Process Flow – SAP Material Management

The Following is the major process flow of SAP Material management. There will be many sub processes in between the following major processes. We will discuss this in coming chapters,                                 

The Above is the basic procurement cycle. It covers from requirement gathering to payment process.

Requirement Gathering

            This is the first process in the procuring material and Services. We have to identify and Consolidate our requirement with all required details and specifications  as a part of requirement gathering.  

Purchase Requisition (PR)

            Once requirement is cleared, We will create the request for the procurement and the same is called as “ Purchase Requisition “ in SAP. It will cover all the details of the requirement including – Qty, Specification, Material texts, Approx. Price, Expected delivery dates…. Etc. it is internal document. 

            Once the Purchase Requisition created, it will go for approval process. This is known as Purchase requisition Release Strategy. It can be configured as per our requirement. Once it is released, it will be available to the commercial or Purchase department for further processing  – Ordering. 

Purchase Order (PO)

            Once PR is released, it will be available to the commercial team for further processing. Commercial will process the PR and Release a purchase order to the specific vendor. PO is a legal document between company and Supplier. The following Processes will be done once PR Received.

       –      Floating Enquiries to suppliers/ Request for Quotation( RFQ/RFx)
 –         Quotations / Price Comparison
 –         Finalizing the vendor
 –         Purchase Order Creation
 –         Releasing the Purchase Order to supplier

 Goods Receipts (GRN)

            Once PO is released, Partners will deliver the materials as per the PO Terms and Conditions. Once the Goods received at our place, we will inspect and create a receipts in the SAP. It is called as Goods Receipt Number, Short form is “ GRN” . This process will be taken  care by Stores Department
            Once Material received, the respective materials will be tested and capture the testing results to clear the materials to process the payments. 

Payments Processing

            Once Materials accepted by the respective user, Then it will be processed and payments released to the supplier as per the agreed payment terms. These activities will be handled by the Finance Team.