Purchasing Process

Objective: The objective of this project is to review and consolidate the knowledge gained about the procurement process in materials management.

Scenario: The engineering department has modified the design of the Tour Master 1600. This design modification has created the need to purchase a new raw material (the frames). After creating this new material, you will need to select a vendor through the bidding process. The engineering department has provided a list of approved vendors for the bidding process. They also want a contract set-up for this item.
Demand during the contract period is 1000 units. Receive these in equal amounts on four purchase orders (release orders). But you will only receive one invoice and make one payment.

In this project, you will be performing the following tasks:

1. Creating a raw material
2. Create a vendor
3. Creating requests for quotations (RFQ’s) from four approved vendors for RFQ
   quantity of 100
4. Maintaining the quotations
5. Compare the Price
6. Creating a quantity contract (MK) for 1000 units with th selected vendor
7. Creating four Purchase Orders with 250 units each with reference to the contract
8. Create a Release order for your contract
9. Posting the Goods Receipt for the Purchase Order
10. Receive one invoice for the four purchase orders
11. Display vendor line item
12. Make one payment to the vendor
13. Display vendor line item
    1. Creating a Raw Material

• Material number = 844-XXX (MSI Frame)
• Industry sector = Mechanical Engineering
• Reference material = 3300-230
• Select views:
• Basic data 1
• Basic data 2
• Purchasing
• Purchase order text
• General Plant Data/Storage 1
• General Plant Data/Storage 2
• Accounting 1
• Accounting 2

• Plant = 3000 Copy from Plant = 3000
• Storage location = 0001 Copy from Storage location = 0001

Use Assignment #1 to input same info for all views except Accounting 1 view.

On Accounting 1 view:

• Price control = V
• Mov. Avg. price = 800
• Standard price = 800

i.  Write down the message on the status bar. _______________________________

2. Creating a vendor

• Vendor number 25XX
• Company code 3000
• Purchasing Organization 3000
• Account Group LIEF (Vendors)

Note:  you can reference the vendor you created in exercise 1 to copy the data. 

3.   Creating requests for quotations (RFQ’s) from four approved vendors for RFQ 
      quantity of 100 for material 844-XX

              Approved Vendors          Bid (quote)

• 4400 $820
• 4499 $810
• 4498 $815
• 25xxx $800

ii. Write down the document numbers for the quotations posted.
1. ______
2. ______
3. ______
4. ______

4.    Maintaining the Quotations  

• Maintain the RFQ’s for all the four vendors with their bidding prices written above next to approved vendors in 3.

5.   Compare the Price

• Compare the price of all the vendors and select the vendor with best price.

6.   Creating a Quantity Contract (MK) for 1000 units for the material 844-XXX

      Note:  The validity period should be 12/31/2012 (The contract is good until 12/31/2012).

iii.  Write down the Contract number. _________________

7.  Creating four Purchase Orders with 250 units each with reference to the Contract

iv.  Write down the purchase order numbers.  1.  ________________________
                       2.  ________________________
                                                                                           3.  ________________________
                                                                                           4.  ________________________

8.   Write down the Statistics for your contract  

v. Write down the:
(a) Target Quantity ____________________
(b) Open Quantity _____________________
(c) Purchase Order)s) Quantity __________
(d) Purchase Order Value ______________

9. Posting the Goods Receipt for the Purchase Order

• Receive the goods in unrestricted stock for all the four purchase orders.

vi. Write down the material document numbers. 1. ___________
2. ___________
3. ___________
4. ___________

10. Receive One Invoice for the four Purchase Orders --- verify invoice Hint: On “Enter Invoice: Initial Screen”, select “More Allocation Criteria” button and
    enter all Four purchase order numbers and Click on Adopt . Note: Ignore any messages by clicking on Enter.

vii. Write down the invoice amount and Invoice number

viii. What is the advantage of receiving one invoice? ______________
______________________________________________________

11. Display Vendor line item

Accounting  Financial Accounting  Account Payable  Account  Display/Change line items

Enter your vendor number, company code, select all items radio button and Execute.

ix. What is the status of the vendor line item and the amount _

12. Make One payment to the vendor

(x) Write down the i. Debit amount __________
ii. Credit amount __________
iii. Discount amount __________

Note: Deduct the 3% discount from the open item if paying within 14 days.

13. Display vendor line item

xi. Write down the status of vendor line item. ________

xii. Why is the light is green now? __________________

Name ____
Project Section # _
Points: 25 Assigned # _
Due Date:
Purchasing Process

i. Write down the message on the status bar.______________

ii. Write down the document numbers for the quotations posted.
1. ______
2. ______
3. ______
4. ______

iii. Write down the Contract number. _____

iv.  Write down the purchase order numbers.  1.  ________________________
                       2.  ________________________
                                                                                           3.  ________________________
                                                                                           4.  ________________________

v. Write down the:
(a) Target Quantity ____________________
(b) Open Quantity _____________________
(c) Purchase Order)s) Quantity __________
(d) Purchase Order Value ______________

vi. Write down the material document numbers. 1. ___________
2. ___________
3. ___________
4. ___________

vii. Write down the invoice amount and Invoice number

viii. What is the advantage of receiving one invoice? ______________
______________________________________________________

ix. What is the status of the vendor line item and the amount

x. Write down the
i. Debit amount __________
ii. Credit amount __________
iii. Discount amount __________

xi. Write down the status of vendor line item. ________
xii. Why is the light is green now? __________________

Sample Solution