

For this scenario, the process starts with the creation of stock transfer movement in the Inventory Management (IM). It will have the complete details of the plant, Stores, storage location (from and to), material details, quantities and movement type. Stores will manually post the transfer and move the stock to another storage bin if required and finally the Transfer Order is confirmed.

Stock transfer from storage location to storage location within

same plant

For this scenario, the process starts with the Stores receipt of stock transfer request. It will have the complete details of the plant, Stores, storage location (from and to), material details, quantities and movement type. Stores personnel will process the request with Movement type in Inventory Management (IM). The material document has to be printed out for control purposes before the goods can be moved. Lastly, the physical goods are moved to the new storage location.

Flow ChartGap Analysis AReports Ref Reporting section 4.7

4.4.5 Return To VendorDefinition of Process

This Process Describes the returning material to the vendor for various reasons


Vendor Returns are happening COMPANY



To-Be Product will be returned to vendor either with1) An inventory movement that reference an existing PO or goods receipt material document2) a new PO (Return PO)

For cases of not referencing an existing document, the return of material to principal will be carried out via the creation of a Purchase Order (PO). The return item will be marked with the ‘Return’ indicator. The Return PO will facilitate the outbound planning of the return delivery. If shipping data had been configured for the return delivery and the Shipping tab information appears in the PO, a SD delivery (Outbound Delivery) can be created based on the Return PO.

Storage location postings are required and the stock will be manually picked. The goods issue of the material will still be according to the Outbound Delivery.

In the event of a Sales return claim, a credit memo will be created to post the claim amount

Flow ChartGap Analysis AReports Ref Reporting section 4.7 4.4.6 Scrapping

Definition of Process

This Process Describes the Scraping material due to various reasons


Scrapping is done at COMPANY



To-Be Scrapping is a process whereby stocks storage location (damaged, expired, rejected and etc) will be written off from the books.

The process will starts with the identification of stocks for scrapping in the storage location. Stores will create a stock movement for scrapping using Inventory Management (IM). Stocks are moved to a physical location and scrapping process will be executed.Further Sale of Scrap has been covered in SD Module


3.4 P3.4 PHYSICALHYSICAL I INVENTORYNVENTORY WITHWITH A ANNUALNNUAL C COUNTINGOUNTINGDefinition of Process

Process of Physical Inventory at storage location level


Annual stocking is Performed at COMPANY


Physical Inventory Process has to be Captured in the system

To-Be The process will starts with Finance Department and Stores setting the period for physical inventory including stock movement cut off date. All stock movement related activities will have to be completed before the deadline. On the set date, book inventory will be frozen and physical inventory documents will be applied to all the plants and materials involved. No movement of stocks will be allowed during this stipulated date of physical inventory.

Physical inventory documents and count tags will be printed out. Counting will commence with the counting teams covering all the materials and location listed on the physical inventory document. The count result for a material will be entered into the counting sheet. The counting sheets result are collected and entered into the system. After that, the stock differences are listed out and a recount will be initiated if required. If recount is necessary, either a new physical inventory documents will be created again or the quantity in the original count document is changed. When the counting teams are satisfied with count results, Finance personnel will list and post the differences in the system.


3.5 I3.5 INVOICENVOICE V VERIFICATIONERIFICATIONDefinition of Invoice verification is the process of Bill Matching (Bill Passing) for

Process the Right qty /Right Price/ Right value and for other conditions


Invoice Verification presently done at COMPANY


Same to be captured in the System

To-Be Invoice verification shall be defaulted Goods Receipt Based Invoice Verification.Exceptions are allowed like Import PO.All the delivery costs (planned & unplanned) shall be coded in the system.And are to be identified at the time of PO or GRN.Invoices can be blocked for the following parameters Price, Qty, Delivery Variance.The Stochastic blocking will be enabled.Difference due to foreign currency fluctuations can be identified.Vendor credit Note shall be generated through FI Module.


3.6 I3.6 INTEGRATIONNTEGRATION P POINTSOINTS

Integration with SD Based on the type of order booking done in SD module, the

purchase requisitions or process orders will be generated which will be used for further processing of purchasing documents.

During the MRP Run the requirements will be calculated based on the existing Sales documents.

Delivery of Goods in SD module leads to a reduction in stock and return of goods increases the stock.

Integration with PP Goods Issue for consumption against a production order will be

done in the MM Module and this reduces the inventory of the materials.

Goods receipt after production is received through the MM Module.

Integration with QM Whenever the material is received, the quality inspection lot is

created and after result recording, a transfer posting automatically proposes the quantity to be posted to unrestricted/block stock after the results recording.

Quality Blocks will be activated for blocking invoices if posted prior to quality inspection.

Procurement of any material can be restricted to a period using the quality info record.

Integration with FI

During Goods Receipt:Inventory DrGR/IR Clearing A/c Cr

During Excise Part II EntriesCENVAT Received A/c DrCENVAT Clearing A/c Cr

During Invoice Verification Vendor A/c CrGR/IR Clearing A/c DrCENVAT Clearing A/c Dr

During Invoice Verification Vendor A/c CrGR/IR Clearing A/c DrCENVAT Clearing A/c Dr

During Goods Issue to ProductionInventory A/c CrConsumption A/c Dr

During Goods Issue to DeliveryInventory A/c CrCOGS A/c Dr


Business RequirementsTo-Be

Flow ChartGap Analysis AReports Std Report

3.7 R3.7 REPORTSEPORTSThe following are the Reports requirements identified

1. Pending Purchase orders Report2. Daily Stock report3. Report showing Pending PR, PO, Pending Bills, Batch & Shelf life4. ISSUES & RECEIPTS: Main_Store_wise, Sub_Store_wise, Party-wise,

Item_wise, Category-wise, Rejected_Material, Short_Receipt, Contractor-wise, Dead Stock, Asset.

5. Goods Issue: Main_group_wise, Department, Chargeable, Non-chargeable, cylinders consumption etc

6. Item_wise /store wise Inventory report1. Cylinders consumption2. List of vendors based on ABC3. Report on material sent to service with vendors4. All excise related reports

Note: This is broad list of Reports The exact requirement will be finalised Mutually.Excise /statuary Related documentation which are not satisfied by SAP shall also be identified and customisation effort will also be discussed mutually

Print Outputs

The following printed outputs are required by COMPANY.1. Request for quotation.2. Purchase Order3. Purchase order amendment4. Order reminder 1, 2 & 35. Goods Receipt (Will be decided Later)6. Purchase Requisition

BPML-MM

Documents

Transcript of BPML-MM