SAP MM

There are two types of business transactions 1) B2B (Business to business)

2) B2C (Business to Customer)

General life cycle of procurement (Example: Star Bucks) for after amount of order is determined

1) Purchase order is created

2) Vendor is selected

3) Budget approved

4) Order is placed

5) Goods received

6) Quality inspection is done

7) Coffee is stored

8) Coffee is issued

NOTE: In a B2B scenario amount is paid after goods are received.

To execute a Purchase Order in SAP (GUI) go to Logistics->Materials Management->Purchasing-

>Purchase Order->Create

To enable Transactional Codes go to extras and click setting and check the checkbox of Display Technical
Names.
PROCUEMENT LIFE CYCLE:

1) Purchase Order

1) Goods Receipt

2) Invoice

4) Payment

Purchase Order Creation: (ME21N)

First to create a Purchasing Order we need to create or search for vendor, to search for the already
created Vendor there is a Drop-Down beside the Vendor Field.

For searching we need to enter a search Criteria for example to search for vendor in Chennai in the city
field enter Chennai and hit the green icon.

We need to enter Purchase Org, Purchase Group and company data to create a Purchase order.

There are three sections In Purchase Order. They are 1) Header 2) Line Item 3) Line Item Details.

Header Details are automatically created when we enter vendor details.

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Line Items are generally Materials you want from the vendor.

Note: when you want to search anything which you are unclear about how it is called then use *material
name*(Example: *flour* you don’t know how flour is saved like Wheat flour or rice flour etc.)

To create a line item you need to enter material, plant, net price, quantity

Note: Don’t forget to remember the Purchase Order number after u created it

Changing a Purchase Order: (ME22N)

We can print preview PO in this screen and you can’t print actually in this screen

ME9F to print a purchase order

What is the Search Criteria to select a vendor in PO CREATION?

ANS) City, Postal Code, Name, Country, Address.

What is the ORG data that is entered in PO header?

ANS) Purchasing Organization, Purchase Group, Company Code.

Can you enter a Zero quantity at line item level?

ANS) No

What is the material number for hard wheat flour?

ANS) CP-FD1105

What is the error message you will get when you enter Plant No 3100 to the Material hard wheat
flour?

ANS) Material not maintained for Plant.

Use Plant 3200 for hard wheat flour material and enter a price of $2 for lb.

ANS) order quantity violates rounding rules.

GOODS RECEIPT: (MIGO)

In the hierarchy goods receipt will be under follow on functions in purchasing section.

If you don’t remember the PO number you can search it by using different fields like Vendor, Purchase
Document etc.

Before Posting the Document Click check for any errors

NOTE: (Posting is only possible in Periods 2006/12 and 2006/11 in company code 3000) this is a error
message which we will see in almost every training system because of not updating the accounting
system. So to remove this error need to change the close periods for material master records.
Transaction Code MMPV. Open this and put your company code in from and to fields. Enter the Old
closing period and click ok then enter the new opening period until u acquire what u want.

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We can have only to periods in SAP.

Another common error while performing Goods Receipt Transaction is Enter Storage Location to
remove error enter storage location

Another error is Posting period xxxxxxx is now not open this is a financial posting error. To fix this
issue Open OB52. Enter your company code and Ending year as current year.

MMBE: Check Stock Levels

Logistics->Materials Management->Inventory Management->Environment->stock->Stock Overview

(MMBE)

Open it and enter material number and hit execute

To see the relation b/w Purchase order and Goods Receipt, open purchase order and open purchase
order history tab.

Open Change/Display (ME22N/23N) and click purchasing history tab. Purchasing history tab is visible
only if you create subsequent Good’s receipt.

Q/A:

What is the transaction code to create a goods receipt?

MIGO

List all the Storage locations that is associated with the XXXX plant

We can do it in 2 ways i.e. we can do it in PO or G/R. In PO open PO and beside Plant you can see
Storage Location and click on double arrows and you will get all the Storage Locations associated with it.
Open G/R and below plant we have storage location field and click on double arrows and you will get all
the Storage Locations associated with it.

Do you have to enter quantity in MIGO?

No there is no need to enter quantity in MIGO as we have entered quantity while creating PO

What is the error message you get when you save MIGO without flagging the item is OK?

You have not flagged any item as OK.

Can you receive more quantity than Ordered PO?

No

T-Code to check Stock Level

MMBE

INVOICE CREATION (MIRO):

Go to Purchasing Go to Follow on functions and click on Logistics Invoice Verification.

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First Enter Purchase Order Number and enter Invoice Date and enter the amount you want to create the
Invoice.

You can also see the Invoice details in PO history.

To view the previous purchase order click on

Above shaped Icon and enter Purchase Order number. Similar to G/R in Invoice also we need to create
subsequent PO.

What is the Transaction code to create an Invoice Receipt?

MIRO

Does PO history show the Invoice Details Posted?

Yes if the Invoice created is for the Subsequent PO.

What happens when the difference amount is large? (Say the invoice received is 50% more than the
expected value in the PO)?

Generally in SAP there is some level of tolerance i.e. let’s say the PO is created for 400 and invoice is
generated for 410. It depends on the configuration.

Do you have to check the OK box at the line item level?

No it is not required.

VENDOR PAYMENTS: (F-53)

This generally done by the FICO team.

To pay to the Vendor go to the Accounting section->financial accounting->Accounts Payable->Document

Entry->Outgoing Payment->Post.

Enter account number in the bank data section i.e. enter bank account number and in the below Open
Item Selection section enter Vendor number in the account field
After submitting it will show all the Outstanding invoice line items (pending to be paid)

NOTE: The Goods receipt and Invoice receipt are done with reference to the Purchase Order but the
Vendor payment is done with reference to the Accounting Document.

What is the Transaction Code to Create a Vendor Payment?

F-53

Do you have to reference a Purchase order or an invoice receipt to pay to the Vendor?

No we refer an Accounting document

Is the Vendor Payment “Accounting “document recorded in the PO History?

No

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Summary of Procurement to pay cycle:

First we create a Purchase Order as per our requirement and the vendor sends the Goods along with the
Goods receipt and after we confirm we received the goods he will send us the Invoice Receipt and we
initiate the Payment.

COMPANY CODE: (OX02)

A company code in SAP is called the legal entity outside the SAP.

To create a Company Code go to TOOLS->Customizing->IMG->Execute project and then click on SAP

Reference IMG.

Creation of Company Code is Part of Enterprise Structure, Go to Enterprise Structure and expand it and
you will see mainly two things Definition and Assignment.
To create Company Code open Definition Menu and Financial Accounting and go to Define Company if
you want to create a company from the Scratch and go to Edit, Copy, Delete, Check Company Code if
you want to do changes to the Existing Company code or save as a company code. The Later one is the
best practice.

Open it double click on it or click on choose button and then click on Copy button which looks like two
pieces of paper. Then a pop-up asks from which company code to which company you want.

After everything is done SAP gives you a unique number called Customizing Request.

PLANT: (OX10)

Plant is also an enterprise structure which under company code.

Tc create a Plant Go to enterprise structure->Logistics general-> Define, copy, delete, and check Plant.
In the pop-up enter from and to plants.

Storage Location: (OX09)

To create a Storage Location go to enterprise structure->Definition->Materials Management->Maintain

Storage Location.
After clicking on it will ask you to enter the plant to which you want to correspond this Storage Location
and you will get all the storage locations corresponds to that Plant.
You can delete if you want and you can create new Storage Locations as well.

Purchase organization:

The creation path for this is same as Storage Location. In materials management menu click Purchasing
organization.

Purchasing Group: (SPRO)

To create go Materials Management->Purchasing->Create Purchasing Groups.

Create a new Purchasing Group for all the raw materials related to baked goods

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Is the Purchasing group is an enterprise class structure?

Assign the enterprise structure elements:

When you create a Storage Location it is automatically assigned to a plant.

But the plant is not assigned to the company code, Purchasing org is not assigned to plant so to assign
we need to go to Enterprise structure->Assignment->Logistics general->Assign Plant to company code.

Similarly for purchase org in logistics general go to assign standard purchasing organization to plant.

A company registered with the government is set up in SAP as ----

Company Code

Can plants be assigned to more than one Storage Location?

Yes

Will each transport request gets a unique number?

Yes

Can Purchase org can be assigned to a storage location?

No

Can 1 plant can be assigned to more than 1 company code?

No

What are the 2 main sections that enterprise class structure has?

Definition, Assignment

How to create a company code US02 as copy of 3000?

How to Create a Purchase org US02 as copy of 3000?

How to create a plant as copy of 3100?

How to create several storage locations to a single plant?

Can you create Storage locations without assigning to a plant?

No

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How to assign a plant to a company code?

How to assign a purchase org to the plant?

Do you need to assign purchasing org to company code?

Not necessary

To create a Vendor go to Logistics->Materials Management->Purchasing->Master Data->Vendor-

>Central->Create

T-Code to create a vendor is XK01

Note: In SAP number ranges is defined as the range of the numbers that can be assigned to an object.

Note: To fix the jurisdiction errors enter OBBG T-Code and open it and against US in the tax procedure
enter TAXUS (This error comes only with US a Country)

To set the Tax rates for the Input and output use FTXP

To create a Material go to Materials Management->Material Master->Material->Create

T-Code to create Material MM01

when creating a Material select Basic data, Purchasing, Accounting and also don’t forget to assign a
plant to your material.
There are two pricing types Standard and Moving price.

Note: When creating a G/R if u encounter an error saying that For Object RF_BELEG US01, number range
interval XX doesn’t exist FBN1. To resolve this go to transaction fbn1 select the company code then
click on intervals with pencil ICON then go to edit and click on insert intervals then enter the XX
number and remaining fields.

To resolve number ranges errors go to FBN1 transaction.

How to create a new material?

To create a material go to T-Code MM01 and enter material name, Industry Sector, Material Type and
click ok then select Purchasing, Accounting, and Basic Data check boxes and assign the material to a
plant. In Basic Data Screen give material description, Basic unit of measure and Material Group and in
Purchasing Screen enter Purchasing Group and in the Accounting Screen enter valuation Class, Price
Control and Unit Price.

Create a new vendor for supplying coffee beans. Give it this address Name: Gourmet coffee company
LLC 2000N, XXXXXXXXXXXXXXXXXXXXXXXXX

To create a vendor go to T-code XK01

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Order 10 kg of coffee beans from the newly created vendor. Issue PO output.

To Create a PO go to T-Code ME21N and enter the Vendor, Company Code, Purchasing Group,
Purchasing Organization, Quantity, Plant.

Do a G/R and I/R for the PO Created

To Create a G/R go to T-code MIGO and for I/R MIRO. There are Movement types in G/R

Check Stock levels and ensure your stock is increased by 10 KG.

Go to T-code MMBE

Master Data:

Generally there are two types of master data 1) Material Master Data 2) Vendor Master Data

In SAP every material has a number of views.

Basically a View is a set of data that you can see when you go to that particular view.

These are some of different views in SAP

1. Manufacturing
2. Planning
3. Quality
4. Warehouse/Storage
5. Accounting
6. Costing
7. Purchasing
8. Sales

The Parameter in SAP that dictates what kind of views a material should have is Material Type.

1. FERT- Finished Goods

2. ROH- Raw Materials
3. HALB- Semi-Finished Goods
4. NLAG- Non-Stock Materials
5. HAWA- Trading Goods
6. UNBW- Non-Valuated Materials

Does Sales ORG1 and 2 views are available in Materials type-ROH?

NO

Does Material Type-HAWA-Trading Goods has a stock schedule view?

NO

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Does NLAG has Warehouse/Storage View?

NO

Does UNBW has an accounting view?

NO

MATERIAL MASTER:

In the Additional Data tab in the Basic View you can have your own Units of measure, Languages.

If you don’t select the view which you want also you can enter the data in the unselected views by
clicking the file icon button in the right most corner of the screen.

What is the language code for Japanese?

JA

What is the conversion between crate and each?

It depends on the requirement of the company

What does the material group 013 stand for?

Elevators

What are the different valuation classes that are available for the UNBW?

As there is no accounting view so no valuation classes linked to material type UNBW.

VENDOR MASTER:

Generally a vendor master has three views 1) General 2) finance 3) Purchasing.

While creating Vendor we can create Vendor in 2 ways one is only create Purchasing view of vendor in
the Purchasing menu or go to Central menu and create all the 3 views.

Payment terms dictates when and how we should pay the vendor, generally they are created by FICO
people.

Incoterm stands for International Commerce. So when you trade goods across cities across countries
there needs to be a standardized way of specifying how the goods are transferred.
In incoterms there are 2 parts one is standard and other is free floating i.e. for example the incoterm is
FOB (Free on Board) until Warehouse or doc or Plant. Here the former doesn’t change but the later
changes.
What are the ORG elements required to create a vendor in XK01?
Company code and purchasing org elements as Company code and Purchasing view requires them.
What is the T-code to create General and Purchasing view of the vendor?

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MK01
What is the T-Code to create the financial view of the Vendor?
FK01
What is the cash discount if paid within 30 days for SAP standard payment terms 013?
2%
PURCHASING INFO RECORD: (ME11)
The relation b/w vendor and the materials is created by the Purchasing info record.
To create info record go to Logistics->Materials Management->Purchasing->Master Data->Info Record.
Planned delivery time field in info record tells us how long this vendor takes time to deliver the goods.
Note: SU3 is the T-Code to check your user profile.
In a Purchase Order anything from the Header comes from the vendor and anything from the line item
comes from the material master.
Texts:
Select the Purchase Order Text in the material master data to add comments and we see that
text/comment we specified in the Purchase order in Purchase Order Text tab.
Non-Stock Materials:
Generally materials that are procured (not Manufactured) has a Price control of V.
You can default your company code, Purc.Org and Purchasing Group by going into personal setting and
default values and enter the details.
Generally non stock materials requires account assignment category like K (Cost Centre).
Cost Center is a technical word for department.
Transaction to create a cost center is KS01. We have to enter the controlling area.
ERROR: Version 0 is not defined for fiscal year XXXX.
To resolve it go to OKEV and enter controlling area and copy any year to your required year and save.
Distributing Costs b/w departments:
In the purchase Order in the Distribution tab select distribute by percentage
What are the different types of price control in the Material master?
Standard and moving average (s, v)
When the value is of material is updated?
It’s during G/R creation.
Procurement of Services:
To procure services we need to create Service Master. (AC03)

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To create Service Master go to Logistics->Material Management->Service Master->service->Service
Master.
For Services while creating a PO we need to enter the short text and the account category and the item
category.
Item Category tells SAP that we are creating a Service material.
For Services we don’t create a G/R we create a service entry sheet.
To create it go to Logistics->Material Management->Service entry sheet->maintain.
T-CODE: ML81N
Here in Service selection sheet after you enter the PO number the services which we have ordered for
will not be coming automatically. They will be coming after when we click the Service Selection button
which is located in the bottom of the Screen and a pop-up will be coming and click ok then what are the
services we ordered will be coming and you copy them into our service entry sheet.
NOTE: You cannot enter unplanned services in the service entry sheet directly. To do so you need to
set the limits in the PO in the limits tab.
In service always there is a need for approval authority.
We can also manage the prices for the services. To do so go to Service Master->Service->Service
Conditions-> {for vendor with plant, for vendor without plant, for service and others} -> (for service
click add ML45).
For Vendor with Plant:
Add-ML33
Change-ML34
Display-ML35
For Vendor without Plant:
Add-ML39
Change-ML40
Display-ML41
For Service:
Add-ML45
Change-ML46
Display-ML47
For a standard materials the Account Category and Item Category are blank whereas for Services they
are not empty.
Can we create a service line item without a cost element?
No we cannot, we need an account category and its corresponding cost element.
What is the item category for service?
D

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Which of the following is necessary to enter additional line items in Service Entry Sheet?
Limit is necessary and we need to set the upper limit.
For service line items where did the accounting happens?
Service Entry Sheet
What is the T-Code for Service Master?
AC03
What is the T-Code for Service entry sheet?
ML81N
What are the Disadvantages of using NLag material for procuring services?
Adding additional services in G/R breaks relation b/w G/R and PO
Which of the following needs to be flagged for automatic PO?

What are possible Combinations in SAP to maintain service materials?

Vendor + Service Materials, Vendor + Plant + Service Material, Plant + Service Material, Service Material.
Is there a need for user to create MIGO for services?
No need
Returns:
To return the materials we need to do a return delivery in MIGO.
In MIGO instead of G/R in the Dropdown select Return Delivery. When we return the goods the vendor
pays us the Credit Memo.
Similarly to create a credit memo go to MIRO and instead of Invoice select credit memo.
Generally when you change the quantity in credit memo i.e. for example you ordered 100 quantity but
you returned 50 quantity but sap will be showing the price for 100 quantity it doesn’t set automatically
for 50 quantity, this is because the vendor may be charging some extra fields like transport, delivery etc.
Here the option is given to us to change the price but if you want to set it automatically all you need to
do is change a parameter so that it will be changed to the respective user only not for the entire
organization.
You can do it in 2 ways. 1) Go to T-code SU3 go to system->User Profile->Set Data. Then go to
parameters tab and enter IVAMOUNTADJUST in parameter id and enter X in parameter value and save.
CLOSE OUT PO’s:
Suppose we ordered 100 KG of coffee and we received 100 KG of coffee but we found out 50 KG was
defective and returned it back and the vendor gave us the credit memo but in the PO it will be showing
the Open quantity as 50 as we ordered for 100 KG and the PO remains Open.

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To know about the Open the Open PO’s go to ME2L and in Selection of parameters type WE101 (this
shows open G/R).
To change an Open PO to Closed go to Delivery tab in change mode and check the check box delivery
complete. It makes that line item delivery has been completed. You can also make a PO closed by
selecting the line item and blocking it by clicking on the Lock Icon.
Delivery Tolerance:
Delivery tolerance is set in Material Master. To set the Delivery tolerance go to MM02 and in the
Purchasing view in the Purchasing Values Section we have Under Delivery tolerance and Over delivery
tolerance. Before setting tolerance we need to set the Purchasing Value Key. We cannot change the
Tolerances manually we can change them by using the Purchasing value Key.
Go to SPRO->IMG->Material Management->Purchasing->Material Master->Define Purchasing Value
Keys.
Delivery Tolerance can also be set at Purchase Info record to set it go to ME11 or ME12 (Create or
change Purchase Info). SAP gives 1st preference to Purchase info record and then it goes to Material
Master.
Even if we set the Under/Over delivery Tolerance the system does not automatically deem the PO as
Complete it will do so only if we do a configuration. To do go to SPRO->IMG->Materials Management-
>Inventory->G/R->Set Delivery completed indicator.
This is based on plants. This is defined to only that plant.
Return Purchase Order:
We can only return a PO if we check the option of Return Item while creating the PO.
If we create the PO with Return Item Check box checked automatically SAP takes the Movement type in
G/R as 161 (G/R Returns) then do a Goods Issue and a credit memo.
Credits and Debits Memo:
Let us say if the vendor undercharged us we receive the debit note (for example the price is 10$ but he
charged only 9$). Similarly for Overcharge we receive the credit note (Price is 10$ but charged 11$).
To create a Debit Memo we go to MIRO and in place of Invoice keep subsequent Debit. We do debit
memo only if there is no logistics involved.
Basically SAP Locks all the Debit memo payments if we want we need to unlock the Payment Note.
To Unlock go to Logistics->Material Management->Logistics Invoice Verification->Further Processing-
>Release Blocked Invoices. Select your invoice no and release it.

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P2P Overall Cycle and types of transactions:

Outline Agreements:
Basically there are two types of outline agreements.
Similarly there are two types of Purchasing. They are Centralized and De-Centralized Purchasing. Let us
say if we have one Purchasing organization for all the plants then it is Centralized purchasing, similarly if
we have many Purchasing Organization then it is De-Centralized Purchasing.

To open a buyers negotiation sheet go to Logistics->Material Management->Purchasing->master Data-

>info record->buyers negotiation Sheet.
Here we have 2 options 1) By Vendor-ME1X
2) By Material-ME1y
Buyer’s negotiation Sheet gives a history of all the materials their volumes and their prices Purchased
from a particular vendor or by the Material.
Basically Vendors offers two types of terms. They are Contracts and Scheduling Agreements.
In contracts there are 2 types of contracts. They are 1) Quantity Contracts and 2) value Contracts.
Let us say if we made an agreement with the Vendor that I will Buy say XX kg of coffee every year so that
you reduce X$ per KG this is Quantity Contract. Similarly let’s say if we made a contract in terms of
money that I will buy for XX$ per year different materials so that you reduce x$ per material this is value
Contract.
To create a Contract Go to Logistics->Material Management->Purchasing->Outline Agreement->Contract
(ME31k)
Even if we made a Contract the price will be decreased in Po only if we refer to this contract in the PO.
To refer to a contract while creating a Po scroll all the way and you will find a filed called Outline

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Agreement and enter the contract number.
There is another way to release a contract into a PO i.e. open a contract and in the header bar you find
contract and in the contract follow on function->Contract release order and it will a two pop-up window
with your contract numbers and here you can do 2 things either you drag the contract number to the
shopping cart Icon or you can select the contract and click on Adopt (Copy button icon).
The only difference b/w creating a value contract and a quantity contract is we need the select the
contract category i.e. MK for quantity Contract and WK for Value Contract.

Scheduling Agreement:
To create a Scheduling Agreement go to outline agreements->Scheduling Agreements->Create
Here we have two options 1) Vendor known (ME31L), 2) Stock Transport Scheduling Agreement (ME37).
We need to specify the schedule for the Scheduling Agreement and to specify we need to go to Delivery
Schedule and click on maintain (ME38).
After opening it click on the line item and click on delivery schedule button (calendar look like icon) and
we need to set the delivery date and the scheduled quantity.
For Scheduling Agreement we don’t need to create release order.
Purchase Requisitions:
Purchase Requisition is generally is a document that is used for the track/document the Purchase
requirements.
It’s an internal document. These are generally indicative documents.
To Create a Purchase Requisition go to Logistics->Materials Management->Purchasing->Purchase
Requisition->Create (ME51N).
After opening it click on Item Overview and enter the Material, quantity, plant etc….
The most important field in this Purchase Requisition is Valuation Price and a valuation price is an
expected price.
We can convert the purchase requisition into a Purchase Order by opening a Purchase Order and click
on Document overview ON and select the Purchase requisition by selecting the Diamond and anchor
shaped icon in the left most corner and select my purchase requisitions and adopt it. When you adopt
the Purchase requisition we will get all the data that is needed for the PO except the Vendor details.
We can create one Purchase order from multiple Purchase Requisitions but we cannot use the same
purchase requisition for more than one PO. Generally when try to adapt the Same Purchase Requisition
into another PO it will take but SAP masks the Quantity (Removes the Quantity) from the PO and we
need to manually enter the quantity, this done to avoid duplicates.
A Purchase Requisition that is not used by a PO it is deemed to be open and used ones are deemed to be
closed.

Quotations:
Generally we send a Request for Quotation (RFQ) to the vendor with details like required quantity,
Estimated Price etc. The vendors respond to the RFQ and this is documented as Quotations.
To Create an RFQ go to Logistics->Materials Management->Purchasing->RFQ/Quotation->Request for
Quotation-> Create (ME41)

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In RFQ Collective Number is basically a code that ties all the documents (RFQ’s) that is issued to the
vendor.
Even if we create the same RFQ for all the vendors but SAP will be sending different documents to the
different vendors with different RFQ numbers.

To Document the responses that were sent by the Vendor in response to our RFQ we create the
Quotations.
To create Quotation in the same path there is quotations and click on Maintain (ME47) and here we see
the prices of the vendors.
Now we need to compare the prices. To compare go to Price Comparison (ME49) and SAP gives ranking
to the vendors.
Now we can accept and reject the vendors. To do so open the Price Comparison and click on the line
item and click on Quotation and it open the RFQ and click on rejection Indicator.
Now we need to send messages to the Vendors to do so go to messages menu in the same path and
click on Print/transmit (ME9A). To send the Rejection Message enter message type as ABSA and to send
the Acceptance message SAP does not have any in-built type but we need to create a custom message
by entering NEU.
We can use the Price in the Quotation only one time but if we want to use for a long time change that
Quotation into Source of Supply.
There were primarily three sources of supply. They are 1) Purchase Info Record 2) Contract 3) Scheduling
Agreement.
So we can convert the Quotation into a PIR, Contract, Scheduling Agreement and we can create the PO.
Note: We don’t need to create PO for a Scheduling Agreement.
To Convert a Quotation into a Info record open the quotation and copy the quotation number and go to
Price Comparison put the collective number and execute then select the line and go to quotation and
update the info record in that.
Similarly for a contract go and create a contract and then click on Refer to RFQ and enter the RFQ
number.

Consignment Purchase Order:

Let’s say I have a Steel Industry and I require lots of tons of Coal, Iron and other Raw Materials. Let’s say
I require 5000 tons of coal and I am not going to buy that instead I ask the Miner to dump the required
amount of coal into my warehouse and I will pay the vendor for the amount of Coal which I use.
In this Case I use the Consignment PO. Here the main difference b/w the Consignment PO and the
General PO is the vendor sends you the goods into your warehouse but you don’t own them, you own
them once you use them and you pay them after you use.
To create a Consignment PO we need go to ME21N and create a standard PO and in the Item Category
select K (Consignment) and before creating the PO we should have a Consignment Info Record because
it is the Pre-Requisite to create a Consignment PO.
To Create a Info Record go to ME11 and while creating it select consignment in the Info category. The
important thing that we should note here is while creating a Consignment PO we don’t see the
Conditions Tab i.e. we don’t enter the Price this is because that for a consignment PO we are not sure
that we would consume the entire quantity that we ordered.

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Now while creating a goods receipt we can see beside the movement type we see K indicating it as a
special stock.
If we want to see the material Document we need to go to MB03 and see it and in the material
document we don’t have an accounting document. Now the stock will be shown in the MMBE only after
the goods receipt is done.
Now if u want to consume the goods you need to create a goods issue after the goods receipt and to
create it go to MIGO and in the dropdown select goods issue. Now if we don’t specify to consume the
goods from the consignment stock SAP will take from the general stock as consignment stock is also an
unrestricted stock. Now what we need to do is Specify the stock as special stock by entering K beside the
movement type and after entering if we click enter then SAP gives us an extra tab called Partner and
here we need to specify the Vendor from whom we want to consume the Stock.
Now after creating it if we go and see MB03 we have the Accounting Document and this is because we
used the materials from the consignment stock so the value changes.
Now to create an Invoice for the Consignment PO we need to go to MRKO. Now here after entering the
material and vendor we have 2 options i.e. Display and Settle. Display shows us the details about the PO.
In the Consignment PO even if we create a MRKO it doesn’t update in the PO History.

P2P Life Cycle So far:

Sensitivity: Internal & Restricted

Blanket PO:
Non essentials items or low value items like straws, Coffee cups etc. belongs to Class C items. Let’s Say
that ABC coffee company want 1000 coffee cups a day for 10 Plants at 5 cents per cup for 15 days. So
here we can’t create a PO daily or create a Po for the entire quantity and cannot keep them in
Warehouse and see the stock details as they are low value and in that situation we create the blanket
PO.
To Create a Blanket PO go to ME21N and enter the vendor number and in the Dropdown instead of
Standard PO select the Framework Order. Now as we selected Framework Order we need to select
validity start date and end date. Here while creating the PO we need to enter the Account assignment
category, the Item Category and the material group. We also need to specify the limits (Overall limit [up
to how much amount we consume] and expected limit). Then we need to specify the cost center as we
selected the Account assignment category as Cost Center. As we are not going to stock the materials we
don’t need to create a MIGO and we can pay directly when the vendor sends the Invoice Receipt.
If we get the error regarding Posting periods go to MMPV and update the dates. We also get an error
saying that in the previous period some of the materials have a negative stock.
To clear that go back to MMPV screen and check the Allow negative quantities for the previous period.
Now here in the I/R as we are not creating a G/R go to account assignment field and add the amount to
be paid and comeback to I/R and let’s say we created I/R for 1000$ it will be automatically accumulated
in the Actual Value ( Consumed Value) field in the Framework PO.

Sensitivity: Internal & Restricted

Sensitivity: Internal & Restricted
Sensitivity: Internal & Restricted