Presentation on procure to pay cycle.pptx

procure to pay cycle

1. PROCURE TO PAY (P2P) Presented by CYCLE

2. P2P Cycle The procurement process typically starts with the requirement of a material or a service and ends with processing payment to the supplier. In industry terminology, this is called the procure to pay (P2P) cycle.

3. Overview of P2P Cycle

4. Determination of requirement If any department needs materials or services like Production department needs raw materials HR department need office supplies Services or consumables material requirements.

5. Types of procurement Direct material procurement Indirect material procurement Blanket procurement Services procurement Consignment procurement Subcontracting procurement Third-party procurement Outline agreements Stock transfers

6. Direct Procurement Direct procurement is the process of purchasing materials, resources or goods & services that are directly utilized in the core operations of a business. The steps are follows: - PR (Material, Vendor, Quantity) PO (Valuation Price) GR (Delivery Note, Item OK) IR (Date, Tax Code, PO Number).

7. Purchase Requisition Purchase requisition is an internal document and moves within company for approval A Purchase requisition can be converted into RFQ/Outline agreement/PO. PR can be released at Header level (with classification) / Item level (without classification). PR can be created with/without source. T- codes for purchase requisition To create = ME51N To change = ME52N To display = ME53N To release = ME54N List Purchase Requisition = ME5A

8. Request for Quotation (RFQ) RFQ is an external document The RFQ process enables buyers to evaluate suppliers based on pricing, quality, delivery capabilities, and value-added services Collective number is used to identify the relevant quotations. It is a number that enables you to track all RFQ for a given competitive bidding processes. T-Codes for creating RFQ Create RFQ - ME41 Maintain Quotation - ME47 Compare Quotation - ME49

9. Purchase order creation It is an outgoing / external document It is a commitment from company It can also be called an ultimate document because of its features Last minute changes of Price, quantities and delivery dates can be possible Scales can be maintained Free goods can be maintained You can create purchase order by two ways Manually  ME21N / ME22N / ME23N Automatically  with respect to PR, RFQ, Contract and another PO

10. Goods Receipt Goods Receipt with reference to PO value. Material document and Accounting document creation after posting The material document updates the stock in inventory, and the accounting document updates the G/L accounts in Financial Accounting (FI). Resulting to Inventory Update Update of G/L accounts Updates in the Purchase order history and status Update in material costing (Moving average price).

11. Invoice Verification Logistics Invoice Verification checks incoming invoices for accuracy with regards to content, price, and accounting. The main task of Logistics Invoice Verification is to complete the procedure of materials procurement by posting the vendor invoice and passing on the invoice information to Financial Accounting (FI) and subsequent applications. Invoice posting also updates the PO history Invoice date is the date printed on the invoice, Posting Date is the date on which you want to post the invoice

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13. Purchase info record It is a relation between a specific material supplying to a specific plant by a specific vendor along with his pricing, terms & condition. PIR can be maintained at the plant level or purchasing organization level. Purchase info record Material Vendor

14. Source List The source list is a type of Master data that contains a list of all possible sources of supply for a material in a specific plant for a certain period of time. There is no number range or Document type for Source List, Material no itself is a source list no. Source list can be created by following ways: - Automatically Source list can be created automatically from a purchasing info record and an outline agreement. Manually  (T-Code  ME01) Prerequisite / Mandatory for Source list  Purchase info record To view the source list T-Code  ME0M Source list Material + Plant Vendor A Vendor C Vendor B