Document Sign-off sheet

Import Purchase Process

Bavarian Auto Group (BAMC)
Process Definition Document Sign-off sheet

<Mr. Tharwat>
<Kaustav Basu>
<Ahmed Halim>
<Jagadeesan.T>

________________ ________________
<Process Leads, BAG> <Process Lead, IBM>
 Document Sign-off sheet ................................................ 1
Import Purchase Process ....................................................................................................................... 1
Bavarian Auto Group (BAMC) ............................................................................................................ 1
Process Definition Document Sign-off sheet ........................................................................................ 1

2. Process Flow ............................................................... 3

2.1 General Explanation ........................................................................................................... 4
2.2 Explanations of Functions and Events............................................................................. 4
2.3 Special Organization Considerations ............................................................................... 6

3 Organization Impact .................................................. 7

3.1 Changes to Existing Organization .................................................................................... 7
3.2 Description of Improvements ............................................................................................ 7

4 Gaps ............................................................................ 7
4.1 Description of Functional Deficits – .................................................................................. 7
4.2 Approaches to Covering Functional Deficits - (Gap Resolution) ................................. 7

5 Key Integration Areas ................................................ 7

6 Key Considerations (as applicable) ......................... 8
6.1 Interface Considerations .................................................................................................... 8
6.2 Reporting Considerations .................................................................................................. 8

7 List of Business Process Procedures [BPPs] ........ 8

8 List of AS-IS Process Covered ................................. 9

1. Requirements / Expectations
Procurement of materials from overseas vendors required for production activities for BAG-BAMC
(CKD/SKD) will be covered in this process.

The objective of this process is to ensure that import of production items is carried out effectively.

This document addresses how these requirements are ensured, also lists scenarios wherein import
process works.
2. Process Flow

The following flow-chart depicts the process flow of the activities:

Requirements from Production

Plan / orders in hand/ BOM/Annual
Consumption

Create PR (Manual/MRP)
ME51N

Release /Approval of PR
ME55

Create RFQ ref. to PR Send RFQ to vendor

(ME41)
Optional
Receive Quotations
From Vendor
Create Quotation ref. to
RFQ (ME47)
Optional

PO can be created directly from

PR.RFQ/quotation is optional

Create Purchase Order Directly

or ref. to RFQ or Contract
(ME21N)

Release of PO (ME28)

Appoint Forwarding Agents

(if applicable)

Payment of Customs Duty-MIRO Commercial Invoice

GR at BAMC – Factory Gate

Entry
(MIGO) 103 Material stock will increase.
Material will be under block stock.
No accounting doc generated
Goods Receipt at Stores
(MIGO) 105
 Release GR block stock. Material
will come to unrestricted stock.
Ready to use
Invoice Verification to import
vendor -Material (MIRO)

2.1 General Explanation

Import is the process through which production Items from overseas vendors for BAG-BAMC is
arranged. SAP R/3 offers different transaction to be carried out from Purchase Requisition to Purchase
Order. The documents involved in the purchasing cycle are: Purchase Requisition, RFQ (Optional),
Quotation (Optional), and Purchase Order.

2.2 Explanations of Functions and Events

Create Purchase Requisition:

A Purchase Requisition (PR) is an internal request to purchasing. In this we ask the buyer to provide a
certain quantity of a material on a certain date.

Purchase Requisition would be raised by different department as per their business requirements.
Purchase requisition would be raised through MRP run.

Purchase Requisition can capture other information as plain text. Files (specifications, datasheets etc.)
can be attached to the Purchase Requisition in SAP system.

Release of Purchase Requisition: A release procedure for purchase requisitions can be set up.
According to certain conditions, we can determine that a purchase requisition item can only be approved
for an RFQ or purchase order, once it has been released in sequence by certain persons or departments.

The release code is a two digit code associated with the user profile. It designates the person or group
with authorization to release a requisition item.

The different release conditions are Purchase group, Document type, Plant. Approval Level for PR is Section Head, Department head

Create RFQ (Request for Quotation): A product can be sourced from different sources with negotiable
prices and delivery terms. This is done via a Request for Quotation (RFQ).

A request for a quotation (RFQ) would be created with reference to a purchase requisition or without
reference to Purchase requisition. The RFQ can be sent to one or more vendors and linked together using
the Purchase Requisition number.
Request for Quotation can capture other information as plain text. Files (terms & conditions,
specifications, data sheets etc.) can be attached to the RFQ in SAP system.

Create Quotation: When quotations are received from the vendors, the pricing and delivery data is
entered for the respective RFQ in the form of a quotation. The RFQ and the quotation document number
are the same.

Quotation data can be compared using a price comparison list. The price comparison list displays
comparison of vendors for an individual item and for all the items. The only criteria used for quotation
comparison is price.

Any changes (price per unit) in Quotation after doing the final negotiations with the vendor can be made.
The comparison with the old price is not possible and the comparison is always with new price.

We can place the Purchase Order to any of the short listed vendor there is no limitation in SAP that we
have to give the Purchase Order to the lowest quote vendor.

After doing the vendor price comparison, the Purchase Approval Note for creating the Purchase Order will
have to be created.

Quotation can capture other information as plain text. Files (supplier’s offer docs.) can be attached to the
Quotation in SAP system for future reference.

Create Purchase Order: A purchase order is a legal contract to a vendor requesting for supply of certain
materials under certain conditions (quantity, price/pricing conditions, delivery date).

A purchase order can be created with reference to a Quotation - RFQ & PR and if it is a repeat order, it
can be created with reference to an old Purchase Order No.. Purchase Orders can also be created
directly with the material specification & data available in Bill of Material generated by Design Dept.

All items on a purchase order must belong to the same company code; purchase organization i.e. the
header condition for all the items in PO should be same.

The purchase order history shows all transactions that have been entered for an item. For example, in the
ideal purchasing flow, the PO History would show the goods receipt document number and the invoice
receipt document number. From the PO History, one can branch directly to the display mode of one of
these documents.

Purchase Order can capture other information as plain text. Files (Safety precautions and standard
instructions, Special Conditions of Contract,) can be attached to the Purchase Order in SAP system.
Specifications mentioned in are printed or mailed along with PO.

Release for Purchase Order: A Release Procedure for Purchase Order can be set up. According to certain
conditions, we can determine that a purchase order item can only be approved for a goods receipt once it
has been released in sequence by certain persons or departments.

The release code is a two-digit code associated with the user profile. It designates the person or group
with authorization to release a requisition item.

The different release conditions are Document type, Plant, Purchase Organization

Purchase Orders will be approved by the Section Head, Department head.

After releasing the Purchase Order, the printout of the Purchase Order can be generated and accordingly
sent to respective vendors/e-mailed. The specifications of Job Specific materials mentioned in Sales
Order Bills of material will also be sent along with Purchase Order.

Appointment of Forwarding Agents: In case the delivery terms are on Ex-works or FOB shipping port
basis, a Forwarding Agent has to be appointed for organizing shipment of consignment to the entry Port
in Egypt. The vendor code of the forwarding agent is assigned to delivery condition type forwarding
charges in the PO.

Payment of Customs Duty & Clearance of Consignment (Commercial Invoice): Payment of

Customs duty (in case of duty-paid consignments) is arranged at the relevant Customs House and the
consignment cleared for onward dispatch to BAG. The vendor codes of Customs House & clearing
agents are assigned to delivery condition type forwarding charges in the PO.

Goods Receipt for Purchase Order: The consignments forwarded from the Port are received at Main
Gate, The Purchase order number, Invoice No. Quantities are entered. The stock is posted to GR
Blocked Stock. Physical counting is done at receiving stores and stock is posted to Quality Inspection
Stock. Quality Personnel will inspect and post the stock to unrestricted use stock and Quality Blocked
stock. The stock is always received as Sale order stock for Job Specific materials

Invoice Verification to Import Vendor: As per BAG business requirement, the Invoice verification will
have only one stage

1. Posting verified Invoice

Posting of the Verified Invoice will be done by the Finance Department. Posting of Vendor Invoice will
create an accounting document which will credited vendor account.

International Purchasing section will follow up for the payment of shipping lines, forwarders, insurance,
clearance, etc… after receiving the invoices to avoid any delays.

Planning Dates:

ETD from BMW AG and ETA at Egypt port date will be maintained in PO. These dates need to be
updated manually by buyers in BAMC. Planned delivery time in days to be maintained in Material master
and this will reflect in PO delivery date.
Actual receipt date at plant can be obtained from Goods Receipt document, which is created upon receipt
of material at BAMC.
Standard SAP reports are available to get the details of the above parameters.

Defective and Shortage Material Process:

Based on the MCDR raised and return delivery created by the Warehouse, the International Purchasing
section will process the Orders and Claims to the suppliers.
International Purchasing section will follow up with the supplier and ensure that the shipment arrives at
BAMC. Then Warehouse will inspect and receive the shipments against the same Import Purchase Order.

2.3 Special Organization Considerations

As Customs House is situated at Egypt, close co-ordination is required amongst BAMC Purchase,
Finance & Purchase Office at Egypt.
3 Organization Impact

3.1 Changes to Existing Organization

Bavarian Auto Group has 4 company code BAMC, BATC, RATC, ECHF has same kind of commercial
Purchase from 3 company codes (BAMC, BATC, RATC), and has no impact on there existing business.
As this is the fresh implementation so there will be no change to the existing Organization structure.
The Import Process of BAMC is currently happening in Legacy System. With implementation of SAP there
will be a change in Purchase Process. The employees will also have to be trained in SAP process.

3.2 Description of Improvements

The SAP Import Purchase Process provides the visibility of Purchase Requisition, RFQ, Quotation,
Purchase Order with release strategy, Goods receipt, Commercial Invoice, Invoice Verification. All these
documents will have their unique number assignments which will be easy to search by different
organizational unit such as by company code, plant, purchase organization, purchase group, document
type from different SAP standard reports.

4 Gaps

4.1 Description of Functional Deficits –

Output types (documents in output form) are an important means of communication with vendors.
Purchasing Output types is the PO Printout, which will be developed based on the BAG-BAMC Egypt
business requirements.

4.2 Approaches to Covering Functional Deficits - (Gap Resolution)

1. Technical change process will be covered under ABAP enhancement for BAMC requirement.
2. Need to develop new Layout for the Purchase Order Printouts, Goods Receipt Printouts

5 Key Integration Areas

 Integration with FI and PP
 6 Key Considerations (as applicable)
6.1 Interface Considerations

6.2 Reporting Considerations

The reports are covered under Reporting Requirements.
1. List of PO by vendor wise ME2L Purchasing document per Vendor
2. List of PO by material wise ME2M Purchasing document by material
3. List of PO by Orderwise MB52 Purchasing documents by Orderwise
4. List of PO by material group wise ME2C Purchasing document by material group
5. List of PO by tracking no wise ME2B Purchasing document by tracking no
6. Find PO by number ME2N Purchasing document by PO no
7. List of PO by plant wise ME2W Purchasing document by plant wise
9. List of PO splitting there line item ME80FN Purchasing document by line item wise
10. PO order value analysis ME81N Purchasing document by order value
7 List
11.
12.
List of PR by material, plant wise ME5A General list of Purchase Requisition of
List of Account assignment PR ME5K Purchase Requisition by accounting
13. List of PR by project wise ME5J Purchase Requisition by Project wise Busin
15. List of RFQ/Quotation by vendor ME4L RFQ/Quotation by Vendor ess
16. List of RFQ/Quotation by material ME4M RFQ/Quotation by Material
17. List of service RFQ/Quotation MSRV4 RFQ/Quotation by Services Proce
18. List of RFQ/Quotation by material ss
group ME4C RFQ/Quotation by Material Group
19. List of RFQ/Quotation by tracking no ME4B RFQ/Quotation by Tracking no Proce
20. List of RFQ/Quotation by RFQ no ME4N RFQ/Quotation by RFQ no dures
21. RFQ/Quotation by line item wise ME80AN General analysis
22 Stock Overview MMBE Stock overview by material [BPPs]

1 Creating Purchase indent ME51N / 52N / 53N Create / Modify / Display Purchase Requisition
2 Approval of Purchase indent ME55 Release Purchase Requisition
3 Creating Request for Quotation ME41 / 42 / 43 Create / Modify / Display RFQ
4 Receive Quotation from vendor ME47 Create Quotation
5 Comparisons of different vendor Quotations ME49 Price comparison of Quotations
6 Create Purchase order with ref to Quotation ME21N / 22N / 23N Create / Modify / Display Purchase Order
7 Approval of Purchase Order ME28 Release of Purchase Order
8 Printing of PO ME9F Print PO / Print preview
8 List of AS-IS Process Covered

1. Commercial Department procedure