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Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.

Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation.

IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iSeries, pSeries, xSeries, zSeries, System i, System i5, System p, System p5, System x, System z, System z9, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, Informix, i5/OS, POWER, POWER5, POWER5+, OpenPower and PowerPC are trademarks or registered trademarks of IBM Corporation.

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invented and implemented by Netscape. MaxDB is a trademark of MySQL AB, Sweden.

SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.

The information in this document is proprietary to SAP. No part of this document may be reproduced, copied, or transmitted in any form or for any purpose without the express prior written permission of SAP AG.

This document is a preliminary version and not subject to your license agreement or any other agreement with SAP. This document contains only intended strategies, developments, and functionalities of the SAP product and is not intended to be binding upon SAP to any particular course of business, product strategy, and/or development. Please note that this document is subject to change and may be changed by SAP at any time without notice.

SAP assumes no responsibility for errors or omissions in this document. SAP does not warrant the accuracy or completeness of the information, text, graphics, links, or other items contained within this material. This document is provided without a warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.

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The statutory liability for personal injury and defective products is not affected. SAP has no control over the information that you may access through the use of hot links contained in these materials and does not endorse your use of third-party Web pages nor provide any warranty whatsoever relating to third-party Web pages.

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Starting from the 70s there have been major technology waves from mainframe computing to client server architectures, and now from client server technology to service oriented architectures

In the past such shifts in technology have caused a complete replacement of the underlying IT infrastructure, but with the shift from SAP R/3 to mySAP ERP thats no longer true

SAP will protect and leverage the 200 billion $ investments already made in R/3 and will take an evolutionary approach for the next technology shift towards web services driven architectures

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After the SAP R/1 and SAP R/2 products, SAP introduced SAP R/3 in 1992. Now there was a two layer architecture (SAP Basis and SAP Application).

With mySAP ERP, which has been available since March 2003, SAP offered a bundle of components supporting ERP business processes. At this point, SAP R/3 Enterprise was one of those components. As you can see here, even from this point mySAP ERP was more than just SAP R/3 Enterprise plus SAP NetWeaver, since it offered many functional enhancements like Self Services, SAP SEM, and others.

The SAP ERP Central Component (ECC) represents the next step in this evolution. As you can see, the orange boxes represent the items that can be operated on an SAP ERP Central Component. And in the SAP NetWeaver area, you can see the dark blue frames that are technically integrated in the SAP ERP Central Component (Business Intelligence only on a project basis). .

Since Release 4.6C, SAP R/3 consisted of two parts: SAP Basis (the technology platform) and the application. To come to a higher SAP R/3 Release, customers had to upgrade both the technology and the application.

With mySAP ERP, a new mySAP solution was born. Although there are many other SAP components included in mySAP ERP, SAP R/3 Enterprise is also included in mySAP ERP. This explains why a customer who has implemented SAP R/3 Enterprise has nothing to do from a technical perspective when changing his license to mySAP ERP.

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mySAP ERP is the solution suite within the mySAP Business Suite It is based on SAPs listening to customers, user groups and further inputs from analysts and other

thought leaders to better serve market demands of our customers and prospects. It is ready to service operational, tactical and strategic needs of enterprise and beyond enterprises

ensuring collabortion among partners. Business Solutions are part of mySAP ERP which before had to be licensed separately with the

benefit to be pre integrated due its development being continously based on our Netweaver platform.

Let us have a closer look at the solution map you are all familiar with from a high level perspective. mySAP ERP mySAP Enterprise Resource Planning mySAP CRM mySAP Customer Relationship Management mySAP PLM mySAP Product Lifecycle Management mySAP SRM mySAP Supplier Relationship Management mySAP SCM mySAP Supply Chain Management

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The figure above represents the mySAP ERP solution map. As with all other mySAP solutions, a solution map shows you the processes enabled by a specific solution.

The picture shows the top-level of the mySAP ERP solution map. To find out more, you can look at the solution map at the SAP Service Marketplace, where you can click on the different areas in the map to get more detail. The map is available at KWWSVHUYLFHVDSFRPEXVLQHVVPDSV!&URVV,QGXVWU\0DSV!(QWHUSULVH5HVRXUFH3ODQQLQJ. 1RWH You must have a registered user ID to access the map. After registering, you can also install the SAP Solution Composer from VHUYLFHVDSFRPVFRPSRVHU (be aware that the solution map may change with the evolution of market terminology, so always use the most recent one by updating SAP Solution Composer regularly).

As you can see, this figure highlights several areas. These are the areas where mySAP ERP offers additional capabilities compared with SAP R/3 Enterprise, making mySAP ERP the state-of-the-art ERP solution. As an example, a mySAP ERP customer can use SAP NetWeaver capabilities by implementing the SAP Business Information Warehouse or the SAP Enterprise Portal. Or, the customer can implement Self-Service Procurement, Internet Sales, or other functionalities.

SAP Best Practices have a few of these highlights pre-configured such as New General Ledger, Analytics, others need to be evaluated on a project basis.

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Organizational Levels: A companys enterprise structure is mapped to SAP applications using organizational units. They are used to represent the enterprise structure in terms of legal and/or business-related purposes. Organizational elements include legal company entities, plants, storage locations, sales offices, and profit centers.

Examples: The highest-level unit of all organizational elements is the Client The Client represents the

enterprise/headquarters group.

A Company Code is a unit included in the balance sheet of a legally-independent enterprise and is the central organizational element of Financial Accounting.

In the context of Sales and Distribution, the Sales Organization is the central organizational element that controls the terms of sale to the customer. Division is usually used to represent product line.

In the context of Production Planning, Plant is the central organizational unit. A Plant can manufacture product, distribute product, or provide a service.

In Inventory Management, material stocks can be differentiated within one plant according to Storage Location.

Organizational units may be assigned to a single application (such as Sales Organization assigned to Sales and Distribution, or to several applications (such as Plant assigned to Materials Management and Production Planning).

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7KHKLJKHVWOHYHOHOHPHQWRIDOORUJDQL]DWLRQDOHOHPHQWVLVWKHFOLHQW The client can be an enterprise group with several subsidiaries. All of the enterprise data in an SAP System implementation is split into at least the client area, and usually into lower level organizational structures as well.

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By linking the organizational units, the separate enterprise areas can be integrated and the structure of the whole enterprise represented in the SAP System. This links are defined in Customizing.

When defining the organizational units, bear in mind that they define the structure for how data is to be entered, tracked, and extracted from the SAP system.

The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated. It represents a separate unit of cost accounting.

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All company-code relevant transactions from one of these five plants are posted to company code 1000 in Accounting.

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0DVWHU'DWD Data which is used long-term in the SAP System for several business processes. Master data is created centrally and can be used by all applications and all authorized users. Examples of master data in SAP include customers, materials, and vendors.

A customer master contains key information that defines the business relationship between a company and its customer. The master data is used to support execution of key business processes such as customer requests, deliveries, invoices, and payments.

Master data also has an organizational aspect as the information is organized into views which are assigned to organizational elements.The customer master is organized into three views which are each located at a different organizational level: General Data (Client), Financial Accounting Data (Company Code), and Sales Data (Sales Area).

Data on the client level can be used by all company codes. The customer account number is assigned on this level. That means the same customer has an explicit accounts receivable number in all company codes from a financial view.

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7UDQVDFWLRQV Application programs which execute business processes in the SAP System such as creating a customer order, posting an incoming payment, or approving a leave request.

'RFXPHQW A data record that is generated when a transaction is carried out. When creating an order for a customer, you must take transport agreements, delivery and payment

conditions, and so on, with business partners into consideration. To avoid re-entering this information each time for every activity related to these business partners, relevant data for the activity from the master record of the business partner is simply copied.

In the same way, the material master record stores information, such as the price per unit of quantity, and stock per storage location that is processed during order entry. This concept is valid for processing data for each master record included in the activity.

When performing each transaction, applicable organizational elements must be assigned. Assignments to the enterprise structure in the document are generated in addition to the information stored for the customer and material.

The document generated by the transaction contains all relevant pre-defined information from the master data and organizational elements.

A document is generated for each transaction carried out in the SAP System.

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From a logistical point of view, requirements planning is carried out first of all. To do this, the responsible department can register a materials requirement manually to Purchasing using an order requirement. It is possible to have the RUGHUUHTXLUHPHQW automatically created by the system.

3XUFKDVHRUGHUKDQGOLQJ: The system provides you with entry tools when creating RUGHUV. The required entry data such as supplier, material, plant and other data relevant to the organization of purchasing must be provided.

When JRRGVDUHUHFHLYHG, the system checks, among other things, the quantity of goods received against the order quantity. A material document is created in MM to update the inventory. At the same time, a document is created in FI with which the evaluated goods are posted to the material stock account or the consumption account (debit) and to a goods receipt / invoice receipt account (credit).

After the invoice has been received in the ,QYRLFH9HULILFDWLRQ, the 9HQGRU,QYRLFH is checked as to the correctness of computation and content. All of these purchasing processes are settled in Logistics. The vendor invoice is posted in MM and, at the same time, a document is created in FI with which the invoice amount is posted to the goods receipt / invoice receipt account (debit) and the vendor account (credit). The goods receipt / invoice receipt account is used to make sure that a goods receipt is executed for every invoice and vice versa.

The 3D\PHQW3URFHVVLQJ usually takes place in Financial Accounting. It is here that decisions are made about the payment process, such as, for example, the payment methods and the bank settlement.

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The sales order is the basis of the sales process. Many different scenarios can be settled via the sales order in SD. Two scenarios which are typical for Accounting are introduced here as an example: The anonymous VDOHRISURGXFWVH[VWRFNand the PDGHWRRUGHUSURGXFWLRQXVLQJWKHJHQHUDWLRQRIDVHUYLFHDVDQH[DPSOH.

Product sale ex stock: In this process, a sales order is created for material which is kept in inventory. Costs and revenues are derived automatically from the material production costs or from the SD sales prices. An outbound GHOLYHU\GRFXPHQW is created. The delivery cannot be billed until the goods have been removed from the stock and posted as goods issue. You can create a 7UDQVSRUW2UGHU that generates a transfer order. The required goods are removed from the stock and prepared for delivery. The goods to be delivered are posted as *RRGV,VVXH. In MM, a goods issue document and an accounting document in FI are created. The last step in the sales and distribution process is %LOOLQJ An invoice document is created in SD and a printed invoice is sent to the customer. Billing is also the point when revenues are transferred to Controlling. When3D\PHQW has been made by the customer, you receive your money and post the receipt of payment in FI.

Producing a service represents, in contrast to ex stock sales, a direct VHUYLFHVJHQHUDWLRQSURFHVV that can also be displayed via a sales order item. The sales order item is a FRVWEHDUHU. This means that the costs, and also the revenues, can be posted individually and directly on the SD item. The steps incoming orders, billing, payment are nearly all identical to the steps in sales ex stock. However, in this services example, transport and delivery do not apply. The cost bearer sales order item can be posted for all transactions of the VHUYLFHJHQHUDWLRQ directly. When the service is completed, you can pass on the costs and revenues to the profitability analysis (CO-PA) via the 2UGHU6HWWOHPHQW.

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While you are using the transactions in the Logistics applications, the Logistics Information System (LIS) updates relevant information. You can also update information from other systems in the LIS.

The LIS aggregates and stores this information in the data warehouse. Data can be aggregated on a qualitative as well as on a quantitative basis:

quantitative reduction by aggregating on period level

qualitative reduction by selecting specific key figures You can then use the tools in the Sales Information System (SIS) to analyze this aggregated

information. The aggregation leads to an improvement of the response times and of the quality of the resulting reports.

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SAP BW enables the analysis of data from operative SAP applications as well as all other business applications and external data sources such as databases, online services, and the Internet.

Administrator Workbench (AWB) functions allow you to control, monitor, and maintain all data procurement processes.

SAP BW enables Online Analytical Processing (OLAP) for staging information from large amounts of operative and historical data. OLAP technology permits multi-dimensional analyses according to various business perspectives.

The BW server, which is preconfigured by Business Content for core areas and processes, allows you to examine the relationships in every area within your company. Business Content provides targeted information to companies, divided into roles. This helps your employees to carry out their tasks. As well as roles, Business Content includes other preconfigured objects such as InfoCubes, queries, key figures, and characteristics. These objects facilitate the implementation of SAP BW.

The Business Explorer (BEx) component provides users with extensive analysis options.

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The subareas of People Integration are: Portal Infrastructure delivers unified, personalized, and role-based user access to heterogeneous

IT environments.

Collaboration promotes dynamic and cost-effective communication within teams or communities

Multi-Channel Access allows access to enterprise systems through PCs, the Internet, mobile devices, and speech-controlled systems.

The subareas of Information Integration are: Business Intelligence enables companies to include, analyze, and distribute business-critical

information.

Knowledge Management manages unstructured information such as text files, presentations, or audio files, and allows access to this content.

Master Data Management ensures company-wide unification of data and information in heterogeneous IT environments.

The subareas of Process Integration are: Integration Broker: realizes XML/SOAP- based communication between application

components from various sources.

Business Process Management allows the modeling and acceleration of processes in a dynamic IT environment.

The Application Platform supports J2EE and ABAP in a single environment.

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People Integration ensures that your employees have the information and functions that they require to perform their work as quickly and efficiently as possible. The functions of the SAP Enterprise Portal play a central role.

Information Integration provides access to all structured and unstructured information in your company. The core components in this subarea is the SAP Business Information Warehouse (SAP BI), which provides data from a large number of different systems for evaluation.

Process Integration ensures that business processes run across system boundaries in a heterogeneous system landscape. This is achieved using XML data packages and workflow scenarios, for instance. The SAP Exchange Infrastructure (SAP XI) plays a central role here.

Application Platform supports J2EE and ABAP in a single environment. It guarantees the independence of databases and operating systems, the complete support of platform-independent Web services and company applications, and an open environment that is based on recognized standards. The central component of the Application Platform in the SAP Web Application Server (SAP Web AS).

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An enterprise service does not focus on detailed function, but rather on a complete, industry specific process.

For example you could use an enterprise service to cancel a purchase order. From a business perspective, an enterprise service may represent various actions in various systems:

Send a confirmation to the customer Remove the order from production Cancel the material requirement Change the order status

The enterprise service comprises all of the individual actions and therefore provides context-based business process logic. The contextual nature of an enterprise service is crucial because the individual functions in an order cancellation service in the automobile industry will differ from those in a similar service in the media sector, for example.

However, if you have decided on a context-specific definition of the cancel purchase order service, all providers of the service can implement the service in their system, which means the systems will ultimately become interchangeable, as long as the process does not change at company level. The individual steps within an enterprise service can then be processed using Web services. How does a :HEVHUYLFHdiffer from an HQWHUSULVHVHUYLFH? (QWHUSULVHVHUYLFHVdescribe the broader business process logic. :HEVHUYLFHVare small, modular applications that use Internet technologies and are usually accessed as detailed functions in applications or enterprise services. There are agreed standards for describing and accessing Web services. (Web Service Description Language (WSDL), Simple Object Access Protocol (SOAP), and Universal Description, Discovery, and Integration (UDDI).

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In addition to the traditional runtime environment for ABAP programs, SAP Web Application Server (SAP Web AS) also has a runtime environment for J2EE-based Java programs, the SAP J2EE Engine. Together with the database, SAP Web AS forms the Application Platform of SAP NetWeaver.

SAP Web AS offers: A reliable and thoroughly test runtime environment, which has evolved over more than 10 years

A framework for executing complex business processes that meets the highest security standards

A reliable and user-friendly development environment

Support for open technical standards such as HTTP(S), SMTP, Unicode, HTML, and XML High scalability, inherited from SAP basis

Support for various operating systems and databases

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The central component in the context of the Application Platform is the SAP We Application Server (SAP Web AS).

If you consider the functions of different SAP systems (such as SAP ECC 6.0 and SAP CRM) in more detail, you can divide them roughly into two categories:

Basis functions

Application functions The application functions are obviously different in the various SAP systems. In this way, you can,

for example, use an SAP CRM system to perform marketing actions (marketing planning/campaign management), which is not possible in SAP ECC 6.0, while you can use SAP ECC 6.0 to map store management, a function which SAP CRM does not provide.

While the application functions are obviously different for the various SAP systems, the Basis functions are very similar. The Basis functions are provided by the SAP Web AS, which is a further development of the classis SAP Basis. With regard to basis functions, such as configuring output devices or supporting different languages, the two systems are not significantly different, as both SAP systems use the technology of SAP Web AS.

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The sender system provides data in a document format, for example IDoc, and sends it to the adapter by means of a protocol. The adapter transforms the document to the SAP XI format and forwards it to the ,QWHJUDWLRQ6HUYHUby using HTTP(S). The configuration determines which adapter is to be used to receive the message at the receiver. The Integration Server sends the message to the relevant adapter, which in turn converts it to the protocol of the receiver and finally sends it to the receiver.

If you want to use SAP XI to realize a cross-system integration process and provided the systems involved are based on SAP Web AS 6.20 or higher, you can use the new SAP XI programming model. You define your platform-independent interface descriptions in the ,QWHJUDWLRQ5HSRVLWRU\and then, using this description, you can generate SUR[LHVin the various application systems for Java applications or SAP systems. In the application system, the SUR[\is a representative of the interface in the ,QWHJUDWLRQ5HSRVLWRU\.

From a technical perspective, proxy objects are classes and methods in a programming language (ABAP or Java), which create and process messages for a message format that is defined in the ,QWHJUDWLRQ5HSRVLWRU\.

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Master Data Management (MDM) allows you to create cross-company, unified master data and distribute this across various, dependent systems. MDM uses the technological foundation of the exchange infrastructure (SAP XI) to distribute the data. However, MDM does not only distribute the data. It also checks new master data to determine whether identical master data already exists, and identifies all duplicates, which can be transferred to the SAP BW and used in analyses.

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An Enterprise Portal ensures a central point of access to information, applications, and services in the company. All your SAP and non-SAP systems, your data warehouse, desktop documents, Web contents, and Web services are brought together in one single user interface. With Single Sign-On, you benefit from the simplified process of authentication and communication between different IT systems. Knowledge Management in the portal converts unstructured data into important company information, Collaboration facilitates cooperation between people within the company and beyond, and Personalization adapts the portal structure to suit the requirements of the individual users.

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Openness and extendibility: SAP NetWeaver features complete compatibility and extendibility with IBM WebSphere and Microsoft.NET technologies in which companies have made significant investments. SAP will ensure interoperability with IBM and Microsoft solutions, and assist in development strategies, sales activities, and competence and support centers. The integration of SAP NetWeaver with IBM and Microsoft solutions spans all levels and therefore applies to the integration of people, information, and processes. This means that optimal benefit can be gained from existing IT investments in systems and employee qualifications.

Immediate integration: SAP NetWeaver enables complete enterprise integration at all critical levels. SAP NetWeaver also provides valuable preconfigured business content. This ready-to-use content is available at all levels of SAP NetWeaver, drastically reducing implementation time and therefore speeding up return on investment. Among other things, the following business content is provided with SAP NetWeaver:

Preconfigured portal content and predefined roles for better integration of people

Reports and analyses for fast integration of information

Interfaces for linking the business processes in your various back-end systems Lower total cost of ownership: The technology platform leverages your existing IT investments,

since it integrates these and profitability includes systems that are already used in your company. SAP NetWeaver supports the entire software life cycle of business-critical applications with the lowest total cost of ownership.

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The external procurement process is structured in the following way: 'HWHUPLQDWLRQRIUHTXLUHPHQWV The user department responsible can pass a requirement for

materials to the Purchasing department manually, via a purchase requisition. If you have set a MRP procedure for a material in the material master, then MRP will automatically generate a purchase requisition.

'HWHUPLQDWLRQRIWKHVRXUFHRIVXSSO\: mySAP ERP supports the buyer responsible in many different ways when determining sources of supply. You can use determination of the source of supply to create requests for quotation (RFQs) and then to enter the quotations.

9HQGRUVHOHFWLRQ The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favorable vendor. You can send rejection letters automatically.

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any time online. The buyer can, for example, determine whether goods or an invoice have been received for the corresponding purchase order item. The system also supports dunning procedures.

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Organizational Units represent the legal and/or organizational views of an enterprise. You can design your company structure based on your business processes.

The Procurement process uses the following organizational units:

Client - a self-contained unit in a SAP system with separate master records and its own set of tables. It is the highest organizational element.

Company code - represents an independent accounting unit. Balance sheets and Profit & Loss Statements, required by law, are created at the company code level.

Plant - an organizational element within a company. A plant produces goods, renders services, or makes goods available for distribution. A plant can be a manufacturing facility, a warehouse or distribution center

Storage location - units that allow the differentiation of material stocks within a plant

Purchasing organization - unit structured to negotiate the general conditions of purchase for one or more plants or companies. Pricing conditions are set at the purchasing organization level.

Purchasing group - key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. This cannot be assigned to a purchasing organization.

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plant, and storage location. Organizational structures are assigned uniquely. For example, several plants may be affiliated with

one company code, but in mySAP ERP, a plant is always assigned to one company code.

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The purchasing organization is responsible for the enterprises purchasing requirements. You can incorporate Purchasing into the company structure by assigning the purchasing

organization to company codes and plants. This means that you can determine whether Purchasing is organized centrally or de-centrally in your company.

You can distinguish between plant-specific, cross-plant, and cross-company-code Purchasing.

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In plant-specific procurement, a SXUFKDVLQJRUJDQL]DWLRQis responsible for procuring materials for only one SODQW.

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You can set up a cross-plant SXUFKDVLQJRUJDQL]DWLRQ for each FRPSDQ\FRGH This purchasing organization procures material and services for all SODQWVbelonging to the FRPSDQ\FRGH.

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If you want to organize Purchasing on a cross-company-code basis, you cannot assign a company code to the purchasing organization in Customizing. When you create a purchase order, for example, the system will ask you to enter the company code for which you want to procure the material.

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The material master record is the main source of material-specific data in an enterprise. It is used by all Logistic modules.

The integration of all material data in a single database object prevents the problem of data redundancy. Every area, such as purchasing, inventory management, materials planning, and invoice verification can use the data stored.

The material master is subdivided into information grouped by user departments (functions). Each user department has a different View of the material master record and is responsible for maintaining the data to support their function, for example:

Purchasing data for ordering

Inventory management data for posting goods movements and managing physical inventory

Accounting data for material valuation upon goods movements or in invoice verification

Materials planning data for material requirements planning The data maintained within a view may be valid for more than one organizational level

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The vendor master record contains information about a vendor from a Purchasing and Accounting perspective.

Data in the vendor master record is structured by organizational considerations:

General data is valid for the whole corporate group (client). This includes the vendor communication data, for example.

Accounting data is stored at company code level (company) and with the general data. Purchasing data on the vendor is managed separately for each purchasing organization, for

example, payment conditions. General data is also relevant to Purchasing, for example, address data.

There are other levels for purchasing data, but which are optional (plant, vendor sub-range). In Accounting, the vendor is regarded as the companys crediting business partner. The vendor

master record is therefore maintained by Accounting and Purchasing. You can use the authorization concept to define how data maintenance should be organized in the

vendor master record. Each user department can maintain general data centrally or decentrally, as well as Purchasing and

Accounting-specific data. Often, Purchasing also maintains data at corporate group level.

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Purchasing info records contain concise information on a vendor and the material you procure from this vendor.

Purchasing info records are an important source of information for buyers, allowing them to find out at any time which vendors offer a particular material or which materials can be procured from a particular vendor.

You can store and maintain the following data in info records:

current and future prices and conditions (for example, freight and discounts) delivery data (for example, planned delivery time and tolerances) vendor data

Texts

When you create purchasing documents (for example, purchase orders or contracts), the system displays data maintained in info records as default values.

Purchasing Info records can be referenced in the planning process to predetermine vendor specific information.

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Conditions are used in purchase orders to determine price. When you create a purchase order with reference to a contract or purchasing info record, or if certain criteria in extended conditions apply, the system automatically includes the conditions in the purchase order. They therefore influence its effective price.

The following types of conditions are used in Purchasing:

Conditions in a contract apply to all contract release orders created with reference to this contract.

Conditions in a purchasing info record apply to all purchase order items that contain the material and vendor contained in the purchasing info record.

Extended conditions are only included in the purchase order if it meets certain criteria. For example, you can use extended conditions to define vendor discounts or include discounts for a material type. Extended conditions are more flexible than conditions in info records or contracts in that you can define which criteria must be met if the conditions are to apply to purchase orders.

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The external procurement process is structured in the following way: 'HWHUPLQDWLRQRIUHTXLUHPHQWV The user department responsible can pass a requirement for

materials to the Purchasing department manually, via a purchase requisition. If you have set a MRP procedure for a material in the material master, then MRP will automatically generate a purchase requisition.

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Purchase requisitions are internal documents you use to request your Purchasing department to procure a particular quantity of a material or a service for a particular date.

Purchase requisitions are either created manually by the department responsible or automatically by MRP.

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3XUFKDVLQJ converts the purchase requisition into a request for quotation (RFQ) or purchase order SCM (APO) Supply Chain Management (Advanced Planning and Optimization) SRM (EBP) Supplier Relationship Management (Enterprise Buyer Professional)

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The buyer responsible normally converts the purchase requisitions into purchase orders. You have the following options:

If you have not yet entered a valid source of supply for the relevant material-vendor relationship in the system, you can create the purchase order with reference to the purchase requisition. You can make reference to the purchase requisition on the initial screen as well as on the item overview for purchase order entry.

Before converting the purchase requisition to a purchase order, the buyer has to define the source of supply. You can enter a valid info record or outline agreement in the purchase requisition.

The purchase requisition is then converted into a purchase order manually by the buyer responsible or automatically by the system.

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The term consumable material is understood to cover a material that is subject to a procurement transaction and whose value is recorded in the cost element or asset accounts. Consumable material is thus procured directly for an account assignment object. Examples of consumable materials are office supplies and computer systems.

When a material is procured directly for consumption, no material master record is necessary. In connection with consumable materials, you can distinguish between the following cases:

Consumable material without material master record

Consumable material with material master record that is not subject to inventory management (on either quantity or value basis)

Consumable material with material master record that is subject to inventory management on a quantity, but not a value basis.

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Consumable materials debit different account assignment objects depending on the account assignment category specified.

The account assignment category determines which category of account assignment is to be debited and which account assignment data you have to prepare.

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When procuring consumable materials that do not have a material master record, you have to enter the following, as well as the account assignment category:

short text (description) material group

order unit When you create a purchase order with account assignment, depending on the account assignment

category, you have to enter a cost center or asset number. Depending on the account assignment category, the system can use automatic account determination to suggest a G/L account number for the consumption account.

The standard configuration contains the following consumable materials with material master record:

Material Type Non-stock material (NLAG): Quantity and value are not updated Material Type Non-valuated material (UNBW): Quantity is updated, but value is not.

Consumable materials with a material master record must have an account assignment.

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A purchase order is a formal request to a vendor to supply certain goods or services under the stated conditions.

Purchase orders can be created without reference, or with reference to a purchase requisition, a request for quotation or another purchase order.

When you enter the purchase order data, the system suggests values to use. For example, the ordering addresses, as well as the terms of payment and freight (Incoterms) are suggested from the vendor master record. If you have maintained a material master for a certain material, the material short text or the material groups, among other things, are suggested for you. If a purchasing info record already exists in the system, a default price is copied to the purchase order.

The purchase order is either sent to a vendor or you carry out a stock transport order in another plant belonging to your company or group. With a stock transport order, you can take into account the associated freight costs in the purchase order. 1RWH You can find more information about stock transport orders in the Materials Management documentation on the topic of Inventory Management: Special stocks and special forms of procurement in Materials Management.

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The purchase order is a formal request to a vendor to supply you with goods or services at the conditions stated in the purchase order. In the purchase order, you further define whether the material is delivered for stock or direct consumption (for example, cost center, asset or project). Goods Receipt and Invoice Verification are normally carried out based on the purchase order.

You can minimize the work involved in entering data, by creating purchase order items with reference to an existing purchase requisition, RFQ or purchase order. Of course, you can also enter a purchase order without reference to preceding documents in the system.

If you do not know the vendor when you create a purchase order, you can use source determination. The system suggests possible vendors to you on the basis of the defined sources of supply (outline agreements, info records, source list entries, quota arrangements).

For each purchase order item, you have the option of determining the current processing status. For example, you can determine whether there are goods receipts or incoming invoices for an item. From the purchase order history screen you can display the subsequent documents (material document and invoice document).

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The item category defines the process used to procure a material or service. In the standard system, the item categories already defined include:

6WDQGDUG You use this item category for materials that are procured externally. 6XEFRQWUDFWLQJ The finished product is ordered from a vendor. The components that the vendor

needs to manufacture the finished product are entered as material to be provided items.

&RQVLJQPHQW The vendor makes material available, which you then manage as consignment stock. A liability only arises when material is withdrawn from consignment stock, not when the stock is placed in the consignment stores.

6WRFNWUDQVSRUWRUGHUV The material is transferred from one plant to another. 7KLUGSDUW\RUGHU You order material from a vendor with the instruction that the vendor should

deliver the goods direct to a third party (a customer, for example). The vendor sends your company the material invoice.

1RWHSubcontracting, consignment, stock transfer orders and third-party orders are covered in the Materials Management documentation on Inventory Management:Special Stocks and Special Forms of Procurement in Materials Management.

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You can issue purchase orders, purchase order changes and order acknowledgements as messages. Output can be via a printer, fax machine or EDI, for example.

You can set which header texts and item-based texts the system issues. The header text is printed at the start of the purchase order and contains generally applicable information. Item texts describe a purchase order item more precisely. You can also include and issue standard texts.

1RWHYou will find more detailed information about purchasing document output in the Materials Management documentation on Purchasing: Entering Texts, Print Functions and Information Transmission.

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Posting a goods receipt to stock with reference to a purchase order has a number of advantages for you, including:

The goods receiving department can check whether the goods delivered are what was actually ordered.

The system suggests data in the purchase order when you enter the goods receipt (for example material ordered, quantity). This makes it easier to enter the goods receipt and check overdeliveries and underdeliveries when goods arrive.

The purchase order is automatically updated with the delivery. The Purchasing department can send a reminder about late deliveries.

When a goods receipt to the warehouse is posted, a material document is created that contains information such as the material delivered and the quantity delivered. The storage location in which you place the material into stock in the associated plant is also recorded.

In transactions relevant for material valuation, at least one accounting document is created which records the effects the material movement has on the value of the stock.

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Goods movements include both external and internal movements. In general, a transaction that causes a stock change is marked as a goods movement. You can

distinguish between goods receipts, goods issues, stock transfers, and transfer postings. A goods receipt (GR) is a goods movement in which the receipt of goods from both an external

vendor and from production is posted. A goods receipt leads to an increase of warehouse stock. A goods issue (GI) is a goods movement in which a material withdrawal, goods issue, material

consumption, or goods shipment is posted to a customer. A goods issue leads to a decrease of warehouse stock. A stock transfer is removal of materials from a particular storage location and placement into

another storage location. Stock transfers can take place both within the same plant and between two plants.

A transfer posting is a super ordinate term for stock transfers and changes the stock identification or qualification of a material, regardless of whether the posting is linked to a physical movement or not. Examples of a transfer posting include the release of the stock for quality inspection, the transfer posting from material to material, or the transfer of consignment material.

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You enter goods receipts against production and purchase orders with movement type 101. For a goods receipt into the warehouse, you can decide on the basis of the stock type whether the receipt is to be booked into unrestricted-use stock, stock in quality inspection, or blocked stock.

If the goods receipt into stock in quality inspection is to be preplanned, you have a number of options:

If the material is generally subject to a quality check prior to use, set the - Post to inspection stock indicator in Purchasing or Work Scheduling Data - in the material master record. The stock type Quality Inspection is then - adopted in the purchase or production order.

If you wish to make the material subject to a quality check in exceptional cases only, enter the stock type Stock in Quality Inspection only in the relevant document (purchase or production order). An example from - purchasing would be a case where material is procured from a new vendor and the quality of

the vendors goods needs to be checked in every case. Hint: You will find the stock type for the PO item in the item details on the Delivery tab page. In the

production order, you will find the stock type on the Goods Receipt tab page. When you post a receipt into the warehouse, the quantity and value of the stock is increased

irrespective of the stock type (except for material types without value updating).

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In the stock overview, you can display material stocks for each organizational level. Quantities posted for a particular stock type are totaled for each organizational unit.

You can display the stock overview for batches/valuation type and special stocks (for example, consignment material) as well as for client, company code, plant, and storage location.

The stock overview is a static display of stocks. This means that you can only view the current stock situation. You can view firm stock commitments on the stock overview screen. However, you cannot see future planned goods receipts and goods issues in this list. But you can call up additional information functions via the menu bar.

There are several display versions for stock overviews, which differ in the way the stock types are listed and in the order of the stock types. In Customizing for Inventory management, the system administrator defines which stocks are displayed in each column and the order in which they are displayed.

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The movement type is a three-digit key to differentiate between goods movements in the system. Examples of these goods movements are goods receipts, goods issues or transfer postings.

The movement type takes over important control functions in Inventory Management. It plays a central role in automatic account determination. Together with other influencing factors, the movement type determines, among other things, which stock or consumption accounts are updated in Financial Accounting. The movement type also determines the structure of the screen when you enter documents and the updating of the quantity fields.

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There are three stock types in inventory management that indicate the usability of a material: XQUHVWULFWHGXVH, LQTXDOLW\LQVSHFWLRQ, and EORFNHG.If the usability of a material changes, you must make transfer postings between the different stock types. With this type of transfer posting, you can also enter a physical goods movement to a different storage location. However, it is only possible to enter a movement within one plant, not between several plants.

Examples: Material is posted to stock in quality inspection at the time of a goods receipt against a purchase or production order. Following quality inspection, the quantity is posted to unrestricted-use stock.

Hint: If inspection processing in the quality management system is active, you cannot post any issues from stock in quality inspection within Inventory Management. Such movements can only be carried out within the framework of inspection processing.

Due to a damaged water pipe in a warehouse, a certain material can no longer be used and is transferred to blocked stock.

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The material document consists of a document header and at least one item. The header information includes the posting date and the name of the creator. Which quantity of which material is posted to which storage location of the associated plant is recorded at item level.

The accounting document records the effects of material movements on the accounts. The document header contains generally applicable data, such as the document date, posting date, posting period, and document currency. The G/L account numbers and the associated amount posted are recorded at item level.

The material and accounting documents are independent documents. You can identify the material document by the material document number and the material document year. The accounting document can be clearly identified by the company code, accounting document number and fiscal year. The company code in which the accounting document is posted is taken from the plant in which the goods movement takes place.

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In addition to the Material (quantity) and Accounting (value) Documents being created, other areas are