integration of materials management with financial...

Faisal Mahboob

Integration of Materials Management with Financial Accounting in SAP®

Bonn � Boston

337_Book_TIGHT.indb 3 4/30/10 2:40:43 PM

Contents at a Glance

1 Introduction ............................................................................ 19

2 Overview of SAP ERP .............................................................. 25

3 Overview of the Materials Management and Financials Relationship ........................................................................... 41

4 Basics of Configuration and the Processes in Procurement ... 69

5 Procurement of Stock and Consumable Materials ................ 113

6 Conditions, Price Determination, and the Basics of Material Price Changes .......................................................... 157

7 Balance Sheet Valuation ........................................................ 191

8 Material Price Change ............................................................ 219

9 Accounts Payable Invoice from Materials Management ........ 255

10 Variances and Blocking of Invoices ........................................ 311

11 Additional Functionalities in LIV ........................................... 363

12 Conclusion ............................................................................... 399

A Optimizing the Integration between Materials Management and Financial Accounting ................................. 405

B Commonly Used Abbreviations .............................................. 415

C References .............................................................................. 417

D Useful Links ............................................................................ 419

E The Author .............................................................................. 421


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Contents

Preface ....................................................................................................... 15

1 Introduction .............................................................................. 19

1.1 Business ...................................................................................... 191.2 Enterprise Resource Planning ...................................................... 201.3 Procurement and Finance ........................................................... 201.4 Purpose of this Book ................................................................... 221.5 Scope of the Book ....................................................................... 231.6 Summary .................................................................................... 23

2 Overview of SAP ERP ................................................................ 25

2.1 The Building Blocks of SAP ERP ................................................. 252.1.1 Financials ....................................................................... 262.1.2 Logistics ......................................................................... 272.1.3 Human Resources ........................................................... 282.1.4 Materials Management .................................................. 28

2.2 Integration of Materials Management in SAP ERP ....................... 302.3 Analysis and Resources for Materials Management ..................... 31

2.3.1 SAP Easy Access ............................................................. 322.3.2 SAP Customizing ............................................................ 322.3.3 SAP Library .................................................................... 352.3.4 SAP Service Marketplace ................................................ 37

2.4 Summary .................................................................................... 40

3 Overview of the Materials Management and Financials Relationship ............................................................................. 41

3.1 Elements of Materials Management ........................................... 433.1.1 Purchasing ..................................................................... 443.1.2 Inventory Management .................................................. 483.1.3 Material Valuation .......................................................... 493.1.4 Logistics Invoice Verification .......................................... 503.1.5 GR/IR Account Maintenance .......................................... 51


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Contents

3.2 Elements of Financial Accounting ................................................ 523.2.1 General Ledger ............................................................... 523.2.2 Accounts Payable ........................................................... 523.2.3 Asset Accounting ........................................................... 53

3.3 Relationship between the Elements of Materials Management and Financial Accounting and Controlling ................................... 543.3.1 Commitments in Procurement ........................................ 543.3.2 Elements of Financial Accounting and Controlling in

a Purchase Order ............................................................ 573.3.3 Accounting Documents for Goods Receipt ..................... 583.3.4 Accounting Documents for Invoices ............................... 58

3.4 Troubleshooting Techniques ........................................................ 613.4.1 Introduction to Technical Elements ................................ 613.4.2 The Troubleshooting Approach ....................................... 633.4.3 The Technical Analysis .................................................... 643.4.4 Debugging ..................................................................... 64

3.5 Summary .................................................................................... 67

4 Basics of Configuration and the Processes in Procurement .... 69

4.1 Enterprise Structure .................................................................... 694.1.1 Definition ....................................................................... 714.1.2 Assignment .................................................................... 754.1.3 Materials Management Enterprise Structure ................... 784.1.4 Financial Accounting Enterprise Structure ....................... 80

4.2 Processes in Procurement ........................................................... 814.2.1 Procurement Cycle ......................................................... 844.2.2 Procurement of Stock Material ....................................... 874.2.3 Procurement of Consumable Materials ........................... 884.2.4 Procurement of External Services .................................... 89

4.3 Master Data ................................................................................ 914.3.1 Material Master ............................................................. 914.3.2 Vendor Master ............................................................... 954.3.3 Master Data in Purchasing .............................................. 97

4.4 Documents in Procurement ........................................................ 994.4.1 Purchase Requisition ...................................................... 994.4.2 Request for Quotation and Quotation ............................ 1004.4.3 Purchase Orders ............................................................. 102


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Contents

4.4.4 Outline Purchase Agreements ........................................ 1084.4.5 Purchasing Info Records ................................................. 111

4.5 Summary .................................................................................... 111

5 Procurement of Stock and Consumable Materials .................. 113

5.1 Procurement of Stock Material .................................................... 1135.1.1 Stock Material within Document Flow ........................... 1145.1.2 RFQs/Quotations ........................................................... 1215.1.3 Conditions and Calculation Schema ................................ 1245.1.4 Purchasing Info Record ................................................... 1285.1.5 Stock and Valuation ....................................................... 1305.1.6 Material Valuation Procedure ......................................... 1325.1.7 Stock Valuation in Inventory Management and LIV ........ 134

5.2 Procurement of Consumable Materials ........................................ 1385.2.1 Purchase Requisition and Purchase Order ....................... 1385.2.2 Blanket Purchase Order .................................................. 141

5.3 Procurement of External Services ................................................ 1445.3.1 Procurement Cycle for External Services ......................... 1445.3.2 Service Entry Sheet, Its Acceptance, and Its Invoicing ..... 147

5.4 Subcontracting ............................................................................ 1525.4.1 Subcontracting in Purchasing .......................................... 1525.4.2 Subcontracting in Inventory Management ...................... 1535.4.3 Subcontracting in Logistics Invoice Verification .............. 1545.4.4 Technical Elements of Subcontracting ............................. 155

5.5 Summary .................................................................................... 156

6 Conditions, Price Determination, and the Basics of Material Price Changes .......................................................................... 157

6.1 Conditions and Price Determination ........................................... 1576.1.1 Elements of Condition Techniques .................................. 1576.1.2 Price Determination ....................................................... 1686.1.3 Header and Group Conditions ........................................ 1766.1.4 Special Condition Types and Special Functions ............... 1786.1.5 Subsequent Settlement .................................................. 181

6.2 Basics of Material Price Changes ................................................. 1846.2.1 Control of Material Valuation ......................................... 185


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Contents

6.2.2 Valuation Structure ........................................................ 1876.2.3 Changes in Material Valuation ........................................ 189

6.3 Summary .................................................................................... 190

7 Balance Sheet Valuation .......................................................... 191

7.1 Lowest Value Determination ....................................................... 1927.1.1 Lowest Value Determination Based On Market Prices .... 1937.1.2 Lowest Value Determination Based On Range of

Coverage ........................................................................ 1957.1.3 Lowest Value Determination Based On Movement Rate ... 1977.1.4 Lowest Value Determination: Loss-Free Valuation .......... 201

7.2 LIFO Valuation ............................................................................ 2017.2.1 LIFO Methods and the Layer Versions ............................ 2047.2.2 Quantity and Index LIFO Procedures .............................. 2067.2.3 Pool LIFO Valuation ....................................................... 2127.2.4 Lowest Value Comparison .............................................. 213

7.3 FIFO Valuation ............................................................................ 2147.3.1 FIFO Configuration ......................................................... 2157.3.2 Procedures for FIFO Valuation ........................................ 217

7.4 Summary .................................................................................... 217

8 Material Price Change ............................................................. 219

8.1 Value Changes in Inventory Management ................................... 2198.1.1 Goods Receipt for Purchase Orders ................................ 2208.1.2 Account Postings: Planned Delivery Costs ...................... 2228.1.3 Delivery Free of Charge .................................................. 2238.1.4 Value Changes in Transfer Postings ................................. 2248.1.5 Initial Entry of Inventory Data ........................................ 2298.1.6 Goods Receipt Reversal .................................................. 231

8.2 Value Changes in Logistics Invoice Verification ............................ 2378.2.1 Subsequent Debit/Credit ................................................ 2388.2.2 GR/IR Clearing Account Maintenance ............................ 240

8.3 Value Changes Resulting from Cash Discounts ............................. 2428.3.1 Gross Goods Receipt – Gross Invoice Receipt ................. 2438.3.2 Gross Goods Receipt – Net Invoice Receipt .................... 2448.3.3 Net Goods Receipt – Net Invoice Receipt ....................... 245

8.4 Revaluation ................................................................................. 245


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Contents

8.4.1 PriceChangesinthePreviousPeriodOnly ...................... 2478.4.2 PriceChangesinthePreviousandCurrentPeriod ........... 247

8.5 PostingtoaPreviousPeriod ........................................................ 2488.5.1 PostingGoodsMovementstothePreviousPeriod .......... 2508.5.2 PostingInvoicestothePreviousPeriod ......................... 2508.5.3 PostingtoaPreviousPeriodafteraPriceChange ........... 2518.5.4 StockShortageintheCurrentPeriod .............................. 252

8.6 Summary .................................................................................... 254

9 AccountsPayableInvoicefromMaterialsManagement .......... 255

9.1 LogisticsInvoiceVerification ...................................................... 2559.1.1 FunctionalBasis ............................................................. 2569.1.2 SAPFunctionalDesign ................................................... 2569.1.3 CheckpointsandReal-timeIssues ................................... 2589.1.4 TechnicalElements ......................................................... 2599.1.5 TroubleshootingTips ...................................................... 259

9.2 IncomingInvoice ........................................................................ 2609.2.1 FunctionalBasis ............................................................. 2609.2.2 SAPFunctionalDesign ................................................... 2609.2.3 CheckpointsandReal-TimeIssues .................................. 2629.2.4 TechnicalElements ......................................................... 2649.2.5 TroubleshootingTips ...................................................... 265

9.3 InvoiceVerificationOnline .......................................................... 2669.3.1 FunctionalBasis ............................................................. 2669.3.2 SAPFunctionalDesign ................................................... 2679.3.3 InvoicesforaOne-TimeVendor ..................................... 2729.3.4 DuplicateInvoiceCheck ................................................. 2759.3.5 CheckpointsandReal-TimeIssues .................................. 2779.3.6 TechnicalElements ......................................................... 2789.3.7 MaterialsManagement,FinancialAccounting,and

ControllingInterfaceforTransactionMIRO .................... 2809.4 InvoiceParking ........................................................................... 280

9.4.1 FunctionalBasis ............................................................. 2809.4.2 SAPFunctionalDesign ................................................... 2819.4.3 IntegrationwithFinancialAccounting ............................ 2839.4.4 CheckpointsandReal-TimeIssues .................................. 2849.4.5 TroubleshootingTips ...................................................... 285

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Contents

9.5 Prepayment ................................................................................ 2859.5.1 Functional Basis ............................................................. 2859.5.2 SAP Functional Design ................................................... 2869.5.3 Checkpoints and Real-time Issues ................................... 2879.5.4 Troubleshooting Tips ...................................................... 288

9.6 Invoice Verification in the Background ........................................ 2899.6.1 Functional Basis ............................................................. 2899.6.2 SAP Functional Design ................................................... 2909.6.3 Technical Elements ......................................................... 2919.6.4 Checkpoints and Real-Time Issues .................................. 2929.6.5 Troubleshooting Tips ...................................................... 293

9.7 Account Determination .............................................................. 2939.7.1 Principles of Financial Accounting Integration in

an SAP System ............................................................... 2939.7.2 Functional Elements of Account Determination .............. 294

9.8 Purchase Account Management .................................................. 2959.8.1 Postings at Receipt Value ............................................... 2959.8.2 Postings at Stock Value ................................................... 296

9.9 Direct Posting ............................................................................. 2979.9.1 Posting to SAP G/L Accounts .......................................... 2979.9.2 Posting to a Materials Account ....................................... 298

9.10 Posting Taxes .............................................................................. 2999.10.1 Types of Taxes ................................................................ 2999.10.2 Proposal Logic for Tax Codes .......................................... 3029.10.3 Settings for Taxes in Customizing and in Master Data ..... 3039.10.4 Technical Flow and Architecture ..................................... 3049.10.5 Technical Details of Tax Calculations ............................... 305

9.11 Cash Discount ............................................................................. 3059.11.1 Cash Discount Base ........................................................ 3069.11.2 Cash Discount Postings .................................................. 306

9.12 Summary .................................................................................... 310

10 Variances and Blocking of Invoices ......................................... 311

10.1 Invoice with Variances ................................................................ 31110.1.1 Quantity Variance .......................................................... 31210.1.2 Price Variance ................................................................ 31610.1.3 Quantity and Price Variance ........................................... 32010.1.4 Order Price Quantity Variance ........................................ 325


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Contents

10.2 Invoice Blocking ......................................................................... 32910.2.1 Functional Basis ............................................................. 32910.2.2 SAP Functional Design ................................................... 32910.2.3 Checkpoints and Real-Time Issues .................................. 33610.2.4 Technical Elements ......................................................... 33710.2.5 Troubleshooting Tips ...................................................... 338

10.3 Invoice Release ........................................................................... 33910.3.1 Functional Basis ............................................................. 33910.3.2 SAP Functional Design ................................................... 33910.3.3 Checkpoints and Real-Time Issues .................................. 34210.3.4 Technical Elements ......................................................... 34310.3.5 Troubleshooting Tips ...................................................... 344

10.4 Delivery Costs ............................................................................. 34510.4.1 Planned Delivery Costs ................................................... 34510.4.2 Unplanned Delivery Costs .............................................. 350

10.5 Total-Based Differences ............................................................... 35410.5.1 Functional Basis ............................................................. 35410.5.2 SAP Functional Design ................................................... 35410.5.3 Checkpoints and Real-Time Issues .................................. 35610.5.4 Technical Elements ......................................................... 357

10.6 Invoices for Purchase Orders with Account Assignment .............. 35710.7 Entering Invoices in a Foreign Currency ....................................... 36010.8 Summary .................................................................................... 361

11 Additional Functionalities in LIV ............................................. 363

11.1 Valuation and Account Determination ........................................ 36311.1.1 Influencing Factors ......................................................... 36411.1.2 Organizational Level Dependency .................................. 36511.1.3 Account Determination of Stock Materials ..................... 36611.1.4 Account Determination of Consumable Materials ........... 37211.1.5 Simulation ...................................................................... 375

11.2 Automatic Settlements ............................................................... 37611.2.1 Evaluated Receipt Settlement (ERS) ................................ 37711.2.2 Consignment and Pipeline Settlement ............................ 38011.2.3 Revaluation .................................................................... 38211.2.4 Invoicing Plan Settlement ............................................... 386

11.3 Messages in Logistics Invoice Verification ................................... 387


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Contents

11.3.1 Areas of Messages .......................................................... 38811.3.2 Message Schema ............................................................ 38911.3.3 Outputting Messages ..................................................... 390

11.4 Credit Memos, Returns, and Reversals ........................................ 39011.5 GR/IR Clearing Account .............................................................. 39411.6 Summary .................................................................................... 398

12 Conclusion ................................................................................ 399

12.1 Lessons Learned .......................................................................... 39912.2 Additional Resources .................................................................. 402

Appendices ..................................................................................... 403

A Optimizing the Integration between Materials Management and Financial Accounting ............................................................................ 405

B Commonly Used Abbreviations ........................................................... 415C References .......................................................................................... 417D Useful Links ......................................................................................... 419E The Author .......................................................................................... 421

Index ......................................................................................................... 423


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A large portion of Materials Management is initiated and represented by the processes in procurement. The system is configured with the goal of rep-resenting these processes.

Basics of Configuration4 and the Processes in Procurement

In this chapter, we’ll demonstrate and explain the most important elements of the configuration steps that decide the integration of Materials Management with SAP ERP Financials Financial Accounting.

Later in this chapter, you’ll learn about the various kinds of master data used in procurement and the different application transactions that correspond to procurement.

The understanding you will develop in this chapter will help you represent the procurement processes in the SAP system for your business. You will also learn about the different types of master data you need in the SAP system and the vari-ous documents that make use of this master data.

Enterprise Structure4.1

An enterprise is made up of people and departments. Its structure represents the people within different departments that are a part of the reporting hierarchy. In an SAP system, the enterprise is represented differently, on the basis of vari-ous operations such as Materials Management, Sales and Distribution, Financial Accounting, Human Resources, and so on. We then pursue the integration of these components and in this book, will talk about them as and when required. The representation of an enterprise structure for business into SAP ERP is the first step towards realizing real-time business scenarios. If you examine an enterprise’s building blocks for the purpose of analysis, you see that it’s made up of organiza-tional units and the relationships among them.


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Basics of Configuration and the Processes in Procurement4

Customizing is used to configure business functionalities in the SAP system. The same is true for the enterprise structure, which is represented with the help of the following two Customizing options:

DefinitionEE

AssignmentEE

As you can see in Figure 4.1, both options are present for all of the components that require organizational units specific to them. The enterprise structure shows the interdependence of the organizational units on one another and the organiza-tional units of one component may be used in another to define its own enterprise structure. For instance, Materials Management uses the company code from Finan-cial Accounting, the plant from Logistics – General, and the purchase organization and storage location from Materials Management to define its enterprise structure. We’ll describe the enterprise structures of Materials Management and Financial Accounting later in this chapter.

Definition and Assignment of Organizational Units in CustomizingFigure 4.1


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Enterprise Structure 4.1

The decision on which organizational units to create is a fundamental step in your project. When you have decided on an organizational structure, it’s not easy to change it.

Not all of the application components are included in the enterprise structure. Why?

You’ll find that not all of the application components are included in the Enterprise Struc-ture in Customizing. The only components included are those that require the organiza-tional units specific to them. Quality Management, Production Planning, Project System, and so on use the organizational units from other SAP software, for example. Therefore, they don’t appear under Definition or Assignment under the Enterprise Structure.

Now that you know that the enterprise structure is used in Customizing to portray and configure the specific structure of your business, let’s move on to the defini-tion and assignment, to help you understand how it’s represented within the SAP system.

Definition4.1.1

You define various organizational units the under the Division section in Customiz-ing (Transaction SPRO) menu path: SAPIMG•EnterpriseStructure•Definition. In most cases, you’ll find an SAP standard organizational unit already defined. It’s advisable to first come up with the structure and naming convention on paper and then create new organizational units by copying those delivered in the SAP standard. The definition is kept simple and generally represents a code with a text description.

Because our focus in this entire book is Materials Management and Financial Accounting, let’s take a quick look at some of the important organizational units from these areas that help in defining the enterprise structure in Materials Man-agement and Financial Accounting.

Client

The client is a commercial organizational unit in the SAP ERP system, with its own data, master records, and set of tables. From a business perspective, the client forms a cor-porate group.

From the technical point of view, is the client is a three-character key you enter along with the user id and the password when you log into the system. At this time, the client along with the user id decides the following:


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User master data such as parameters, authorizations, and user groupsEE

Customizing data such as organizational units, assignments, and document typesEE

Application data such as business transaction data and material master dataEE

Because the client is decided at the time of logging into the system, you’ll notice that in Materials Management or Financial Accounting, it doesn’t appear as an option in the enterprise structure in Customizing (Transaction Code SPRO).

Let’s move on to define the various organizational units used in the enterprise structure of Materials Management and Financial Accounting.

Company

The company is an organizational unit in accounting that represents the business organization that acts as an internal trading partner and facilitates inter-company transactions.

Company Code

The company code is the smallest legal organizational unit that represents an accounting unit for which you can have an independent accounting department within external accounting.

It’s important to note that the company code has to be a legal entity but the com-pany may or may not be a legal entity.

Company and company code: Points to remember

In the SAP system, consolidation functions in Financial Accounting are based on com-EE

panies.

A company can comprise one or more company codes.EE

All company codes for a company must work with the same operational chart of EE

accounts and fiscal year. You assign a chart of accounts to each company code. This chart of accounts is the operational chart of accounts and is used for the daily post-ings in this company code. This is a list of all SAP G/L accounts used by one or several company codes.

The currencies of various company codes of a company can be different.EE

Business Area

A business area is an organizational unit within accounting that represents a sepa-rate area of operations or responsibilities in a business organization. The use of


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business area is optional. However, SAP recommends the use of profit center, which helps in segmental reporting.

Functional Area

A functional area is an organizational unit that classifies the expenses of an orga-nization by functions such as administration, sales and distribution, marketing, production, research and development, and so on. The classification takes place to meet the needs of cost of sales accounting.

Financial Management Area

The financial management area, also called the FM area, is an organizational unit within accounting that structures the business organization from the perspective of Cash Budget Management and Funds Management.

Controlling Area

The controlling area is an organizational unit in accounting used to subdivide the business organization from a cost accounting standpoint. A controlling area may be assigned to one or more company codes in a 1:1 or 1:n relationship.

Operating Concern

The operating concern is an organizational unit in accounting that structures the enterprise from the point of view of Profitability Analysis, based on the cost of sales accounting method.

Plant

The plant is an organizational unit used to divide an enterprise according to pro-duction, procurement, maintenance, and materials planning. It’s the place where materials are produced or goods and services are provided.

The valuation level determines the level at which material stocks are valuated. You may choose either plant or company code as the valuation level. Your choice of valuation level affects the following:

Maintenance of the material master record.EE

How accounting data is maintained. In this case, it is maintained for each plant EE

or for each company code in the material master depending on the valuation level.


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The SAP G/L in which material stocks are managed.EE

How account determination is defined. In this case, if the material stocks are EE

valuated at the company code level, all of the plant stocks for a material are managed in a joint stock for each company code. If material stocks are valuated at the plant level, the material stock for each plant can be managed in different accounts. Thus, you can define separate account determination for each plant.

The SAP G/L to which transactions are posted in Materials Management.EE

Depending on whether the valuation is at the plant level, there is a separate account determination for each plant.

If the plant is chosen as the valuation level, you can define material prices for each plant. In addition, each plant can have its own account determination.

Switching the valuation level

The valuation level or the valuation area determines the level at which material stocks are valuated. This can be either the plant or the company code level. The valuation area is hidden within the Materials Management component.

This is one of the fundamental settings for materials valuation and should be set care-fully as it’s not possible in the standard to switch the valuation level from plant to com-pany code or vice versa.

For switching the valuation level, you must ensure the following:

An assignment of plant to company code isn’t present.EE

Entries don’t exist in Table T001K.EE

If materials already exist, all stocks must be cleared and posted again after the con-EE

version.

The valuation data of the materials (Table MBEW at the valuation area level) must be EE

converted.

You may have to adjust the account determination for all accounts that depend on EE

valuation area and valuation classes. Valuation classes represent the assignment of a material to a group of SAP G/L accounts. This is explained in detail later in the book.

You may have to adjust the assignment of business areas per valuation area, division, EE

and so on.

Storage Location

The storage location is an organizational unit that allows the differentiation of material stocks within a plant. Inventory management on a quantity basis is car-ried out at the storage location level in the plant.


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Purchasing Organization

A purchasing organization is an organizational level that negotiates conditions of purchase with vendors for one or more plants. It’s legally responsible for complet-ing purchasing contracts.

Now that you have a fair amount of information about defining various organiza-tional units for Materials Management and Financial Accounting, we’ll continue to explaining the significance of the assignment of these organizational units.

Assignment4.1.2

The framework of an enterprise for processing business transactions is realized by linking organizational units. The assignment in Customizing provides a set of options available for portraying your enterprise in SAP. It serves the purpose of creating references between the organizational units you have defined.

The organizational units from other components can be used during assignment. For instance, only the purchasing organization belongs to Materials Management, however, the following options are present for assignment under the menu path SAPIMG •EnterpriseStructure•Assignment•MaterialsManagement:

AssignPurchasingOrganizationtoCompanyCodeEE

AssignPurchasingOrganizationtoPlantEE

AssignStandardPurchasingOrganizationtoPlantEE

AssignPurch.OrganizationtoReferencePurch.OrganizationEE

Table 4.1 provides the technical details for the definition and assignment for Mate-rials Management, Financial Accounting, and Controlling in Customizing.

Menu Path Table/View Transaction

(All of the menu paths listed are found under SAP IMG • Enterprise Structure)

Definition • Materials Management • Maintain storage location

T001L/V_T001LEE

TWLAD/V_TWLADEE

OX09

Definition • Materials Management • Maintain purchasing organization

T024E/V_ T024E OX08

Definition • Logistics – General • Define valuation level

TCURM OX14

Menu Path and the Technical ElementsTable 4.1 of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling


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Definition • Logistics – General • Define, copy, delete, check plant

T001W/V_T001WEE

T005 (T/S/U/G/E/EE

H/F)

T002 (T)EE

TFACD (T)EE

OX10(Only for defining the plant organizational unit)

Definition • Financial Accounting • Define company

T880/V_T880 OX15

Definition • Financial Accounting • Define Credit Control Area

T014/V_T014 OB45

Definition • Financial Accounting • Edit, Copy, Delete, Check Company Code

T001/V_T001 OX02

Definition • Financial Accounting • Define Business Area

TGSB/V_TGSB OX03

Definition • Financial Accounting • Define Functional Area

TFKB/V_TFKB OKBD

Definition • Financial Accounting • Maintain FM Area

FM01/V_FM01_A OF01

Definition • Controlling • Maintain Controlling Area

TKA01/V_TKA01_GD OX06(Maintain controlling area)

Definition • Controlling • Create Operating Concern

TKEB/V_TKEB2 KEP8

Assignment • Materials Management •

Assign purchasing organization to company code

T024E/ V_ T024E_EE

ASSIGN

T001EE

TASSIGN_MM_EE

EKORG

T000EE

OX01


Assign purchasing organization to plant

T024W/W_T024W_EE

ASSIGN

T000EE

T001WEE

T024EEE

TASSIG_MM_WERKSEE

OX17

Table 4.1 Menu Path and the Technical Elements of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling (Cont.)


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Assign standard purchasing organization to plant

T001W/V_001W_E OMKI


Assign purch. organization to reference purch. organization

T024Z/V_T024ZEE

T024EEE

OMKJ

Assignment • Logistics – General • Assign plant to company code

T001K/V_T001K_EE

ASSIGN

T001EE

TASSIGN_MM_EE

T001W

T001WEE

T001W_EXTEE

OX18

Assignment • Financial Accounting • Assign company code to company

T001/V_001_Y OX16

Assignment • Financial Accounting • Assign company code to credit control area

T001/V_001_X OB38

Assignment • Financial Accounting • Assign business area to consolidation business area

TGSB/V_GSB_AEE

TGSBKEE

TGSBLEE

OBB6

Assignment • Financial Accounting •

Assign company code to financial management area

T001/V_T001_FMEE

FM01EE

FM01TEE

OF18

Assignment • Controlling • Assign company code to controlling area

TKA01/V_TKA01_GDEE

TKA02/V_TKA02EE

T001EE

OX19

Assignment • Controlling • Assign controlling area to operating concern

TKA01/ V_TKA01_ER KEKK

Table 4.1 Menu Path and the Technical Elements of the Enterprise Structure for Materials Management, Logistics – General, Financial Accounting, and Controlling (Cont.)

As we discussed in the previous chapter, a transaction code might not be available for each menu path in Customizing. The maintenance views and the tables there-fore represent the technical elements of such menu paths in Customizing.


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In this section, you learned only about the options available for assignment in Customizing. However, to understand how these options impact the enterprise structure, we’ll describe the Materials Management and Financial Accounting enterprise structures in the following sections.

Materials Management4.1.3 Enterprise Structure

The enterprise structure in Materials Management in SAP ERP consists of the organizational units from Financial Accounting, Logistics – General, and Materials Management, and the relationships between them.

Figure 4.2 shows a typical Materials Management enterprise structure.

Purchasing Organizations

1:n1:n

1:n

1:n

m:n

Client

Company Codes

Plants

Storage Locations

Enterprise Structure in Materials Management in SAP ERPFigure 4.2

As shown in Figure 4.2, there is 1:n (one to many) relationship between client and company codes, company codes and plants, and plants and storage locations. This means that there can be multiple company codes per client, multiple plants per company code, and so on. The client is decided when you log into the system; therefore, there is only one client for an enterprise structure.

The relationship between company codes and purchase organizations is 1:n and is illustrated in Figure 4.2 by broken lines in the arrow. It means the relationship may not exist, depending on your choice of cross-company code procurement. The relationship between plants and purchase organizations is many to many.

The enterprise structure in Materials Management is quite simple, except for the relationship between purchasing organizations and company codes and plants. It provides added flexibility in configuring real time procurement scenarios. Different


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options exist for organizing purchasing within your company, as you can see in Table 4.2. In this example, we have the purchase organizations A, B, 0001, and C100. The company code is 1000 and the plants are 1000 and 1100. In addition, plants 1000 and 1100 are assigned to company code 1000 and plants 2000 and 3000 are assigned to company codes 2000 and 3000 respectively.

Scenario Purchasing Organizations (A, B, 0001, C100

Purchasing Organization Assignment to Company Code (1000, 2000, 3000)

Purchasing Organization Assignment to Plants (1000, 1100)

Plant Assignment to Company Code

Plant-specific purchasing organization

A 1000 1000 1000

B 1000 1100 1000

Cross-plant purchasing organization

0001 1000 1000 1000

0001 1000 1100 1000

Cross-company code purchasing organization

C100 1000 1000

C100 2000 2000

C100 3000 3000

Different Procurement Scenarios in an EnterpriseTable 4.2

As you can see, for configuring the plant-specific purchasing scenario, purchasing organizations A and B are assigned to company code 1000 and plants 1000 and 1100 respectively, which belong to company code 1000.

For configuring the cross-plant procurement scenario, the same purchasing organi-zation 0001 is assigned to company code 1000 and plants 1000 and 1100 belong-ing to company code 1000.

For configuring purchasing on a cross-company-code basis, the same purchasing organization C100 is assigned to plants 1000, 2000, and 3000 belonging to com-pany codes 1000, 2000, and 3000 respectively. In this case, the purchasing orga-nization isn’t assigned to the company code; therefore, you’ll find that the column for the purchase organization to company code assignment is blank in Table 4.2.

You should now understand the enterprise structure for Materials Management, as well as the different procurement scenarios possible for its representation in


80


the SAP system. Let’s now take a look at the enterprise structure of Financial Accounting.

Financial Accounting4.1.4 Enterprise Structure

The SAP ERP Financials component includes other components capable of car-rying out an organization’s complete financial and management accounting pro-cesses. SAP ERP Financials Financial Accounting provides information on your company’s financial position to external entities such as government regulators and shareholders. SAP ERP Financials Controlling provides internal stakeholders with information necessary for financial decision-making such as that related to overhead and cost of goods. Together, they deliver a complete picture of the over-all financial status of your organization and can be integrated with other SAP ERP components to provide real-time cost, revenue, and planning data. Both have their own organizational structures.

Although a full-fledged discussion of Financial Accounting and Controlling is beyond the scope of this book, we’ll briefly describe the essential elements of the organizational structures for both of these components and subcomponents, as shown in Figure 4.3.

Com

pany

Cod

eCo

mpa

ny C

ode

Company

Credit Control Area

Financial Area

Controlling Area

Operating Concern

Client

Organizational Structure for Financial Accounting and ControllingFigure 4.3

Figure 4.3 doesn’t represent the assignments in Customizing precisely. Instead, it’s meant to provide you with an overview and should help you develop an


81

Processes in Procurement 4.2

understanding of the way various organizational units in Financial Accounting and Controlling can be visualized.

The controlling area and the operating concern belong to Controlling, whereas the credit control area, company, and company code belong to Financial Accounting. Financial management area (FM area) is also called financial area. It’s taken into account in Cash Budget Management and Funds Management and has its assign-ment in the corresponding components.

The controlling area is used for the purposes of reporting. It’s an organizational unit within a company, used to represent a closed system for cost accounting pur-poses. A company code is assigned to one controlling area, but a controlling area can have more than one company code assigned to it.

The company code is the most important organizational unit for Financial Account-ing. All other subcomponents connect to Financial Accounting by assigning their organizational units to the company code.

You have so far learned about the various organizational units and their relation-ship in Materials Management and Financial Accounting and Controlling, used to realize the enterprise structure. The objective of setting up an enterprise structure is to establish a framework for processing different business transactions. Having set up the enterprise structure, we’re now ready to take a look at the various pro-cesses in procurement.

Processes in Procurement4.2

The processes in procurement are optimized to meet financial objectives. At a lower level, these objectives may either be about complying with the principles of external accounting or about providing information for management decision-making in Controlling. Of course, the business objective is to make the materials/services available at the planned date and at the best possible price.

Materials can be procured in your company through various channels such as external vendors or other branches of your company. The departments that are involved are purchasing, inventory management, and invoice verification. SAP has knit together operational requirements with financial objectives using docu-ments. The various documents created in Purchasing, Inventory Management, and Invoice Verification reflect the integration and configuration flexibility of Materials Management and Financial Accounting.


423

A

Access sequence, 177, 179Account assignment category, 153Account determination, 48, 320, 395, 398Account grouping code, 402Accounting1, 129Accounting document, 284

Header, 290Accounts payable, 60, 277

Invoice, 277Accounts receivable, 277AP Invoice, 277Application Linking and Enabling, 279Asset Accounting, 60Authorization data, 36Automatic account assignment

Simulation, 407Automatic account determination, 404Automatic invoice reduction, 423Automatic settlements, 408

B

Balance sheet valuation, 209Lowest value principle, 210Recognition-of-loss principle, 210

Bid invitation, 100Bill of materials, 167Blanket purchase order, 155, 156

Account assignment, 157BOM explosion, 167BPX, 44BSV, 403BSX, 403Business area, 80Business Process Expert, 44Business volume, 200

C

Calculation schema, 139, 179RM0000, 140, 174, 181

Calculation Schema, 137Call Transaction, 281

MIR7, 281MIRO, 281

Cash Budget Management, 90Cash discount, 263, 333

Cash discount gross, 335Cash discount net, 335Gross goods receipt, 265Net goods receipt, 266Net invoice receipt, 266Value changes, 263

Cash discounts, 138Change document, 119Chart of Accounts, 399Client, 79Collective number, 135Commitments, 51Commitments in Procurement, 62Company, 80, 90Company code, 80, 90Components, 26Condition, 137, 173

Records, 141, 176Tables, 176Time-dependent, 139Time-independent, 139

Condition technique, 173Condition type, 139, 175

PB00, 176, 185PBXX, 185

Configuration, 77Consignment and pipeline settlement, 412, 423Consumable materials, 152, 404

Account determination, 404

Index


424

Index

Contract, 121Centrally-agreed contract, 121Distributed contract, 121Quantity contract, 121Technical elements, 122Value contract, 121

Contributor recognition program, 44Controlling, 31Controlling area, 81, 90Conventional invoice verification, 279Credit control area, 90Credit memo, 261, 425

Warning and error messages, 261Customizing data, 36

D

Debugger, 74Debugging, 73

Screen, 75Default SAP G/L account, 391Delivery costs, 376Delivery free of charge, 243Determination of requirements, 94Direct posting, 324Documents in procurement, 92, 110Duplicate invoice check, 300

Points to remember, 301

E

Effective price, 138EIN, 403EKG, 403End-of-period rebate, 138Enterprise Resource Planning, 24Enterprise structure, 77

Assignment, 83Definition, 79Financial Accounting, 89Materials Management, 86Technical elements, 86

ERP Central Components, 30ERP Financials, 31

Evaluated Receipt Settlement (ERS), 409Planned delivery cost, 410

Exchange rate, 393External services, 158

Procurement cycle, 158

F

FIFO valuation, 234, 236Configuration, 236Sample, 235

Final Invoice indicator, 164Financial Accounting, 31Financial management area, 81, 90Financials, 30Framework order, 155, 157Freight charges, 138FRL, 403FRN, 403Functional area, 81

G

General Ledger, 59Goods issue, 251

Value changes, 251Goods receipt, 33, 96, 241, 296

Price variance, 241Goods receipt reversal, 251

After goods receipt and invoice receipt, 253Purchase order price quantity variance, 255

GR-based IV, 418GR/IR Account Maintenance, 58GR/IR clearing account, 262, 396, 430GR Non-Valuated, 56Gross goods receipt, 265Gross price, 138Group conditions, 194GR Valuated, 56


425

Index

H

Header conditions, 194HotNews, 44Human Resources, 32

Payroll, 32Personnel Management, 32Personnel Time Management, 32Talent Management, 32Training and Event Management, 32

I

Implementation consultants, 42Index LIFO procedure, 229

Example, 229Info record, 123, 136, 142

Automatic update, 143Last purchase order, 143

Initial entry of inventory data, 249Integration of Materials Management, 34

Controlling, 35Financial Accounting, 35Human Resources, 35Logistics Execution, 35Production Planning, 35Quality Management, 35Sales and Distribution, 35

International Accounting Standards Board, 209International Financial Reporting Standards, 209Inventory Management, 33, 55, 149, 239

Initial entry of inventory data, 249Stock valuation, 149Value changes, 239

InvoiceForeign currency, 392Purchase order with account assignment, 389

Invoice blocking, 358Invoice item amount block, 363Invoice parking, 306

Hold, 308Park, 308

Save as Complete, 308Substitution, 310Validation, 310Workflow, 309

Invoice reduction, 422Invoice release, 368

After goods receipt, 426Without Goods Receipt, 428

Invoice Verification, 33, 96, 277In the background, 315Online, 290

Invoice with variances, 339Invoicing party, 282Invoicing plan settlement, 419, 423

Partial invoicing plan, 420Periodic invoicing plan, 420

K

KDM, 403

L

Layer, 220Layer versions, 223Levels of valuation, 48LIFO/FIFO, 224

Quantity comparison parameter, 225LIFO methods, 223LIFO procedures, 226

Progressive fill-up basis, 228Quantity and index, 226

LIFO valuation, 220Layer versions, 225Models, 223Sample, 221

Logistics, 31Logistics Execution, 32Logistics General, 31Logistics invoice verification, 57, 258, 277

Clearing details, 286Direct posting, 324Duplicate invoice check, 300


426

Index

Important tables, 287Important transactions, 281Insufficient stock coverage, 258Messages, 421Taxes, 327Value changes, 258

Lowest value comparison, 233Lowest value determination, 210

Based on market prices, 211Base price, 219Range of coverage, 214Based on movement rate, 217

Lowest value principle, 210

M

Maintenance views, 39Manual block, 364Manual invoice reduction, 423MAP, 148Master data, 36, 101, 283

Purchasing, 108Material document, 284Material master, 101, 126, 203

Accounting1, 129Accounting view, 105Database tables, 105Organization of, 102

Material master price, 229Material price change, 173, 201, 239Material type, 126, 204Material valuation, 57

Procedure, 147Materials Management, 31, 33ME21N, 406

SAP G/L, 406Message schema, 423MIRO

Exchange rate, 393Header screen, 291Layout, 291Planned delivery costs, 379

Movement rate, 216Movement type, 204Moving average price, 147, 148

Sample Posting, 150MRBR, 374

Technical program flow, 374

N

Net goods receipt, 266Net invoice receipt, 266Net price, 138Non-valuated goods receipt, 61

O

Offsetting entry for inventory posting, 402One-time vendor, 296Operating concern, 81, 90Optimization, 24, 25Order price quantity variance, 354Order unit and the order price, 254OSS Message, 43OSS Note, 43Outline purchase agreements, 121

P

Parking workflow, 309Partial invoicing plan, 420Payment block, 367PB00, 176Periodic invoicing plan, 420Planned delivery cost, 151, 197, 242, 376, 410

Account postings, 242Plant, 81Plant Maintenance, 32Pool LIFO valuation, 232

Merging, 232Splitting, 232

Pool number, 233Posting to previous period, 270

After a price change, 273Posting goods movements, 272


427

Index

Posting invoices, 272PRD, 403Precious metal condition, 195Prepayment, 311Price change, 268

Previous and current period, 269Previous period only, 268

Price determination, 139, 173Price variance, 344Pricing in ME21N, 190Processes in procurement, 77, 91Procurement cycle, 33, 34, 94, 95

external services, 97, 100services, 97

Procurement of consumable materials, 98, 152Procurement of external services, 158Procurement of stock material, 97Procure-to-pay, 33Production Planning, 32Product Lifecycle Management, 31Purchase account management, 322

Postings at receipt value, 322Postings at stock value, 323

Purchase commitments, 51Purchase order, 113, 153

Database tables, 117Elements of Financial Accounting, 115monitoring, 96processing, 95Service, 160Technical elements, 115

Purchase order-based invoice verification, 294Purchase order history, 289

Chronological order, 289Purchase order with account assignment, 389Purchase requisition, 33, 110, 153

Technical elements, 111Purchasing, 50Purchasing documents, 110Purchasing info record, 109, 123, 142

Technical elements, 123Purchasing organization, 83

Cross-company code, 88

Cross-plant, 88Plant-specific, 88

Q

Quality Management, 32Quantity and price variance, 349Quantity update, 56Quantity variance, 340

Account postings, 341Quota arrangement, 109Quotation, 111, 134, 135

R

Recognition-of-loss principle, 210Reconciliation account, 68, 108Request for quotation, 111

Technical elements, 113Return, 425Return delivery, 255, 257

Purchase order price quantity variance, 257

Revaluation, 207, 267, 414, 423Account postings, 268Credit memo, 418Invoice, 417

Reversal, 425RFQ, 134, 135, 136

Collective number, 135Technical elements, 137

RM08RELEASE, 373

S

Sales and Distribution, 31SAP Best Practices, 42SAP Customer Messages, 43SAP Customer Notes, 43SAP Customizing, 36, 38, 39SAP Developer Network, 44SAP Easy Access, 36, 37SAP ECC, 32


428

Index

SAP ERP, 23, 24, 26, 29, 47Building blocks, 29Expenses, 23Financials, 30, 33Human Capital Management, 32Introduction, 23Logistics, 31Revenue, 23

SAP ERP Financials, 26, 77, 277Financial Accounting, 77

SAP G/L, 127, 406SAP HotNews, 44SAP Library, 36, 41SAP Service Marketplace, 42SAP Support Portal, 43SAP TopNotes, 44Scheduling agreement, 122

Technical elements, 123Without release documentation, 122With release documentation, 122

SDN, 44Service acceptance, 101Service entry, 101Service entry sheet, 162

Acceptance, 162Entry, 162Field selection, 166Final Invoice indicator, 164Invoice reversal, 164Partial invoice, 163

Service Marketplace, 42Service purchase order, 160Services

User exit, 166Source determination, 94Source list, 109Split valuation, 49, 182Standard price, 147Stochastic block, 363Stock material, 33, 125, 398

Account determination, 398Database tables, 133Material master, 126

Stock overview, 145Stock shortage in the current period, 274Storage location, 82

Subcontracting, 167Account postings, 169In Inventory Management, 168In Logistics Invoice Verification, 169In Purchasing, 167Technical elements, 170

Subledger accounting, 68, 108Subsequent debit

Account postings, 261Subsequent debit/credit, 259Subsequent settlement, 198Supplementary conditions, 186Support consultants, 42Support Portal, 43

T

Taxes, 327Customizing, 331Deductible taxes, 327Non-deductible taxes, 327Proposal logic, 330

Technical naming convention, 93Time-dependent Condition, 109, 139Time-independent Condition, 139Timesheets, 32Tolerance keys, 359TopNotes, 44Total-based acceptance, 386Total-based differences, 385Total-based invoice reduction, 386Transaction, 39, 401

ME41, 136ME47, 135ML81N, 97MM01, 105MMBE, 145MR11, 431MR11SHOW, 431MRKO, 413OMED, 141OMWB, 40SM30, 40SPRO, 38

Transaction data, 36, 284


429

Index

Transfer postings, 244Consignment to company-owned stock, 246Material to material, 247Valuation type to valuation type, 248Value changes, 244

Types of data, 36Authorization data, 36Customizing data, 36Master data, 36Transaction data, 36

U

UMB, 403Unplanned delivery cost, 151, 152, 381Update allocation, 308User parameter

EFB, 188EVO, 187

User Parameter, 187, 188

V

Valuation, 395Valuation area, 49, 82, 146Valuation Category, 204

Valuation class, 129, 204, 391, 400Valuation grouping code, 399Valuation level, 49, 82, 146

Switching, 82Valuation modifier, 399Valuation price, 153Valuation Structure, 204Valuation Type, 204

Lowest value, 213Value added tax, 278Value-based commitment, 64Value creation, 24Value string, 402Value update, 56VBR, 406Vendor evaluation, 109Vendor master, 106, 199

Company Code Data, 107General Data, 107Purchasing Organization Data, 107Subsequent settlement, 199Transactions, 107

Vendor selection, 95Views, 39

W

WRX, 403
