1 Overview of SAP ERP

19

1.1 The Building Blocks of SAP ERP

19

1.1.1 Financials

20

1.1.2 Logistics

21

1.1.3 Human Resources

22

1.1.4 Materials Management

22

1.2 Integration of Materials Management in SAP ERP

24

1.3 Analysis and Resources for Materials Management

25

1.3.1 SAP Easy Access

26

1.3.2 SAP Customizing

27

1.3.3 SAP Library

29

1.3.4 SAP Service Marketplace

31

1.4 Business Processes

34

1.4.1 Procure to Pay (P2P)

34

1.4.2 Order to Cash (O2C)

34

1.4.3 Forecast to Stock (F2S)

35

1.4.4 Record to Report (R2R)

35

1.4.5 Acquire to Retire (A2R)

35

1.4.6 Hire to Retire (H2R)

35

1.5 Technical Aspects of SAP ERP

36

1.5.1 Enhancement Package

36

1.5.2 Business Function

37

1.5.3 Switch Framework

38

1.5.4 Service-Oriented Architecture (SOA)

38

1.6 Summary

39

2 Overview of the Materials Management and Financials Relationship

41

2.1 Elements of Materials Management

43

2.1.1 Purchasing

44

2.1.2 Inventory Management

48

2.1.3 Material Valuation

49

2.1.4 Logistics Invoice Verification

50

2.1.5 GR/IR Account Maintenance

51

2.2 Elements of Financial Accounting

52

2.2.1 SAP General Ledger

52

2.2.2 Accounts Payable

53

2.2.3 Asset Accounting

53

2.3 Elements of Controlling

54

2.3.1 Cost Element Accounting

55

2.3.2 Cost Center Accounting

55

2.3.3 Activity-Based Costing

56

2.3.4 Internal Orders

56

2.3.5 Product Cost Controlling

56

2.3.6 Profitability Analysis

56

2.3.7 Profit Center Accounting

56

2.4 Relationship between the Elements of Materials Management and Financial Accounting and Controlling

58

2.4.1 Commitments in Procurement

58

2.4.2 Elements of Financial Accounting and Controlling in a Purchase Order

61

2.4.3 Accounting Documents for Goods Receipt

62

2.4.4 Accounting Documents for Invoices

62

2.5 Reporting

64

2.5.1 External Reports

65

2.5.2 Management Reporting

65

2.5.3 Business Intelligence

66

2.6 Troubleshooting Techniques

68

2.6.1 Introduction to Technical Elements

69

2.6.2 The Troubleshooting Approach

71

2.6.3 The Technical Analysis

71

2.6.4 Debugging

72

2.7 Summary

75

3 Basics of Configuration and the Processes in Procurement

77

3.1 General Settings

77

3.1.1 Settings for Currency Codes

79

3.1.2 Decimal Places for Currencies

79

3.1.3 Standard Quotation for Exchange Rates

80

3.1.4 Prefix for Quotation of Exchange Rates

80

3.1.5 Exchange Rate Type

81

3.1.6 Translation Ratios for Currencies

82

3.1.7 Exchange Rates

83

3.1.8 Exchange Rate Spread

83

3.1.9 Rounding Rule

83

3.2 Enterprise Structure

84

3.2.1 Definition

86

3.2.2 Assignment

90

3.2.3 Materials Management Enterprise Structure

93

3.2.4 Financial Accounting Enterprise Structure

95

3.3 Processes in Procurement

96

3.3.1 Procurement Cycle

99

3.3.2 Procurement of Stock Material

102

3.3.3 Procurement of Consumable Materials

102

3.3.4 Procurement of External Services

104

3.4 Master Data

105

3.4.1 General Ledger Account

106

3.4.2 Cost Element

107

3.4.3 Cost Center

107

3.4.4 Profit Center

108

3.4.5 Internal Orders

108

3.4.6 Segment

109

3.4.7 Material Master

110

3.4.8 Vendor Master

113

3.4.9 Master Data in Purchasing

116

3.5 Documents in Procurement

117

3.5.1 Purchase Requisition

117

3.5.2 Request for Quotation and Quotation

119

3.5.3 Purchase Orders

121

3.5.4 Outline Purchase Agreements

128

3.5.5 Purchasing Info Records

130

3.6 Summary

131

4 Procurement of Stock and Consumable Materials

133

4.1 Procurement of Stock Material

133

4.1.1 Stock Material within Document Flow

134

4.1.2 RFQs/Quotations

141

4.1.3 Conditions and Calculation Schema

145

4.1.4 Purchasing Info Record

150

4.1.5 Stock and Valuation

152

4.1.6 Material Valuation Procedure

154

4.1.7 Stock Valuation in Inventory Management and LIV

156

4.2 Procurement of Consumable Materials

159

4.2.1 Purchase Requisition and Purchase Order

160

4.2.2 Blanket Purchase Order

162

4.2.3 Materials Management Multiple Account Assignment

165

4.3 Procurement of External Services

168

4.3.1 Procurement Cycle for External Services

168

4.3.2 Service Entry Sheet, Its Acceptance, and Its Invoicing

171

4.4 Subcontracting

176

4.4.1 Subcontracting in Purchasing

177

4.4.2 Subcontracting in Inventory Management

178

4.4.3 Subcontracting in Logistics Invoice Verification

179

4.4.4 Price Difference for Subcontract Order at Goods Receipt

180

4.4.5 Technical Elements of Subcontracting

187

4.5 Summary

188

5 Conditions, Price Determination, and the Basics of Material Price Changes

189

5.1 Conditions and Price Determination

189

5.1.1 Elements of Condition Techniques

190

5.1.2 Price Determination

200

5.1.3 Header and Group Conditions

210

5.1.4 Special Condition Types and Special Functions

211

5.1.5 Subsequent Settlement

221

5.2 Basics of Material Price Changes

224

5.2.1 Control of Material Valuation

225

5.2.2 Valuation Structure

227

5.2.3 Changes in Material Valuation

229

5.3 Summary

230

6 Balance Sheet Valuation

231

6.1 Lowest Value Determination

232

6.1.1 Lowest Value Determination Based on Market Prices

233

6.1.2 Lowest Value Determination Based on Range of Coverage

235

6.1.3 Lowest Value Determination Based on Movement Rate

237

6.1.4 Lowest Value Determination Based on Loss-Free Valuation

241

6.2 LIFO Valuation

241

6.2.1 LIFO Methods and the Layer Versions

244

6.2.2 Quantity and Index LIFO Procedures

247

6.2.3 Pool LIFO Valuation

253

6.2.4 Lowest Value Comparison

254

6.3 FIFO Valuation

255

6.3.1 FIFO Configuration

256

6.3.2 Procedures for FIFO Valuation

258

6.4 Summary

258

7 Material Price Change

259

7.1 Value Changes in Inventory Management

259

7.1.1 Goods Receipt for Purchase Orders

260

7.1.2 Account Postings: Planned Delivery Costs

262

7.1.3 Delivery Free of Charge

263

7.1.4 Value Changes in Transfer Postings

264

7.1.5 Initial Entry of Inventory Data

270

7.1.6 Goods Receipt Reversal

272

7.1.7 Inventory Management Inconsistency Prevention

278

7.2 Value Changes in Logistics Invoice Verification

280

7.2.1 Subsequent Debit/Credit

281

7.2.2 GR/IR Clearing Account Maintenance

284

7.3 Value Changes Resulting from Cash Discounts

286

7.3.1 Gross Goods Receipt/Gross Invoice Receipt

287

7.3.2 Gross Goods Receipt/Net Invoice Receipt

288

7.3.3 Net Goods Receipt/Net Invoice Receipt

289

7.4 Revaluation

289

7.4.1 Price Changes in the Previous Period Only

291

7.4.2 Price Changes in the Previous and Current Period

292

7.5 Posting to a Previous Period

293

7.5.1 Posting Goods Movements to the Previous Period

294

7.5.2 Posting Invoices to the Previous Period

295

7.5.3 Posting to a Previous Period after a Price Change

295

7.5.4 Stock Shortage in the Current Period

297

7.6 Several Accounting Documents during LIV

298

7.7 Closing Previous Period for Posting

299

7.8 Summary

300

8 Accounts Payable Invoice from Materials Management

301

8.1 Logistics Invoice Verification

301

8.1.1 Functional Basis

302

8.1.2 SAP Functional Design

302

8.1.3 Checkpoints and Real-Time Issues

305

8.1.4 Technical Elements

305

8.1.5 Troubleshooting Tips

306

8.2 Incoming Invoice

306

8.2.1 Functional Basis

307

8.2.2 SAP Functional Design

307

8.2.3 Checkpoints and Real-Time Issues

309

8.2.4 Technical Elements

310

8.2.5 Troubleshooting Tips

312

8.3 Invoice Verification Online

313

8.3.1 Functional Basis

313

8.3.2 SAP Functional Design

313

8.3.3 Invoices for a One-Time Vendor

319

8.3.4 Duplicate Invoice Check

323

8.3.5 Checkpoints and Real-Time Issues

325

8.3.6 Technical Elements

329

8.3.7 Materials Management, Financial Accounting, and Controlling Interface for Transaction MIRO

330

8.3.8 Business Transaction Events (Open FI)

331

8.4 Invoice Parking

332

8.4.1 Functional Basis

332

8.4.2 SAP Functional Design

332

8.4.3 Integration with Financial Accounting

335

8.4.4 Checkpoints and Real-Time Issues

336

8.4.5 Troubleshooting Tips

337

8.5 Prepayment

337

8.5.1 Functional Basis

337

8.5.2 SAP Functional Design

338

8.5.3 Checkpoints and Real-Time Issues

339

8.5.4 Troubleshooting Tips

340

8.6 Invoice Verification in the Background

341

8.6.1 Functional Basis

341

8.6.2 SAP Functional Design

342

8.6.3 Technical Elements

343

8.6.4 Checkpoints and Real-Time Issues

344

8.6.5 Troubleshooting Tips

345

8.7 Account Determination

345

8.7.1 Principles of Financial Accounting Integration in an SAP System

345

8.7.2 Functional Elements of Account Determination

347

8.8 Purchase Account Management

347

8.8.1 Postings at Receipt Value

348

8.8.2 Postings at Stock Value

348

8.9 Direct Posting

349

8.9.1 Posting to SAP General Ledger Accounts

349

8.9.2 Posting to a Materials Account

351

8.10 Posting Taxes

352

8.10.1 Types of Taxes

353

8.10.2 Proposal Logic for Tax Codes

355

8.10.3 Settings for Taxes in Customizing and in Master Data

357

8.10.4 Technical Flow and Architecture

358

8.10.5 Technical Details of Tax Calculations

359

8.11 Cash Discount

360

8.11.1 Cash Discount Base

361

8.11.2 Cash Discount Postings

361

8.12 Summary

365

9 Variances and Blocking of Invoices

367

9.1 Invoice with Variances

367

9.1.1 Quantity Variance

368

9.1.2 Price Variance

372

9.1.3 Quantity and Price Variance

377

9.1.4 Order Price Quantity Variance

382

9.2 Invoice Blocking

385

9.2.1 Functional Basis

386

9.2.2 SAP Functional Design

386

9.2.3 Checkpoints and Real-Time Issues

393

9.2.4 Technical Elements

393

9.2.5 Troubleshooting Tips

394

9.3 Invoice Release

396

9.3.1 Functional Basis

396

9.3.2 SAP Functional Design

396

9.3.3 Checkpoints and Real-Time Issues

399

9.3.4 Technical Elements

400

9.3.5 Troubleshooting Tips

401

9.4 Delivery Costs

402

9.4.1 Planned Delivery Costs

402

9.4.2 Unplanned Delivery Costs

407

9.5 Total-Based Differences

412

9.5.1 Functional Basis

412

9.5.2 SAP Functional Design

412

9.5.3 Checkpoints and Real-Time Issues

414

9.5.4 Technical Elements

415

9.5.5 Troubleshooting Tips

415

9.6 Invoices for Purchase Orders with Account Assignment

416

9.7 Entering Invoices in a Foreign Currency

418

9.7.1 Parallel Currencies in Material Ledger

420

9.7.2 Parallel Local Currencies in Financial Accounting

421

9.7.3 Exchange Rate Rounding Difference

421

9.7.4 Exchange Rate Differences for Standard Price-Controlled Materials

422

9.8 Summary

430

10 Additional Functionalities in LIV

431

10.1 Valuation and Account Determination

431

10.1.1 Influencing Factors

432

10.1.2 Organizational Level Dependency

433

10.1.3 Account Determination of Stock Materials

434

10.1.4 Account Determination of Consumable Materials

441

10.1.5 Simulation

443

10.2 Automatic Settlements

445

10.2.1 Evaluated Receipt Settlement (ERS)

445

10.2.2 Consignment and Pipeline Settlement

450

10.2.3 Revaluation

453

10.2.4 Invoicing Plan Settlement

457

10.3 Messages in Logistics Invoice Verification

459

10.3.1 Areas of Messages

460

10.3.2 Message Schema

461

10.3.3 Outputting Messages

461

10.4 Credit Memos, Returns, and Reversals

462

10.5 GR/IR Clearing Account

466

10.6 Summary

470

11 Conclusion

471

11.1 Lessons Learned

471

11.2 Additional Resources

474

Appendices

477

A Optimizing the Integration between Materials Management and Financial Accounting

479

A.1 Screen Layout

479

A.2 Validation

481

A.3 Substitution

483

A.4 Technical Elements of Validation and Substitutions

483

A.5 Enhancements

486

B Commonly Used Abbreviations

489

C References

493

D Useful Links

495

E The Author

499