27.01.

2022:

Out line agreements are of two types:

 Contract(quantity based(MK), Value based(WK))
 Scheduling Agreement.
 In Quantity contract we made a contract with vendor to supply a fixed
amount of item for a fixed period of time. And in case of value based
contract a fixed amount or fixed value of items are procured from vendor.
 These out line agreements are made for centralized procurement system,
where one purchasing organization is responsible for procurement of a lot
of plants. Here we get a bargaining power by making contract or scheduling
agreement with vendor.
 In contracts release orders are made for procurement, which are similar to
PO. But in case of SA no release orders or POs are made.
 Scheduling agreements are made when we need any item in a particular
interval of time. i.e. we made a schedule of item that is supposed to be
delivered on that particularly day without creating POs on every interval of
time.
 Example: we need some item every day for our manufacturing plant.
Instead of making PO every day and send it to vendor we make a
scheduling agreement to supply every day. So wo do not need to create PO
everyday. Vendor automatically send the items.

Purchase Requisation:
 It is a formal documentation of requirements (Goods, Services etc.)
 It is an internal document. It does not go to vendor. It is an indicator i.e. it
only indicate the requirements.
 In PR we keep record of our requirements without knowledge of vendor or
stock, but in PIR(purchase Info Record) we keep record of one material one
vendor record (in PIR we keep info of negotiated price and scaling of price
of material so that quotation and price comparison can be made.)
 We can create a PO by referring a PR.

 A collective no. In RFQ is tag to bind all the documents of different RFQs
together so that it can be managed easily.
Configuration:

Basic of Customization:
 Account groups : (Control Master Data)
 Documents type and Item Categories controls Transaction i.e. how an item
or document behaves.
 Condition technique controls pricing, outputs, text messages, etc.
 Other controls are number ranges, plant, storage location, vendor,
movement type, tolerances etc.
Material Master:
 Material group is created to group a lot of material under one umbrella for
their operational and analytical use.
 An external material group is created for the same material group because
that material group may be different for others prospective.
 Old material no. Is used to refer to same material before the
implementation of SAP.
 Purchase value keys is grouping of some fields like reminders, tolerance
value etc. Under one field.
 X plant (cross plant) material status indicates the status of the material over
the supply chain, meaning if we can block the purchasing, production etc.
Of the material.

03.02.2022:

 In G/R when posting period problem happens, then go to MMPV and close
the entire fiscal past years.
 TO OPEN period T code is OB52

04.02.2022: INVENT0RY MANAGEMENT:

 Three pillar of SAP are Procurement, Inventory Management (IV),

Consumption Based planning(CBP)

 Transfer posting:
 It is used for both when locations are nearby or far away.
 Used for plant to plant, storage location to storage location.
  Two ways used: one step and two step transfer.
 Cant used external logistics.
 There is no tolerance
 There is no traceability ( no history of transfer)
 Linking of ST with requisition can’t be done

 Stock transfer:
 It is used for far away locations.
 MB5T T CODE is used to see material in transit.
 Used only plant to plant transfer.
 Only two step transfer method used.
 External logistic is used.
 There is tolerance
 This can be traceable.
 Here linking of requisition with STO can be done.
 Intra Company STO: Without Delivery: MvT:351 & 101- 2Step
With Delivery: MvT: 641 & 101- 2Step and 647: 1step
 For Intra Company STO Receiving plant must have customer no. And Supplying
plan must have sales details(like sales org, division etc.)


Miscellaneous Good Movement:

Goods Receipt:
 G/R with PO movement type is 101 and G/R without PO movement type is
501.
 Convert stock to material: Here movement type is 309. Here one material is
converted or shifted to another material within the plant.
 GR against production, sales, project etc. Every GI has a return GR. And
reverse movement type is used.
  Goods Issue: Here material is only issued from one stock to other. i.e when
using this movement material is decreased from source stock but not
added to destination stock.
 QA (Quality Inspection) movement type is 333
 Scrapping: Movement type is 551. Here if some material is damaged
scrapping is used. Here cost centre is used to bear the accounting.
 T-code OMJJ for movement type overview.
 Consumption is a case of good issue. Movement type decide consumption.
 Movement type 201 is cost centre basis.
 Goods issue also against sales order. Movement type 601
 Good issues against project. movement type is 201
 GI against asset. Movement type is 241
 GI against production order. Movement type is 261
 GI against internal order etc.
 So GR increases stock GI decreases stock. And those that are not used are
scrapped. GR is inbound, GI is outbound, Scrap is internal.

Effects of Goods Movement:
 Inventory Changes: Here either quantity increases or decreases. E.g in case
of good receipt and good issue. But there may be some cases where
inventory does not change. Like in case of stock transfer in between stocks
where total inventory of storage remains same. Only storage type changes.
 Value is updated.
 Consumption also changes. In case of GI it increases be when customer
returns good it decreases, whether in case of scrapping, receipts against PO
and stock transfer from QA to UR there is no change in consumption.
 Reservations also changes. Ex SO and PO
 Order update also changes. Ex production order.

08.02.2022:
 Automatic PO Creation: For automatic creation of PO following steps to
be followed
 Add non order line items in MIGO.
 Use movement type 101
 Configure movement type in OMJJ for automatic PO.
 In enterprise structure assign default purchase organisation to plant.
 Make MM and VM as automatic PO.
  Make PIR for MM and VM.
20.02.2022: Physical Inventory:

 In SAP to do inventory counting first to generate a physical inventory

document. Second to do physical count of inventory. Then post the
difference.
 What SAP thinks in stock is Book Inventory. And physical availability of that
stock in store is physical inventory.
 Physical inventory is needed for availability check of the material, and for
MRP (that is planning use of material), and to show the actual stock in
balance sheet of the material.
 In SAP to do inventory counting steps are:
 Generate physical inventory document
 Do a physical inventory count
 If difference found do post difference
 T code MI01 to create physical inventory document
 T code MI21 to print physical inventory document
 T code MI04 to count inventory
 T code MI07 to post the difference
 MB03 to display material document
 According to the difference of physical and book inventory the
inventory is credited or debited as well as the loss and gain account.
 Suppose there is loss of 100 quantity(book inventory has more than
physical inventory) the inventory account credited(-) and loss is
debited(+)
 If there is excess amount in physical inventory than inventory
account debited(+) and gain account credited(+)
 Constraints:
 While doing physical inventory we needs to stop any movements of
stock to count correctly. So to block movements at that time active
the block posting indicator at the initial screen at the time of
generate physical inventory document.
 Also at one time only one physical inventory document active for
one material.
 Freezing book inventory is another constraint. Here all the
movements happen but no stocks added to book inventory. After
the inventory document is posted the stock is updated according to
 the movements. In this process we avoid unnecessary delay or block
in movement process.
 Freezing of book inventory is done at the same process as block
movements. The freeze indicator must be activated at the time of
create of physical inventory document.
 This customization is needed to freeze book inventory document
SPRO SAP RIMGMMInventory management and physical
inventoryphysical inventory allow freezing of book inventory
balance in storage location select work area and then activate the
freeze indicator against the storage location.
 When we freeze book inventory in MMBE the stock is
added/subtracted if any G/R or G/I happen. But the difference in
count post of physical inventory does not change.
 Negative Stocks:
 When Book inventory< Physical inventory. That is we don’t have
sufficient stock to issue in MMBE but physically we have it, and
immediate G/R is not possible for the book inventory. Then we can
issue good using negative stock process.
 There are two prerequisite to use negative stock
1. Activate negative stock in plant level in customizing.(SPROSAP
RIMG MMInventory management & Physical
inventoryGood issue/ Transfer postingAllow negative
stocks(here allow negative stock at plant level)
2. Activate negative stock indicator in material master in plant/
storage location2 view
3. Then we can make GI and there is an negative stock entry in book
inventory(MMBE) till any G/R against negative stock

23.02.2022: How to Delete MASS PO

 T Code for this is MEMASSPO.

 T Code ME2N is used to see purchasing documents per document number.
03.03.22: Special Procurement:

 Low value and non essential items are called Class C material. These type of
materials are procured through Blanket PO.
 Create Blanket PO:
 Order Type :FO”(framework Order)
 Item category : B
Account assignment: K Cost Centre
Specify Limit.
No MIGO in this. Only Invoicing.(MIRO)
In Consignment when vendor sends Good we don’t own them we own
them when we consume them and pay for them.
Movement Type:

 T Code to create or display Movement type is OMJJ

 Table to get details of movement type is T156
 Table to get the movement type and it’s text is T156HT.
 1 Series: Goods Receipt and related movements.
 2 Series: Goods Issue and related movements.
 3 Series: Transfer Posting related movements.
 4 Series: Special Transfer Postings.
 5 Series: Other Good receipts.
 6 Series: Sales and STO related Goods Movement.
 7 Series: Physical Inventory related Movements.

Document type in a PO indicates the type of business processes. Item category

and account assignment decides how a line item behaves.

Procurement:

 Standard procurement- Item Category Blank

 PR-PO-GR-IR-Payment
 Example: Raw materials: material master.
 Service Procurement- Item category D- Service.
 Ex: Manpower services, Machine Services etc- Service Master.
 PR-PO-Service entry sheet-ML81N-IR-Payment
 SPRO-MM-Purchasing- Purchasing orders- Define Document types.
 Account assignment category
 Blank-Standard-Stock able
 All stock items which you want to maintain inventory/stock-
Direct Procurement.
 K-Cost centre
  All non stock items which you don’t want to maintain
inventory. Indirect procurement.
 Consumable items i:e papers, cups, pens, all services etc.
 A- Assets: All items which are procured as assets of the company like fan,
ACs, Computers etc.
 Consignment procurement- Item category K- Consignment
 Consignment Info record Mandatory- ME11
 Create Consignment PO- ME21N, Note: No condition tab and
price for PO
 G/R- MIGO-101K No accounting entries. Stock will come to
CONSIGNMENT. It is called as Vendor Consignment Stock.
 Transfer Posting 411K- Consignment stock to Own stock.
Accounting entries.
 Invoice settlement –MRKO.
 Payment to Vendor F-53
 Pipeline procurement- Item category K- Consignment
 Consignment Info record Mandatory- ME11
 Create Consignment PO- ME21N, Note: No condition tab and
price for PO
 G/R- MIGO-101K No accounting entries. Stock will come to
CONSIGNMENT. It is called as Vendor Consignment Stock.
 Transfer Posting 411K- Consignment stock to Own stock.
Accounting entries.
 Invoice settlement –MRKO.
 Payment to vendor- F-53.
 Subcontracting Procurement- Item category L- Subcontracting.
 Subcontracting info record-optional-ME11
 Create subcontracting PO with item category L- T code
_ME21N
 Steps: ME21N->Enter Item Category L->, Material(End
product), PO Quantity, Delivery Date, Net Price, Plant->Click on
Item Components button-> Enter the sub components->Go
back and save.
 Note: Components can be exploded through BOM (T code
CS01) or components can be given manually also.
 Create Transfer Posting with Movement Type 541 to issue the
sub components to the vendor T Code- MIGO.
  Good Receipts for finished product- T Code-MIGO.
 Note: During goods receipt, final product will be received with
Movement type 101 and components will be consumed
automatically with 543 movement type.
 Invoice receipt for service performed- T code _MIRO.
 Accounting entries for sub contracting: Example: Components
cost 100 INR. Subcontracting Charges are 40 INR.
 There will be no accounting entries at transfer posting 541.
 While the accounting entries will be at 101 those are:
 (BSX) Stock A/c of Assembly- 140 Dr
 (BSV) Change in subcontracting stock- 140 Cr
 (FRL) Subcontracting charges – 40 Dr
 (WRX) GR/IR Clearing A/c- 40 Cr
 (BSX) Stock A/c of Components- 100 Cr
 (GBB- VBO) Consumption A/c of components- 100 Dr

 Stock Transfer Order Procurement- Item Category U- STO

 Transfer posting One Step- MIGO- Transfer posting- 301- Stock
from one plant to another plant.
 Transfer posting two step- MIGO- Transfer Posting- 303-
Remove from storage @ Supplying plant, 305- Place in storage
@ Receiving plant.
 Note: In intra company STO, accounting entries will be
generated only during Goods Issue only (303,641,643).
 When the stock is in transit, value will be at supplying plant
only until the receiving plant does the goods receipt. T code to
see stock in transit is MB5T.
 STO without delivery (SD Module): Create PO with UB
Document type and Item category U->Goods Issue with 351
Mvt at supplying Plant->Accounting entries will be generated->
G/R with 101 Mvt at receiving Plant- No accounting entries.

24.09.2022:Purchage Requisation:

 For PR we mostly (99%) use internal number range.

25.09.2022: :
 A RFQ is a standard business process whose purpose is to invite suppliers
into a bidding process to bid on specific products or services. RFQ generally
means the same things as IFB (invitation for Bid)
 An RFQ typically involves more than the price per item, Information like
payment terms, quality level per item or contract length are possible to be
requested during the bidding process.
 T code to create RFQ in SAP is ME41.
 We can send RFQs at a time to multiple vendors.
 Collective number acts as bidding number. Ad it will be useful to list all
similar quotations for respective bidding.
 Once the quotations are received from the vendors, details like price,
payment terms etc will be maintained in T code ME47.
 You can compare the prices from all quotation received as a result of
competitive bidding process using the price comparison list. The
comparison list ranks the quotation by item from lowest to highest price.
 T code to compare quotation is ME49.
 If a quotation is submitted in a foreign currency, the price is automatically
translated in to the currency of the company code, which is determined by
your purchasing organization.
 The quality market ranking, etc details have to be compared out of SAP.
Selection and rejection od Quotation:
 As per the price comparison and other parameters which are observed out
of SAP, a quotation can be rejected.
 The indicator R has to be flagged for the quotations you want to reject in
ME47 T code.
 Finalized quotation can be used for procurement.
 With this quotation, either Contract or PO can be created as per the
process requirement.
Configuration Of RFQ:
 Define document type
 Allowed item category
 Linking of Purchase requisition document type
 Define number ranges
 Define screen lay outs for document types.
 Create RFQ ME41
  Maintain RFQ ME47
 Compare RFQ ME49
 Reject RFQ ME47
26.09.2022:Purchasing Contract:
 A legally binding document agreed between a purchaser and a vendor.
 A purchasing contract defines the purchasing and supply of goods or
services at agreed prices and conditions. The quality and value of the
purchase orders, limit confirmations, and invoices are released against the
contract.
 The contract does not contain specific delivery dates or the individual
delivery quantities. These are specified subsequently in release orders
against the contract when customer requires them.
USE:
 When purchasing department want to setup long term relationship with
vendor for specific group of material or services.
 To negotiate binding conditions for purchasing (i.e. price, quantity,
discount etc.) without actually releasing purchase order.
 The PO which is created against a Contract is called a Release Order.
 Using pre-negotiated offer during day-to-day purchasing.
 Increase speed of actual purchasing to satisfy actual requirements.
 Provides better monitoring and control of actual release of PO against
offer.
Structure of an outline purchase agreement:
 An outline purchase agreement consists of the following elements:
 Document header: contains information relating to the entire agreement.
E.g. the vendor information and header conditions are in the document
header.
 Items: Contains the information specific to the relevant material or service:
E.g. Statistics on ordering activities for the item.
 Quantity or price of item
 Condition, such as quantity discount and surcharges
Types of Contract:
Value Contract (MK): The Contract is regarded as fulfilled when release orders
totalling a given value have been issued. Use this contract type when the total
value of all release orders should not exceed a certain amount.
Quantity Contract(WK): The contract is regarded as fulfilled when release orders
totalling a given quantity have been issued. Use this contract type when the total
quantity to order over the duration of the contract is known.

Special characteristics of contract:

 Contracts are outline agreement. They do not contain details of the delivery
dates for each of items.
 If a purchasing information record with condition exists for the material
and the vendor, the system automatically suggest the net price according
to these conditions when you create the contract item.
 Contract validity period is defined in the contract header as the validity
period.
 THE PO which is crested with reference to the contract is called as release
order.
 The purchasing requisition document types which are linked to the
Contract Document type in the configuration can only be used for creating
Contract with reference to PR.
PO:
Structure of PO:
 A PO consists of a document header and a number of items.
 A procurement type is defined for each of the document items. The
following procurement types exist:
 Standard
 Subcontracting
 Consignment
 Stock transfer
 External Service
 Account assignment category:
 Specification of the objects (e.g. cost centre, sales order, project) thatare
charged in the case of a PO for a material that is intended for direct usage
or consumption.
 Costs can be appropriated among various controlling objects via the
account assignment.
Item Category:
The item category determines whether the material defined in a PO items.
 Requires a material number
 Requires an account assignment
  Is to be managed as a stock item.
 Requires a goods receipt (GR) and/ or an invoice receipt (IR)
Conditions:
Conditions can apply at various levels:
 To the entire PO
 At item level, to the materials to be supplied or to the set of services
specifications in the case of services.
 At service lone level for individual services (tasks or activities)
EX: price, Discount, Freight, Insurance, Tax etc.

ME28- Collective Release of PO.

ME29N- Individual Release of PO.

PO Output Determination :
Messages: Messages are an important means of communication with vendors
in purchasing. Messages can be transmitted both by the regular main (postal
service) and electronically.
Message Types: The message type denotes different kind of messages in the
SAP system ( e.g. communications sent to vendors, such as PO, order
acknowledgment, reminders, expediters etc). Alphanumeric key up to 4
characters, uniquely identifying a message type.

Introduction:
The printing program does not only confess with the output of purchasing
documents on the printer but with all methods of getting the documents to
the vendor. This can be print out, but also sending a purchasing document by
fax or e-mails. The same program and form are used for the output of several
documents and processes. The documents that can be output are:
 Request for Quotation
 PO
 Contract
 Schedule agreement Delivery Schedule.
The processes that require the output of a document are:
 Creating a new document
 Changing an existing document
 Creating a new delivery schedule for a scheduling agreement
 Urging/ reminding a delivery
To set up the message determination of purchasing documents you have to assign
a message schema to a purchasing document.

Condition/Message Type contains Access Sequence

Access Sequence contains different Condition Tables

Condition Table contains different combinations like Purchase Org/Doc

type/Vendor etc.

Configuration Steps:
1. Define Message Types
 It is possible to maintain the message type and define
what print operations should be used for the message
type.
 Make sure that the flags for ‘Access to conditions’ and
‘Multiple issuing’ are set. The flag for ‘Multiple issuing’
allows sending messages multiple times to the same
partner (this is relevant for urgings and reminders).
 To create change messages properly, the program
FM06AEND and the form CHANGE_FLAG must be
maintained
 Replacement of Text symbols data will be useful to
send the mail with specific Purchase Order data
2. Fined-tuned Control:
 Defines which message type shall be used for which print
operation (new print, change print, urging letter, expediter).
For the message type NEU the print operations 1 (new
print) and 2 (change print) should be always maintained
 In case scheduling agreements are used, the flag ‘Update
print-dependent data’ (T161M-DRUAB) should be selected.
 3. Define Access Sequence:
 One access sequence is assigned to the message
type. The access sequence serves as key combination
for the creation of condition-/message entries.

4. Message Determination Schemas:

 We assign required condition types to the Schema.
5. Assign Message Determination Schema:
 In this step, we assign schema to the application: it is
possible to define more than one schema, but only one
schema can be assigned to one application: for
example the standard procedure RMBEF1 is assigned
to application EF i.e. PO. 
 To make sure that the message determination works
properly, the flags ‘N’ for message determination
(T161N-NFIND) and ‘P’ for partner determination
(T161N-NEUPR) should be set. The flag “Rel. mess.”
(T161N-OBJLG) is only relevant for scheduling
agreement releases.

6. Create Condition Records:

 Transaction Code to create Condition Records for PO
is MN04

PO to vendor as Mail:
 1. Proper communication strategy has to be maintained under
below configuration path
SPRO-IMG- SAP NetWeaver- Application Server-- Basis Services-
Message Control- Determine Communication Strategy
2. SCOT settings for INT has to be maintained
3. Proper Program and Form routine have to be assigned to the
medium External Send for the Condition type
4. Vendor should have valid Mail address
5. Output medium 5 has to be set for the condition type in
Condition Records

Release Statergy:

Tables and Fielda in RS:

 CEKKO- PO,RFQ, Outline agreement

 CEBAN- PR
 CESSR- Service entry sheet(SES)
 T code – SE11 or SE12- To check fields in structure.

Configuration for PO-RS: In copy

Return to Vendor:

Case-1: Here we return to vendor on a specific PO, where we know the

document number or PO number.

 Return to supplier processing enables you to return damaged or

unwanted products from your supplier.
 A subsequent delivery is additional delivery of goods to meet
demand or a previous defective delivery.
 In logistics, it becomes necessary when an order cannot be
fulfilled with just one delivery due to lack of available stock.
 For this prerequisite is one must have vendor and material
master, then create PO then GR (Mvt 101) then for return same
MIGO (Mvt 122), then subsequent delivery under MIGO (mvt 101,
here again vendor send material replacing the defective materials
and we have to again receive the material), then invoice
processing then supplier payments.
Case-2: Here we don’t have a particular PO under which we want
to return to vendor, or we don’t know the document number.
 We create a return PO (ME21N) with the return quantity and
thick the return box in line item. Then we make G/R (MIGO)
WITH MvT 161. Then we go to MIRO and create Credit
Memo.

Returnable Transport Packaging:

 Generally, for some of the materials, it is very difficult to

send without packaging materials, for these vendors will
send materials with packaging or some container. But these
materials are very expensive. So, vendor will ask to return
these materials once you utilize the main material.
 Here prerequisite is Material and Vendor Master, then
create Material master for RTP Material (MM01, Material
type is LEIH), then PO, then MIGO(MvT is 501 M for RTP
Material). While receiving goods (MIGO) under line item
there is a button name transport equipment click it and
another line item will be added under received material.
  Then we check for RTP mat stock (MMBE), then make MIGO
(return RTP mat. Mvt 502 M).

Stock Transfer:

Stock transfer describes a process in warehouse logistics for moving

goods from one part of the distribution chain to another. In general,
the stock transfer is aimed at optimizing the storage capacity according
to certain strategies.

Types of ST:

Transfer Posting:

 Change of stock type, material number or batch number.

 Additional physical material movement possible
 Under this Stock to Stock, Material to Material, Consignment to
Warehouse come.

Physical stock transfer:

 Physical material movement.

 STO
 One- and two- step procedure possible.
 Under this Storage loc to Storage Loc, Plant to Plant, Company
Code to Company code come.

Stock to Stock Transfer: Block diagram in copy.

Material to material Transfer:

 The posting cannot be pre planned via a reservation.

  The posting can only be made from unrestricted-use stock
of the issuing material to unrestricted-use stock of the
receiving material.
 The posting can be entered in the system with transaction
MIGO or the SAP Fiori app Post Goods Movement.
 The posting can be made only in a single step.
 Must have same UOM(Unit of Measurement).
 Trnsfer posting material to material Mvt 309.

One step or two step Storage location: Block diagram in copy.

STO :

Advantage of STO:

 A good receipt can be planned in the receiving plant.

 You can enter a vendor (freight vendor) in the stock transport
order.
 Delivery costs can be entered in the STO.
 Purchase requisition that were created in MRP can be converted
into STOs. (Can be managed with MRP)
 The system can run an availability check for the stock transfer.

Characteristics of STO:

 The quantity posted from stock is first of all managed as stock in

transit.
 The quantity first posted to the unrestricted use stock of the
receiving plant in the goods receipt posting. This enables the
quantity “on the way” to be checked.
 You can enter delivery costs in the stock transport order.
 The transfer posting is valuated at the valuation price of the
material in the issuing plant.
 If the plants involved belong to different company codes, the
transfer between plants is also a transfer between company
codes. In this case, the system creates two accounting documents
when the goods issue is posted. The stock posting is offset against
a company code clearing account.

STO One Plant to Other Plant: Block Diagram in copy.

Configuration for STO without Delivery:

 SPRO MMPurchasing PODefine Document type UB

 IMG MM Purchasing PO Set up STO configure
Delivery Type & Availability check Procedure by plant.

STO W/O Delivery for same C code: Block diagram in copy.

 Prerequisite: Material Master (MM01) in both the plant,

then create PO (ME21N) Doc type UB, Then check available
of stock in MMBE, then GI (MIGO) Supplying plant Mvt-351,
then check stock in transit (MB5T), then G/R in receiving
plant.

Subcontracting:

 Employ a firm or person outside one’s company to do (work)

as part of large project.
  Subcontracting is the practice of assigning, or outsourcing,
part of the obligations and tasks under a contract to another
party.
 Prerequisite( Material (both component and finished
material master) and vendor master)PIR (ME11) for
finished product and vendor must be maintained check
the component stock (MMBE)Transfer posting component
material to vendor( MvT 541)Then again check
stock(MMBE)receive the final product G/R (101)(but in
background 543 Mvt happens)invoice
processingpayment.

Pricing Procedure:

 Pricing procedure in MM module is way to determine

prices in purchasing documents. It gives us functionality
to assign different calculation types for different needs of
the business.
 The main concept of pricing procedure is combination of
different types of charges involved while purchasing
material or services.
Ex: Gross Price, Freight, Discount, Surcharge etc.
 Pricing procedure is use to determine all the conditions
in to one procedure in order to find out the sub-total
for net amount.

Types of Pricing:
  Gross price: It is the basic price of the material w/o
discounts, surcharges, and taxes. Price excluding any
possible discounts or surcharges.
 Net Price: The Gross price after considering duties &
taxes in to account. Price taking discount, surcharges,
and possibly taxes into account.
Net Price= Gross Price+ Duties+ Taxes
 Effective Price: The net price after considering surcharges and
discounts. Net price less or plus delivery ( include procurement)
costs, cash discount, and miscellaneous provision for accrued
costs or rebates.

Pricing procedure (Ganesh):

Invoice Verification --~Subsequent Debit

Credit Memo --~Subsequent Credit

Invoice Verification: When you want to verify the amount against a

PO to pay to the vendor.

Ex: You received goods from vendor. You verified the invoice given
by vendor to pay the amount.

Subsequent Debit: Correction kind of payment. Vendor has sent you

an invoice to pay as pay as additional charges after few months of
months of payment due to different reasons.

Credit Memo: You want/charge money from the vendor.

 Ex: you have received the good and identified all the goods and
some of the goods are damaged and you want to returning the
goods back to the vendor. We will create credit memo for the goods
amount equal to the return goods.

As per the agreement, if vendor does not provide the materials/

service within the delivery date or within quality etc. Parameters,
customers can send credit note to vendor to pay the penalty.

Subsequent credit: Whenever you want to charge or receive the

correction amount from vendor, you will create subsequent credit.

Ex: You want to charge the amount from vendor about the poor
performance of batteries which were bought from the vendor few
months back and the payment was also done.

Ex:Suppose we created a PO- 500 quantity (36000 INR)

G/R- 500 Qu( 36000), I/R- 500 Qu(36000+Tax 6840=42840)
Credit Memo -500qu (42840), Subsequent Debit 1000 InR for 500 qu,
Subsequent Credit-1000 INR + tax 95), Then Accounting entries are
follows:
G/R: Stock Entry: Debit (+36000)
GR/IR clearing account: Credit (-36000)

I/R: Vendor Acc: Cr (-42840)

GR/IR clearing acc: Debit (+36000)
Tax: Debit (+6840)
Credit Memo: Vendor acc: Db (+42840)
GR/IR clearing acc: Cr (-36000)
Tax: Cr (-6840)
Subsequent Debit : Vendor Acc: Cr (-1190)
Stock/Inventory Acc: Db (+1000)
Tax: Db (+190)
Subsequent Credit: vendor Acc: Db (+595)
Stock/Inventory Acc: Cr (-500)
Tax: Cr (-95)

So for Company/plant: Cr (+) Db(-) and for Vendor Cr (-) Db (+)

What is pricing procedure?

The main concept of pricing procedure is combination of different type charges, like Gross price,
freight, discount, surcharges etc etc.
We use pricing procedure to determine these all conditions into one procedure, where we can
find the sub-total for net amount.
To understand pricing procedure we have to comfortable with these below things:
1. Condition Table
2. Access Sequence
3. Condition Type
4. Condition Record
5. Schema Group
6. Calculation Schema
7. Schema Determination

Pricing Structure:
Gross Price –> 100 INR
Discount -> -10 INR
Surcharges-> 20 INR
Net Price -> 110 INR
Freight Charges -> 20 INR
Insurance Charges -> 10 INR
Effective Price/Final Price – 140 INR
Let's discuss about all these points in details.
1. Condition Table
It's a table where we can save the all fields with the combination for individual condition record.
Suppose if I use Plant as condition table, then the condition record will be created for plant only.
We can use many fields in one condition tables.
2. Access Sequence
The main think of Access sequence is, it searches condition record for condition type from
condition table.
One access sequence contains many condition tables.
Suppose we maintain 4 condition tables in one access sequence. Then when a condition type is
searching for condition record via this access sequence, the access sequence will allow searching
only this 4 condition tables.
3. Condition Type
In simple term condition type is used for different types of charges. Like gross price, discount,
freight, rebate etc etc.
Suppose we purchase a material for price 10, we get a discount of price 2. Then the price 10 will
be goes to a condition type and the price 2 will be goes to another condition typ

2.547 = 2.55
4. Condition Record
Condition record contains the record which is maintained against condition table with regards to
condition type.
It can be fetched via access sequence and condition type.
Suppose we maintain a condition record against condition table (vendor) with regards to
condition type. Then whenever the vendor used this condition type, the condition record will
fetched.
Condition Tables are assigned to Access Sequence
Access Sequence is assigned to the Condition Type
Condition Record can be maintained for the Condition types for which the access sequence is
assigned

5. Schema Group It's assigned to our vendor and Purchase Organization; It helps the vendor and
purchase organization to choose pricing procedure. One schema group will be assign to vendor
and one schema group assign to Purchase organization. With this combination, system will take
the pricing procedure.
Schema Group Vendor and it is assigned to Vendor in Vendor Master Purchase Data
Shema Group Purchase Organization and it is assigned to Purchase Organization in configuration
6. Calculation Schema
Here we maintain sequence for the pricing calculation, like gross price, discount, rebate,
surcharges etc. We maintain here the calculation for all condition type and group together all
required condition types for our pricing procedure.
7. Schema Determination
Here we maintain the pricing procedure for purchasing document. We maintain calculation
schema combination of per each vendor - schema group and each purchase organization -
schema group.

1. Step:
Number that determines the sequence of the conditions with in a procedure.
It indicates the position of the condition type in pricing procedure.
Ex.: 10, 15 etc.

2. Counter:
 System uses the counter to count the steps and also it can be used to count mini steps of same
condition types. So that number of steps can be reduced in the pricing procedure and
hence enhancing the system performance.
Access number of the conditions with in a step in the pricing procedure
During automatic pricing, the system takes into account the sequence specified by the
counter.

3. Condition Type:
It represents pricing element in pricing procedure as a base price, discount, freight and tax.
The condition type is used for different functions. In pricing, for example, the condition type
lets you differentiate between different kinds of discount; in output determination,
between different output types such as order confirmation or delivery note; in batch
determination, between different strategy types.
Ex.: PB00 - Price, RA00- Discount, FRA1-Freight

4. Description:
System copies description of condition type from its description (M/06).

5. From and 6. To:

1. From: This can be used as a base to the condition type for calculating further value.
2. From and To: The range between the steps from and to can be used to specify the range
between same condition types. So that depending upon the condition type, the system deducts or
adds the total value of those condition types from specific common source.

7. Manual:
This indicator specifies whether the specific condition type can be determined manually
during Purchase order processing.
If we check the box then the entry is going to be manual, if we uncheck it, it is going to be
automatic.
For Base Price and Taxes, the entry should be automatic.
For Discounts and Freights, The entry should be manual.
If we check the box, in ME21N when we go to conditions at the header/item level, the
condition type will not be listed. If we require we will have to manually enter it.
If we uncheck the box, in ME21N when we go to conditions at the header/item level, the
condition type will be listed.
8. Required:
This indicator specifies that particular condition type is mandatory in the pricing procedure.
If we check the box, then in ME21N at the header/item level in the conditions tab, if we
delete the value in the condition type and try to save the document then system will not
allow us to do it and throws an error.
If we uncheck the box, then in ME21N at the header/item level in the conditions tab, if we
delete the value in the condition type and try to save the document then system will allow
us to save it, without giving any error.
Mandatory check box should be checked in condition types which are compulsorily required
in pricing procedure. Ex.: PB00, MWST.
If the condition type is checked with mandatory option, then value should be maintained for
that condition type, otherwise the system will not allow the user to process the document.

9. Statistical:
This indicator if it is activated will not allow the value of the condition type to be taken into
net value calculation.
It is used only for information purposes only.
This indicator causes a surcharge or discount to be set in the document statistically (that is,
without altering the value).
This is commonly used for condition types
SKTO - Cash Discount
Sub Totals etc

10. Print:
The value of this field specifies whether line item can be printed or not in the Purchase
document and at what level it is to be printed.

11. Subtotal:
The value of this field determines where the values of subtotals to be captured i.e. in which
table and which field.
Controls whether and in which fields condition amounts or subtotals (for example, a material
discount or the price of a material) are stored.
If the same fields are used to store different condition amounts, the system totals the
individual amounts.
 These condition amounts or subtotals are used as a starting point for further calculations. You
may, for example, want a subtotal of all the discounts included in the pricing of a
Purchase order.

12. Requirement:
It is a routine that is written by an ABAP consultant according to the business requirement.
By defining Requirement in condition technique we can restrict the access of condition type.

14. AltCty - Condition formula for alternative calculation

type:
It is again a Routine that is written by ABAP Consultant.
It is an alternative formula for the condition type that can be used instead of standard
formulas.

15. AltCBV - Alternative formula for condition base value:

Formula for determining the condition basis as an alternative to the standard.
It is again a Routine that is written by ABAP Consultant.
It is used as a basis to calculate value of the condition type instead of using it from the
"FROM" column.
Ex.: Freight – FRA1.
Freight is calculated based on weight, volume etc. and not on the base price. In pricing there
is no entry of weight from which the value can be referred like we do for discounts using
base price. We have to get the value from the Material master.
In this column we can mention the value as 12 - Gross Weight or 13 - Net Weight.
During pricing, the system will consider the value that is mentioned in this column and
determine the freight based on this value.
Suppose we have Net weight: 100 kgs and Gross Weight: 150 kgs. And if we mention 13 in
this column then the Freight condition FRA1 will be calculated using the weight as 100
kgs.

16. AcyKy - Account Key/ Accrls - Accruals:

The values of the Sales Revenues, Sales Deductions, Freight Revenues, Tax Revenues, and
Rebate Accruals etc. are going to be posted in the respective G/L accounts in Fi Module.
 In order to do this we assign account keys/ accruals to the different condition types based on
their classification. The classification shown below.
Freight clearing    FR1
Freight provisions    FR2
Customs clearing    FR3
Customs provisions    FR4
Purchasing freight account    FRE
External activity    FRL
Incidental costs of external activities    FRN

For Ex:
For all Freight Conditions we assign FR2 as Account Key and FR1 as Accrual Key
For all Custom Conditions, we assign FR4 as Account Key and FR3 as Accrual Key

This account keys and accruals are in turn assigned to respective G/L accounts. So the system
posts respective values in respective G/L accounts in Fi-Co Module. These assignments
are done in OBYC.  

13.02.2022: Valuation:

 The lowest level where we can maintain unit price of material is in plant
level not in storage level.
 Valuation means how much stuck we have and worth of that stock. We are
specifically looking at value.
 OX14 T-code is used to set valuation at plant level or company code level.
 Most of the time it is set at plant level.
 Valuation data of any material is stored in aggregate manner in a G/L
(general ledger) account.
 FS10N T- Code is used for G/L account balance display.
 If a material valuated or not is determined at material type level plus plant.
 Material type UNBW (Non Valuated) NLAG (Non Stock).
 OMW0 T-code to activate Valuation/ SPROMMVALUATION AND
ACCOUNT ASSIGNMENTSPLIT VALUATYION ACTIVATE SPLIT
VALUATION.
  In split Valuation different characteristics are called “Categories” and values
of each categories is Called “Types”.
 In split valuation we can maintain different quantity and value of a material
by different value types. When we want to separate material stock and
value in accordance with some category we use split valuation.

Split Valuation:
 Split valuation helps in valuating the stocks of a material in the same
valuation area (company or plant) differently.
 Split valuations refer to the valuation type on a material master.
Typically, organisation wants to track material cost.
 Ex, for new, used or repaired stocks. The valuation type field on the
material master allows you to track this stock separately, and specify
what type of stock is being moved or purchased, and charge
appropriately.
 The SAP allows you to valuate stocks of a material either together or
separately, that is, according to different valuation criteria. Split
valuation is necessary to valuate material with different valuation.
Split valuation Type:
 Use of split valuation.
Different origins of material
Different grades of quality for the material.
Different statuses of the material.
Differentiation between in house production and external procurement.
Differentiation between different deliveries and different suppliers.
 In split valuation, you can distinguish between partial stocks of a material
according to certain criteria and valuate them separately.
 The material stock is divided according to valuation category and valuation
type.
 The valuation category determines how the partial stocks are divided, that
is, according to which criteria.
 The valuation type describes the characteristics of the individual stocks.
 Valuation category is the criteria upon which material is valuated.
 Steps for split valuation: In copy
 Automatic Account Creation:
 Procurement process involves the cost of goods and services that
needs to be paid to the vendor by an organisation. The cost being
paid must be posted in an organisation necessarily in a correct
general ledger (G/L) account.
 To avoid this inconvenience, the SAP system can be configured so
that the system will automatically determine the correct G/L
account that needs to be posted.
Elements Decides Account Determination:
 Chart of Account (COA).
 Valuation Grouping Code.
 Valuation Class.
 Transaction/ Event key.
 Account (Modifier) Grouping Code.
 Event Key and G/L Mapping. (OBYC)
Chart of Account:
Chart of Account(s)Company CodePlant/Valuation Area
T code –OB62

Valuation Grouping code:

Chart of Account(s)Company CodePlant/Valuation
AreaValuation grouping Code.
T Code: OMWD
  Valuation grouping code: Group of valuation areas to facilitate
the administration of the table of standard accounts by minimizing
the number of entries.
Valuation class and account Cat. ref.:
Material type------------Valuation Class
Account Cat. Ref
T code: OMSK
Valuation Class:
 Valuation class helps to determine automatic G/L account through
OBYC settings during material document posting
 Material valuation helps in determining the price of the material,
and in which general ledger account it needs to be posted.
 Material valuation can happen at company code level or plant
level.
 Material can be valuated based on different types of
procurement; it is known as split valuation.
General ledger (G/L) account: The central task of G/L accounting is
to provide a comprehensive picture of external accounting and
accounts and records all the transactions that are occurred in a SAP
system.
Account category reference: The account category reference (ACR)
is an artificial code of four characters which allows flexibility in
linking material type with valuation class. In reality, the valuation
class is linked to an account category reference and account
category reference linked to material type. In other term account
category reference is used to simplify the assignment of permitted
valuation class/valuation classes to the material type/ material
types.

Transaction or Event Key:

Value String Transaction Event key Acc modifier(Grouping
Code)
 WE06 BSX

Movement Type WE01 WRX VBO

PRD

WA01 GBB VBR

WA14 KDM

FRL BSA
BSV VKP
 Movement types are linked to transactions event keys via value
string. When any posting or some movements happened value
string is triggered in background depending upon the movement
type and each value string contain some transaction event key.
 System uses Transaction event key to determine the account in
which a posting line is generated.
 T code: OMJJ,OMWN

 Transaction Keys are used for determining A/c's or Posting Keys

for line items. Transaction Keys are SAP standards which user
can't change.

 Normally we use the following transaction keys when we receive

goods.

 BSX - Inventory Posting

 WRX - GR/IR Clearing

 Normally in MM we assign the GL a/c's for automatic Postings in

the T code - OBYC
  & for taxes we use the t.code - OB40 where we assign G/L
Accounts based on tax codes to diff transaction keys.

 Account Modifier: - It is a subdivision of transaction event key in

which GL account is linked during the process of automatic
account determination.
 In MM GBB, PRD, KDM have acc modifier.

Account determination Process: Diagram in Copy(IMPortant)

GST Implementation in SAP MM

 GST( Goods and Service Tax) is an indirect tax throughout India

a. Intra State
b. Inter State
c. Import GST
 Intra state GST means within a state purchasing
CGST( Central GST)
SGST( State GST)
Inter State GST means outside purchasing (out of state)
IGST(Integrated GST)
Import GST means purchasing from other countries
IGST (Integrated GST)
Configuration of GST tax procedure
1. Create Condition Table T code: M/03 (Here we will take
standard condition table: 792)
 2. Create access sequence T code: OBQ2 (SPROSAP
RIMGFinancial Accounting (New) Financial Accounting
Global setting (New)Tax on sales/PurchasesBasic
SettingsCheck Calculation procedureAccess Sequences
 Here we will take SAP Standard Access Sequence JGSI-IN:
GST for Input Taxes. Assign condition table 792 to access
sequence JGSI.
3. Create condition table T code :OBQ1 SPROSAP
RIMGFinancial Accounting (New) Financial Accounting
Global setting (New)Tax on sales/PurchasesBasic
SettingsCheck Calculation procedureDefine condition
types
4. Let’s say....
 JCGT-In: Central GST
 JSGT-In: State GST
 JUGT-In: Union Territory GST
 JIGT-In: Integrated GST
 JIIT-In: Integrated Import GST
 JNCT-In: Central GST-ND
 JNST-In: State GST-ND
 JNUT-In: Union Territory GST-ND
 JNIT-In: Integrated GST-ND
 JIMT-In: Integrated Import GST-ND

Create Condition Type as like above…

Copy the existing condition type to our own.

5. Create Accounting keys T code: OBCN

Copy the existing one to our own
 JCT-In: Central GST
JST-In: State GST
JUT -In: Union Territory GST
JGT -In: Integrated GST
JIT -In: Integrated Import GST
NVV In: Central GST-ND
NVV -In: State GST-ND
NVV -In: Union Territory GST-ND
NVV -In: Integrated GST-ND
NVV Integrated Import GST-ND

Accounting Key NVV- Non Deductible, and it is SAP Standard

accounting key...
6. Create Tax procedure T code : OBQ3
SPROSAP RIMGFinancial Accounting (New) Financial
Accounting Global setting (New)Tax on
sales/PurchasesBasic SettingsCheck Calculation
procedureCreate tax procedure
New Entries: the procedure to create tax procedure picture in
mobile. Do the process accordingly.
Now assign the tax procedure (TAXINX) to condition types.
7. Assign country to calculation procedure T code: OBBG
SPROSAP RIMGFinancial Accounting (New) Financial
Accounting Global setting (New)Tax on
sales/PurchasesBasic SettingsAssign country to calculation
procedure