Storage Locations

Various store Locations identified are

1. General Stores
2. Finished Goods Stores
3. Bagasse Yard
4. Compost Yard
5. Coal Yard
6. Press Mud
7. Raw Sugar
8. Packing
9. Sulphur
10. Lime
11. Oxygen
12. Tools & Tackles
13. Molasses Tanks
14. R.S.
15. Ethanol
 16. Diesel
17. Scrap
18. Bamboo mats & Bamboo
19. Project Items
20. 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 Fernandes
2. Mr. Umesh Malvia
3. Mr. Dharmesh Rana
4. Mr. Umesh Yelgi
5. Mr. S.N. Akki
6. Mr. Adam Pakali
7. Mr. Sayed

Material Types
1. RAW Material
2. Finished goods
3. Packing Material
4. Trading Goods
5. Consumables
6. Tools and spares
7. Capital items
8. Service Items
9. 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 Code
Material Coding will be decided mutually

4.1Master Data Maintenance

Definition of Maintaining the following master data:
Process 1. Materials
2. Services
3. Vendors
4. Purchasing Info Records
5. Source List

Existing Master data is maintained for the following

Process (AS-  Materials
IS)
 Vendors (Farmers/ Transporters/Harvesters)
 Source list


Business The following master data is required. Material, Vendor,

Requirements 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:
Materials
Services
Vendors/Farmers
 Purchasing Info Records
Source List

Flow Chart NA
Gap Analysis A
Reports NA

4.1.1 Sub-Process Scope: Maintenance of Material Master

Definition of The material master is the central master record for logistics. For
Process example, data for sales, production and procurement are stored in
the same master record but can be related to different
organizational units
Maintenance of Raw materials, Packing, Finished material etc.in
the material master for day to day transactions and Modifications
when ever required
Existing At COMPANY Material details are maintained for Raw materials,
Process (AS- Packing, Finished material etc. Materials are maintained in the
IS) material master for day to day transactions and to maintain
information
Business All materials and their related information should be maintained in
Requirements 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 enter
What 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 maintained
1. 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 NA
Gap Analysis A
Reports NA

4.1.2 Sub Process Scope: Service Master Maintenance

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

Existing Services are procured for Plant maintenance. for Maintenance of

Process (AS- Equipments, Plant and machinery
IS)
Business The same should be captured in the system
Requirements
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 brief
Examples of Services for which Master records shall be created:
1. Annual Maintenance Contracts
2. Repairs in COMPANY premises
3. Repairs outside

Flow Chart NA
Gap Analysis A
Reports NA

4.1.3 Sub Process Scope: Maintenance of Vendor Master

Definition of Vendor Master Records contains all the information necessary for
Process any contact with a certain vendor, in particular for conducting
business transactions
Existing The following details for Vendor are Maintained at COMPANY like
Process (AS- Vendor code, Farmer code Address, Contact Number, e-mail ID,
IS) Payment Terms and conditions etc.

Business Vendor Master with all the necessary data should be maintained
Requirements
To-Be Vendor Master Data shall be maintained at the following levels:
 General data
 Company Code Data
  Purchase Organisation Data
The following Groups also will me maintained
 Service vendors
 Farmers
 Import Vendors
 Domestic Vendors
 One time Vendor
 Internal Vendor

Flow Chart NA
Gap Analysis A
Reports NA

4.1.4 Purchase Info Records

Definition Purchasing Info records shall store vendor - material details for various
of Process types of procurement like standard, sub-contracting, etc
Existing At COMPANY, Purchase Info Records are Maintained for Raw Materials,
Process Consumable and Engineering materials
(AS-IS)
Business Provision Should be made to capture the same in the system
Requireme
nts
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 NA
Gap A
Analysis
Reports Ref Reporting section 4.7

4.1.5 Source List Maintenance

Definition of The source list shall be used to maintain the possible sources of
Process 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
Existing At COMPANY standard source Lists is Maintained
Process (AS-
IS)
Business Allowed (and disallowed) sources of a material for a certain
Requirements 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 NA
Gap Analysis A
Reports Ref Reporting section 4.7

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

Definition of Maintaining of Oricing conditions like Gross Price, Net price, Taxes
Process applicable etc
Existing All applicable Pricing Conditions are maintained at COMPANY
Process (AS-
IS)
Business Same to incorporated in the system
Requirements
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 locations
The 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

Flow Chart NA
Gap Analysis A
Reports Ref Reporting section 4.7

4.1.7Payment Terms
Definition of Defining Various Payments required for Procurement activities
Process
Existing There are different payment terms existing
Process (AS-
IS)
Business The same should be captured in the system.
Requirements

To-Be COMPANY shall use the standard payment terms wherever

possible. Wherever required, specific payment terms shall be
defined in the system
Flow Chart NA
Gap Analysis A
Reports NA

4.2 MRP
Definition of Material Requirements Planning activities involved in creating an
Process external procurement plan for all the materials in a plant or
company

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

Process (AS- Material.
IS)
Business Planning to be done on the basis of reorder level. Automatic
Requirements 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 SAP

Consumption 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

Flow Chart NA
Gap Analysis A
Reports Ref Reporting section 4.7

4.3 Procurement Processes

4.3.1 Procurement of Goods (Spares & Routines)
Definition of The Spares and Routines material procured is owned by COMPANY.
Process All subsequent activities of stock management and delivery are the
responsibilities of COMPANY
Existing Purchase Requisitions are generated by concerned departments and
Process (AS- forwarded to Purchase.
IS) 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.

Business Same has to be captured in the system
Requirements
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 SAP

Reports Ref Reporting section 4.7

4.3.2 Procurement of Non-Stocked Material (Consumable)

Definition of Non-stocked materials are not held in stock because they are
Process consumed immediately. Example of non-stocked materials can be
stationery
Existing Purchase Requisitions are generated by concerned departments
Process (AS- and forwarded to Purchase.
IS) 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.

Business Same has to be captured in the system
Requirement
s
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

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.3 Procurement of Services
Definition of Services are regarded as being consumed at the time of their
Process performance. It can be performed internally or procured externally
(outsourced). Examples of services include AMC, Motor Servicing
and construction etc
Existing Services are procured by COMPANY depending on the services
Process (AS- requested by Requester Dept.
IS) 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
Requirement
s
To-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

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.4 Procurement of Packing Material
Definition of The material of packing is the supporting material that facilitates
Process 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
Existing Same as Procurement Spares & Routines.
Process (AS-
IS)
Business Packing Material Procurement has to Captured in the system
Requirements
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 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. 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& Spares

Gap Analysis A
Reports Ref Reporting section 4.7

4.3.5 Procurement of Assets

Definition of Assets are Procured and maintained by COMPANY
Process
Existing Assets are Procured based the Management decision and same
Process (AS- has be maintained by COMPANY in various locations
IS)
Business Asset Procurement has to Captured in the system
Requirements
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.

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.

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 assignment

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.6 Procurement of Subcontracting
Definition of This is the procurement of subcontracting service to a finished/end
Process product from a constituent range of component materials.

The subcontracting services can be procured from an external

vendor or performed internally within COMPANY
Existing  COMPANY needs to get its material processed from Service
Process (AS- providers due to lack of that capability / capacity with in
IS) COMPANY.
 After processing, COMPANY will take back the entire
processed material.
 The Subcontracting charges are settled to the Vendor through
normal Payment Procedure
Business Subcontracting Procurement has to Captured in the system
Requirement
s
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

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.7 Stock transport order/Depot Sales
Definition of Stock can be cross - replenished between plants. The stock
Process 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).

Existing SCOMPANY moves goods from one plant to another plant

Process (AS- depending on the requirement
IS) Sales from Depots are also taking place

Business Stock Transfers and Depot sales has to Captured in the system
Requirement
s
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.

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

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

Flow Chart

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.8 IMPORTS
Definition of This process Procurement of Imported Materials shows you how to
Process 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- Coal, Machineries
IS)
Business Same to captured in SAP
Requirements
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 workflow

This PO will be identified with Customs duty related Conditions
The Customs duty, Cess., shall be identified as Delivery costs
CHA charges shall be based on % basis
Shipping notification will be used to Calculate ETA of Materials
No Inspection Process at the time of Material Receipt.
Note: Customs Office and CHA will be identified as Domestic
Vendors
User 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

Imports.shs
Gap Analysis A
Reports Ref Reporting section 4.7
4.3.9 CAPITAL PURCHASE
Definition of The Capital Items business is processed differently as far as excise
Process 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
Existing Capital Procurements are made at COMPANY
Process (AS-
IS)
Business Same to be captured in the system
Requirement
s
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 this
This main feature is 50% of Cenvat credit in the first year
Flow Chart
Gap Analysis A
Reports Ref Reporting section 4.7

4.3.10 Procurement of Trading Goods

Definition of In COMPANY apart from own production and sales activities, lots
Process 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.
Existing Trade Sale are happening COMPANY
Process (AS-
IS)
Business Same has to Captured in SAP system
Requirement
s
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 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.

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.

Flow Chart

Gap Analysis A
Reports Ref Reporting section 4.7
4.3.11 P007 Procurement of Consignment Goods (Ethanol, Molasses)
Definition of Consignment goods are stock made available by the vendor
Process (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- Ethanol produced from Sugar Plant, which comes in Pipeline.
IS)
Business Same has to captured in The SAP system
Requirements

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.

For materials managed in batches, the system automatically

assigns a batch number to the batch if no external batch number is
entered.

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 procurement

Gap Analysis A
Reports Ref Reporting section 4.7

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

Existing Contracts are presently available with COMPANY for certain

Process (AS- vendors
IS)
Business Same to be Capture in the System.
Requirement
s
To-Be
In 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

Gap Analysis A
Reports Ref Reporting section 4.7

4.3.13 Miscellaneous Procurements

Definition of COMPANY procures certain materials /services like Rent, AMC etc,
Process which are supposed to be paid monthly/quarterly
Existing Same as above
Process (AS-
IS)
Business Same to be Capture in the System.
Requirements
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 system
This 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 A
Reports Ref Reporting section 4.7
4.4.1 Receiving (Goods Receipt)
Definition of This process applies to goods receipt for all storage locations.
Process
Existing  Good s Receipt Process exists.
Process (AS-  Based on this only Payments are made
IS)
Business Same to be Capture in the System .The supplier should get the
Requirements 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 A
Reports Ref Reporting section 4.7

4.4.2. Goods Issue

Definition of Issuing Process of Material to the Plant/Departments
Process
Existing Goods issue to Production/ Plant maintenance /other Departments
Process (AS- are performed in COMPANY
IS)
Business Goods issue Process has to be captured in the system
Requirements
To-Be This is a standard feature of SAP
Flow Chart NA
Gap Analysis A
Reports Ref Reporting section 4.7

4.4.3 Goods Issue to Cost Center

Definition of Goods Issue Process to the Cost Centre
Process
Existing Goods issue Cost centre/other Departments are performed in
Process (AS- COMPANY
IS)
Business Goods issue to cost centre Process has to be captured in the
Requirements 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 Consumables
Gap Analysis A
Reports Ref Reporting section 4.7
4.4.4 Stock Transfer Storage Location to Storage Location
Definition of Stock can be replenished between storage locations within the
Process 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.

Existing Stock Transfers are taking place in COMPANY with in the Same
Process (AS- Plant
IS)
Business Same to be Captured in the System
Requirements
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 Chart
Gap Analysis A
Reports Ref Reporting section 4.7
4.4.5 Return To Vendor
Definition of This Process Describes the returning material to the vendor for
Process various reasons
Existing Vendor Returns are happening COMPANY
Process (AS-
IS)
Business Same to be Captured in the System
Requirements
To-Be Product will be returned to vendor either with
1) An inventory movement that reference an existing PO or goods
receipt material document
2) 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 Chart
Gap Analysis A
Reports Ref Reporting section 4.7
4.4.6 Scrapping

Definition of This Process Describes the Scraping material due to various

Process reasons
Existing Scrapping is done at COMPANY
Process (AS-
IS)
Business Same to be Captured in the System
Requirements
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
Flow Chart
Gap Analysis A
Reports Ref Reporting section 4.7

3.4 PHYSICAL INVENTORY WITH ANNUAL COUNTING

Definition of Process of Physical Inventory at storage location level
Process
Existing Annual stocking is Performed at COMPANY
Process (AS-
IS)
Business Physical Inventory Process has to be Captured in the system
Requirements
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.
Flow Chart
Gap Analysis A
Reports Ref Reporting section 4.7
 3.5 INVOICE VERIFICATION
Definition of Invoice verification is the process of Bill Matching (Bill Passing) for
Process the Right qty /Right Price/ Right value and for other conditions
Existing Invoice Verification presently done at COMPANY
Process (AS-
IS)
Business Same to be captured in the System
Requirements
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.
Flow Chart NA
Gap Analysis A
Reports Ref Reporting section 4.7
 3.6 INTEGRATION POINTS
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 Dr
GR/IR Clearing A/c Cr

During Excise Part II Entries

CENVAT Received A/c Dr
CENVAT Clearing A/c Cr

During Invoice Verification

Vendor A/c Cr
GR/IR Clearing A/c Dr
CENVAT Clearing A/c Dr

During Invoice Verification

Vendor A/c Cr
 GR/IR Clearing A/c Dr
CENVAT Clearing A/c Dr

During Goods Issue to Production

Inventory A/c Cr
Consumption A/c Dr

During Goods Issue to Delivery

Inventory A/c Cr
COGS A/c Dr

Existing 
Process (AS-
IS)
Business
Requirements
To-Be
Flow Chart
Gap Analysis A
Reports Std Report
 3.7 REPORTS
The following are the Reports requirements identified
1. Pending Purchase orders Report
2. Daily Stock report
3. Report showing Pending PR, PO, Pending Bills, Batch & Shelf life
4. 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 report
1. Cylinders consumption
2. List of vendors based on ABC
3. Report on material sent to service with vendors
4. 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 Order
3. Purchase order amendment
4. Order reminder 1, 2 & 3
5. Goods Receipt (Will be decided Later)
6. Purchase Requisition