Unit 3: Plain Procurement Process
The simplest procure-to-pay chain consists of three documents: purchase order, goods receipt and supplier invoice. This unit explains what each document contains, which documents are generated in the background (material and accounting documents), and how the item category steers the process.
Lesson 1 · Creating a Purchase Order
After this lesson you can
- Explain the structure of a purchase order and where its default data comes from
- Describe the predefined item categories and what they allow or require
- Create a PO with the Manage Purchase Orders app and explain message (output) processing
Key concepts
A purchase order (PO) is a legally binding, formal request to a supplier to deliver goods or services under the stated conditions. In this basic scenario all master data (supplier, material, info record) already exists. The PO also states whether the item goes to stock or is consumed directly by an account assignment object such as a cost center, asset or project. Goods receipt and invoice verification are later performed with reference to the PO, which makes it the backbone of the process.
A PO can be created without reference, or items can be copied from a reference document: another PO, a purchase requisition, a quotation or a contract. Even without a reference, the system proposes a great deal of data:
| Source | Data proposed into the PO |
|---|---|
| Supplier (business partner) master – purchasing data | Ordering address, PO currency, payment terms, Incoterms |
| Material master | Short text, order unit, material group, PO text |
| Purchasing info record | Net price/conditions, planned delivery time, tolerances, info record memo |
If the source of supply is one of your own plants, you create a stock transport order instead of a standard PO.
Structure of a purchase order
| Level | Typical data |
|---|---|
| Header (valid for the whole document) | Document type (e.g. NB standard PO), supplier, purchasing organization, purchasing group, company code, currency, document date, payment terms, header texts and header conditions |
| Item (one per material/service) | Item category, material or short text, quantity and order unit, delivery date, net price, plant (and storage location), account assignment category, tolerances, item texts |
One PO can serve several plants, but every plant used must be assigned to the purchasing organization in the header.
Item categories
Item categories exist in requisitions, RFQs, contracts, scheduling agreements and POs. The document type determines which item categories are allowed; each item can have its own category. The item category defines whether a material number, an account assignment, a goods receipt and an invoice receipt are possible, mandatory or forbidden.
| Item category (external) | Material no. | Account assignment | GR | IR | Use |
|---|---|---|---|---|---|
| Standard (blank) | Mandatory if no acct. assignment | Possible | Possible | Possible | Normal external procurement |
Limit B | Not possible | Mandatory (category U unknown allowed) | Not possible | Mandatory | Consumables / services up to a value limit |
Consignment K | Mandatory | Not possible | Mandatory, non-valuated | Not possible | Supplier-owned stock at your site |
Subcontracting L | Possible | Possible | Mandatory | Possible | End product ordered; components provided |
Third-party S | Possible | Mandatory | Possible | Possible | Supplier delivers directly to a third party (customer) |
Stock transfer U | Mandatory | – | Mandatory | Not possible | Plant-to-plant transfer |
Service D | – | Mandatory | Service entry | Possible | Services (lean / classic services) |
Two item categories are used only in contracts and allow items without a material number: M (material unknown) for similar materials with the same price – usable in quantity and value contracts – and W (material group) for materials of one material group with different prices – value contracts only.
System steps (Fiori: Manage Purchase Orders)
The Manage Purchase Orders app (F0842A) lists, monitors, displays, changes and creates POs. In it you can create items with the categories standard, consignment K, subcontracting L, third-party S and enhanced limit E. References possible on creation: contract, info record or existing PO.
- Open Manage Purchase Orders and choose Create.
- In the item area choose Add from Document.
- Enter supplier and material, select Info Record as the reference type and start the search.
- Mark the matching info record and choose Add Items; price and supplier data are copied.
- Complete plant, quantity and delivery date, then choose Order to save.
In SAP GUI the equivalent is ME21N (create), ME22N (change) and ME23N (display); the document overview in ME21N lets you drag requisitions, contracts or POs into the new PO as references.
Messages (output)
Each purchasing document creates an output message when saved. The message waits in a queue until it is transmitted (print, e-mail, EDI/XML). Two dispatch timings exist:
- Send immediately – output happens as soon as the document is saved.
- Send later – a background job processes the queue periodically (the usual choice), or a user triggers output manually for urgent cases, e.g. with ME9F.
Header texts (printed at the top) and item texts are included in the output.
Configuration (IMG)
SPRO › Materials Management › Purchasing › Purchase Order › Define Document Types
SPRO › Materials Management › Purchasing › Define Combination of Item Categories/Account Assignment Categories
SPRO › Materials Management › Purchasing › Purchase Order › Set Tolerance Limits for Price Variance
In SAP S/4HANA the default for purchase order output is the new output management based on BRF+ (output parameter determination) instead of NAST condition technique; the classic NACE/NAST setup is still possible. The Manage Purchase Orders app became the central PO app, and the enhanced limit item (E) replaces the classic limit item B in Fiori-based processes. Flexible workflow can be used for PO approval instead of classic release strategies.
- Reference documents for a PO: PO, requisition, quotation, contract (not production order or invoice).
- Document type controls the permissible item categories.
- Know the GR/IR/material/account-assignment rules of
B,K,L,S,U; "Reversal" is not an item category. MandWexist only in contracts;Wonly in value contracts.- All plants in a PO must be assigned to the header purchasing organization.
Lesson 2 · Posting a Goods Receipt
After this lesson you can
- Post a goods receipt with reference to a purchase order
- Explain material document, accounting document and the role of the movement type
Key concepts
When the supplier delivers, the goods receipt (GR) is entered with reference to the PO. The system then proposes all open items, which speeds up entry and allows checks: Is it the right material? Is the quantity correct or is there an over-/underdelivery (tolerances)? For perishable goods, is the remaining shelf life sufficient (if the shelf-life expiration date check is active)? One PO item can be received in several GR lines, e.g. for different batches or storage locations.
Posting the GR has several effects:
- A material document is created (material, quantity, plant, storage location, movement type).
- If the GR is valuated, an accounting document is created as well (for stock material: debit stock account, credit GR/IR clearing account).
- The PO history is updated so buyers see what is still outstanding and can send reminders.
- Stock quantities (and value) in the material master are increased; MRP and analytics see the new stock.
Movement types
Every goods movement needs a three-character movement type. It distinguishes receipts, issues and transfer postings, controls the screen fields, the quantity update and, together with other factors, automatic account determination (via the transaction/event key).
| Movement type | Meaning |
|---|---|
101 | GR for purchase order (or production order) into stock |
102 | Reversal of 101 |
103 / 105 | GR into GR blocked stock / release from GR blocked stock |
122 | Return delivery to supplier |
201 / 261 | Goods issue to cost center / to order |
301 | Transfer posting plant to plant (one step) |
311 | Transfer posting storage location to storage location |
Process flow
System steps
- Open Post Goods Receipt for Purchasing Document (F0843) – or MIGO with action Goods Receipt and reference Purchase Order.
- Enter the PO or scheduling agreement number, or search by supplier/plant and pick the document.
- In the general information enter delivery note, bill of lading and document date; choose a GR slip version if needed (individual slip, with inspection text, or collective slip).
- Select the items received, adjust quantities, set storage location and stock type (unrestricted, quality inspection, blocked).
- Post. Display the result with MIGO (display) or MB03; check the PO history in ME23N; check stock with MMBE.
Configuration (IMG)
SPRO › Materials Management › Inventory Management and Physical Inventory › Movement Types › Copy, Change Movement Types
(Transaction OMJJ.)
In SAP S/4HANA all material document data is stored in the single table MATDOC; stock quantities are calculated on the fly from it instead of being stored in aggregate tables. Old transactions MB01/MB1A/MB1C are no longer supported – use MIGO or the Fiori apps.
- A movement type is always required for a goods movement.
- A valuated GR produces a material document and an accounting document.
- The GR for a PO updates the PO history.
- Delivery note / bill of lading entered at GR can later be used as invoice references.
Lesson 3 · Entering an Invoice
After this lesson you can
- Execute logistics invoice verification with reference to a PO
- Explain the documents created and when an invoice is blocked for payment
Key concepts
Logistics Invoice Verification (LIV) completes the procurement cycle: invoices and credit memos are entered and checked for content, price and arithmetic. Posting an invoice creates an MM invoice document and an FI accounting document, and updates the PO history. Payment itself and the analysis of open liabilities are not part of LIV – they belong to Financial Accounting.
From the supplier's invoice you enter the gross amount, tax, invoice date and the supplier's reference (invoice number). With a PO reference the system proposes invoicing party, items, quantities to invoice, expected amounts and payment terms; you overwrite where the actual invoice differs. If quantity or price differences exceed tolerances, the system warns and – depending on configuration – sets a payment block on the invoice.
| Reference option | Prerequisite |
|---|---|
| Purchase order / scheduling agreement | None |
| Delivery note | Delivery note number entered at GR |
| Bill of lading | Bill of lading entered at GR |
| Transaction type in the app | Effect |
|---|---|
| Invoice | Increases liability; normal case |
| Credit memo | Reduces liability, also reduces invoiced quantity |
| Subsequent debit | Additional amount without additional quantity |
| Subsequent credit | Reduction of amount without changing quantity |
Process flow
System steps
- Open Create Supplier Invoice (F0859) or MIRO.
- Choose the transaction (invoice, credit memo, subsequent debit/credit) and company code; enter gross amount, invoice date, reference and tax.
- Enter the reference (PO, delivery note or bill of lading); the matching items are proposed.
- Compare each item with the paper invoice; adjust amount, quantity or tax code and select the items to post.
- Choose Simulate to see the account movements, then Post. If variances exceed tolerances the invoice is still posted but blocked for payment.
- Display with MIR4; release blocked invoices later with MRBR.
Accounting effect (stock material, PO price = invoice price)
| Step | Debit | Credit |
|---|---|---|
GR (101) | Stock account (BSX) | GR/IR clearing (WRX) |
| Invoice | GR/IR clearing (WRX) + input tax (VST) | Supplier (reconciliation account) |
Configuration (IMG)
SPRO › Materials Management › Logistics Invoice Verification › Invoice Block › Set Tolerance Limits
SPRO › Materials Management › Logistics Invoice Verification › Incoming Invoice › Configure Supplier-Specific Tolerances
SAP S/4HANA Fiori apps such as Manage Supplier Invoices and Supplier Invoices List complement the creation app, and flexible workflow is available for supplier invoice approval.
- Invoice posting creates an invoice document (MM) and an accounting document (FI) – not a confirmation or reversal document.
- Outside tolerances: invoice is posted but blocked for payment (not rejected).
- Payment is a Financial Accounting task, not part of LIV.
- Delivery note / bill of lading usable as reference only if entered at GR.
Unit summary & exam focus
The plain procurement process is PO → GR → invoice. The PO defines conditions and process (via item category), the GR creates a material document (plus accounting document if valuated) and updates PO history, and the invoice creates an MM invoice document and an FI document, blocked if variances exceed tolerances.
T-codes in this unit
| T-code | Purpose |
|---|---|
| ME21N | Create purchase order |
| ME22N | Change purchase order |
| ME23N | Display purchase order (incl. PO history) |
| ME9F | Output purchasing messages |
| MIGO | Goods movement (GR for PO) |
| MB03 | Display material document |
| MMBE | Stock overview |
| OMJJ | Customize movement types |
| MIRO | Enter incoming invoice |
| MIR4 | Display invoice document |
| MRBR | Release blocked invoices |
Self-check questions
- Which documents can serve as a reference when you create a PO?
Answer
Purchase requisition, existing purchase order, quotation and contract (in the Fiori app also info records). - What does the item category control?
Answer
Whether a material number, account assignment, goods receipt and invoice receipt are possible or mandatory – i.e. which procurement process (standard, consignment, subcontracting, third-party, stock transfer, limit, service) runs. - For item category
K, are GR and IR possible?Answer
A non-valuated GR is mandatory; an IR is not possible (settlement happens via consignment settlement after withdrawal). - Which documents does a valuated GR create?
Answer
A material document and an accounting document. - Is a movement type always required for a goods movement?
Answer
Yes – it identifies the kind of movement and drives quantity update, screen layout and account determination. - What happens if an invoice price variance exceeds the tolerance?
Answer
The invoice can be posted but is automatically blocked for payment; it must be released (e.g. MRBR). - When can you use a delivery note number as invoice reference?
Answer
Only if it was entered when the goods receipt was posted.