Unit 2: Processes and Enterprise Structure in Procurement

Lesson 1 · Delineating Procurement Processes

Key concepts: the procurement cycle

Not all purchasing follows this plain path. Which process runs for a PO item is controlled by the item category: blank (standard), L (subcontracting), K (consignment), U (stock transfer), D (service) and others.

Stock transfer with a stock transport order (STO)

Here goods move between two plants of the same company. The receiving plant "buys" from the supplying plant, so purchasing and inventory management are both involved.

1. Purchasing creates the STO (document type UB, item category U) for the receiving plant, entering the supplying plant instead of a supplier.
2. The supplying plant posts the goods issue against the STO (movement type 351 when the goods issue is posted directly against the STO in MIGO, or 641 when an outbound delivery is used). The quantity now sits in the receiving plant's stock in transit.
3. The receiving plant posts the GR with reference to the STO (movement type 101), moving the quantity from stock in transit into storage-location stock.

Plant-to-plant transfers can also be done purely with inventory management transfer postings (e.g. 301 one-step or 303/305 two-step) – without any purchasing document.

Subcontracting

You buy a finished or processed material from a supplier (the subcontractor) but provide some or all of the components yourself.

1. Create a subcontract PO (item category L) for the end product; the components to be provided are listed per item (from a BOM or entered manually).
2. Provide the components with a transfer posting to the special stock stock of material provided to vendor (movement type 541). The components are physically at the supplier but still belong to you and remain valuated in your books.
3. Post the GR of the end product against the subcontract PO (101); the system simultaneously posts consumption of the components from the supplier stock (543).
4. The subcontractor invoices only the processing service.

The S/4HANA transaction ME2ON (SC Stock Monitoring for Vendor) supports the provision of components.

Supplier consignment

The supplier stores material at your site but keeps ownership until you withdraw it. You owe money only for the withdrawn quantities, settled in agreed periods.

1. A consignment info record (info category consignment) holding the agreed price must exist first.
2. Order the material with a consignment PO item (item category K); the item has no price.
3. Post the GR (101 with special stock indicator K); the quantity goes into consignment stock, which is not valuated in your books. No accounting document is created.
4. Withdraw from consignment stock (e.g. 201 K, or transfer to own stock with 411 K). Now the liability to the supplier is created.
5. Settle the liabilities periodically with MRKO, which can also send a settlement message (self-billing credit memo) to the supplier.

Lesson 2 · Identifying the Organizational Units in Procurement

Key concepts

Organizational units model the legal and organizational structure of the enterprise. Some units are shared by several application areas (company code from Financial Accounting, plant from Logistics), while the purchasing organization exists only for purchasing. Units are defined and linked in the enterprise-structure part of Customizing.

Assignment rules

• A client contains many company codes; a company code contains many plants; but each plant belongs to exactly one company code. Because the plant key is unique in the client, entering a plant implicitly identifies its company code.
• A plant can have many storage locations; a storage location belongs to one plant only. The same storage location key (e.g. 0001) can be reused in other plants.
• A purchasing organization may be assigned to at most one company code (the assignment is optional); a company code can have several purchasing organizations.
• Purchasing organization ↔ plant is many-to-many and mandatory: a purchasing organization can only buy for plants assigned to it.

Types of purchasing organization

Even if a purchasing organization is responsible for every plant of its company code, the plant assignment is still required – the company-code assignment alone is not enough. A further option (not covered in detail here) is a reference purchasing organization whose contract conditions other purchasing organizations may use.

Configuration (IMG)

The enterprise structure is maintained with SPRO; the individual definitions can also be reached directly via OX10 (plants), OX08 (purchasing organizations) and OX18 (plant to company code).

Unit summary & exam focus

The procurement cycle runs from requirement to payment; item categories switch the process to special forms such as subcontracting, consignment or stock transfers. Every document is posted against an enterprise structure in which purchasing organizations are linked to plants (always) and to a company code (optionally).

T-codes in this unit

Self-check questions

1. True or false: in subcontracting a supplier stores material at your site that you pay for only when you use it.
   Answer

   False – that describes supplier consignment. In subcontracting you provide components to the supplier and pay for the processing.
2. When does a liability to the supplier arise in consignment?
   Answer

   When material is withdrawn from consignment stock (goods issue or transfer to own stock); it is settled periodically with MRKO.
3. Can a purchasing organization be assigned to two company codes?
   Answer

   No. It can be assigned to at most one company code – or to none for cross-company-code purchasing.
4. Can a purchasing organization buy for plants of different company codes?
   Answer

   Yes, if it is not assigned to a company code (cross-company-code purchasing organization) and the plants are assigned to it.
5. Within which unit is the storage location key unique?
   Answer

   Within the plant.
6. Which stock type holds a stock transfer quantity after goods issue in the supplying plant?
   Answer

   Stock in transit of the receiving plant.
7. Which organizational unit is not linked to any other unit?
   Answer

   The purchasing group.