BUSINESS BLUEPRINT DOCUMENT

Materials Management

Version:

Date:

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Document Information

Document Name Business Blue Print

Title MLM_MM_BBP_MM_01_Procurement & Inventory management_V1.0

Document Purpose Procurement & Inventory management

Key Words

Document Status

Contact for Enquiries

Document Change Control :

Release Description Created by

Date Reviewed by

Date Approved by

Date

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TABLE OF CONTENT

1.Procurement...................................................................................................................41.1 Requirements/Expectations.......................................................................................41.2 General Explanations.................................................................................................41.3 Explanations of Functions and Events.....................................................................51.4 Organizational Considerations..................................................................................51.5 Process Diagrams.......................................................................................................51.6 Changes to Existing Organization processes..........................................................81.7 Description of Improvements....................................................................................81.8 Solution in SAP...........................................................................................................81.9 Description of Functional Deficits...........................................................................171.10 Approaches to Covering Functional Deficits.......................................................171.11 Integration considerations.....................................................................................171.12 Reporting Requirements........................................................................................171.13 Authorization Requirements..................................................................................171.14 File Conversion / Interface Considerations..........................................................181.15 Workflow Requirement...........................................................................................182 Inventory Management................................................................................................192.1 Requirements/Expectations.....................................................................................192.2 General Explanations...............................................................................................192.3 Explanations of Functions and Events...................................................................202.4 Organizational Considerations................................................................................202.5 Process Diagrams.....................................................................................................212.6 Changes to Existing Organization processes........................................................232.7 Description of Improvements..................................................................................232.8 Solution in SAP.........................................................................................................232.9 Description of Functional Deficits...........................................................................272.10 Approaches to Covering Functional Deficits.......................................................272.11 Integration considerations.....................................................................................272.12 Reporting Requirements........................................................................................272.13 Authorization Requirements..................................................................................272.14 File Conversion / Interface Considerations..........................................................282.15 Workflow Requirement...........................................................................................28

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1.Procurement

1.1 Requirements/Expectations

Planning for raw materials and spares on re-order level point Planning to place the requisition to cover if any shortage exists Creation of RFQ and sending it to vendors Maintaining quotations and price comparison Creation of purchase orders or contract in the system Different Number ranges for Import, Domestic, Direct purchases and Services Approval process for Purchase orders The discounts and taxes (if applicable) to be captured in the purchase order In cases of import purchase the vendor confirmations to be captured in the system using

inbound delivery. For BP01 import purchases, the customs duty and CVD to be captured in the purchasing

document Printing of Purchase Documents Asset Purchase Vendor Evaluation

1.2 General Explanations

Centrally agreed contracts

Materials for BP01 are procured by entering a common contract with vendor. The contract will be entered by the reference purchasing organization. The contract thus created is referred by the local purchasing organization for the creation of purchase orders for these materials.

Planning

All raw materials are planned to have a minimum stock level. The stores will check the stock level on a daily basis. If the stock level falls below the minimum level, a direct purchase order is placed for procurement of the material. The order is placed to fill the storage to the maximum level.

Enquiry to vendors

Currently all enquiries are sent by ordinary email requesting the quotations from the vendors. There is no specific format used for making the enquiries. On receiving the quotations the purchasing department makes a price comparison and directly places a purchase order to the suitable vendor.

Purchase Requisitions

The purchase order is created and printed on a pre-printed format. Normally, the purchase order is placed for bulk quantity and extending for a fixed period of time. The required dates of delivery are specified in the purchase order. The prices and taxes are captured in the purchase order. The printed document is then sent to vendor either by FAX or Courier.

Taxes

Currently BP01 has got an excise exemption certificate for an unlimited period. So the

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excise duties on purchases are loaded to the stock. But the purchases of materials attract the VAT/CST charges. The credit for VAT on purchases is utilized against the VAT liability during the sales.

Approval process for purchase orders

All purchase orders are sent to departmental heads for first level approval. Subsequently, the purchase orders of value more than 50000 INR are sent to General Manager and those below 50000 INR are sent to Plant Manager for approval.

Asset Purchase

The asset purchase is done against the capex approval by the finance.

Vendor Evaluation

The Vendor is evaluated based on the following aspects

Quality

Delivery

Packing

Price

Service The maximum scores for the above aspects are 30,25,15,20 & 10 respectively.

1.3 Explanations of Functions and Events

The fall of stock below the re-order point level necessitates the initialization of procurement. The planning is done in BP01 monthly inventory meeting determines the requirement based on the historical data of six months consumption. In BP01, the purchase orders are sent through release procedures depending upon the purchase group, net value. Entire release procedure will be triggered using the standard SAP workflow for PO release.

1.4 Organizational Considerations

Purchase organization responsible for all local purchases in head office and plants. Persons or groups responsible for purchases in head office and plants separately. The proper

segregation of duties between each personnel for procurement processing Hierarchal structuring of approval department for purchase orders MRP controller to monitor the planning results.

1.5 Process Diagrams

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Check Availability of Stock

Raise PR

Material Requisition to stores

Existence of

product

Inform Stores

Creation of new code by stores dept

Preparation of PRPass to purchasing

Enquiry

Quotation Comparison

If Spare Items

Passing the quotation and PR to

main dept

Check for specifications, ok?

Pur Dept to go for another vendor

Inform Pur DeptPO Creation

Value>300KD 1

2

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1 2

Send for Controller’s & GM approval

Send for Plant manager’s Approval

Send PO to Supplier

Local Order?

Send PO to Sahara for arranging shipment

Opening Of LC by Pur Dept

LC Suppli

er?

Receipt Of material

Collection of original documents

Clearance

1.6 Changes to Existing Organization processes

All purchases for plants within a company code are controlled by one local purchase organization. The purchasing groups responsible for purchase for different plants will be creating purchasing documents. The MRP controller for planning has to be identified in BP01.

1.7 Description of ImprovementsDescribe improvements which will result from implementation of the SAP System. Be sure to include any impact on business drivers.

The planning is done in the system and the planning run places the purchase requisitions. The re-order level point planning will be done for BP01. The re-order level point is specified in the material master manually. For BP01, the re-order level point will be determined using the historical data on consumption which is used to project the future requirements.

Request for quotations and maintenance of quoted prices is captured in the system. The Price comparison and results among various quotations is proposed by the system. All prices, Duties and taxes (If applicable) will be picked up in the documents automatically from the master data records. Internal number generation is done for purchase orders to segregate the import and domestic purchases. Approval process for purchase orders is done in the system as per the criterion specified in the above sections. In the cases of import purchases, the vendor confirmations are captured as inbound delivery in the system.

The freight and clearing charges will be specified in the purchase order and the value will be added to the stock while doing the goods receipt.

The purchase order history can be tracked from the document itself. Every change to a PO after the creation is recorded along with the document.

1.8 Solution in SAP.

Material Types:-

The details of material types to be defined are given in the table below.

Material Types To-Be Description Ref Mat Type Int/ExtNumber Range

Raw Materials ZROH IG:- Raw Materials ROH EXT BA* & BI*Facing Materials ZFAC IG:- Facing Materials ROH EXT FA*Packing Materials ZPAC IG:- Packing Materials ROH EXT PA*Consumables ZCON IG:- Consumables ROH EXT CO*Spares ZSPR IG:- Spares ERSA EXT SP*Energy Materials ZENE IG:- Energy Materials ROH EXT EN*Semi Finished ZSFG IG:- Semi Finished Goods HALB INT 1 to 99999Finished Goods ZFG IG:- Finished Goods FERT INT 1 to 99999Scrap ZSCP IG:- Scrap Materials HALB EXT SC*Fixed Assets ZAST IG:- Fixed Assets ROH EXT FI*Trading Materials ZTRA IG:- Trading Materials HAWA EXT TR*Precious Metals ZPCM IG:- Precious Metals ROH EXT PM*Operating Supplies ZIBE IG: Operating Supplies HIBE INT 1 to 99999

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Material Master:-

Following basic information will be captured for each material

1. Material Description – Basic Description of the material code

2. Material Group: This identifies material group to be assigned to the material as per business need.

3. Basic Unit of Measure: This defines base unit of measure of the material in which transactions on the material will take place.

4. Division: This field assigned to the material master determines the business area for FI postings

5. Size/ dimensions, Net weight/ gross weight: These are optional fields details can be used in capacity planning for the warehouses.

Following information will be captured for each materials at all the plants of each BP01 divisions

1. Purchasing group: This specifies the buyer responsible for procurement of the material

2. Batch Management: This identifies whether the material needs to be batch managed

3. Purchase value key: This defines the reminder days and tolerance limits valid, as well as the shipping instructions and order acknowledgment requirement of the material for Purchasing.

4. MRP type: This field indicates whether the material will be planned based on manual re-order point planning (VB) or automatic re-order point (VM) or Material requirements planning (PD) etc.

5. MRP controller: This represents entity responsible for planning of the materials. This can also be used for scheduling MRP runs and reporting.

6. Re-order point: The stock falling below the re-order point will generate a procurement proposal.

7. Lot size: This will determine the lot size procedure to be used. E.g. weekly lot size, monthly lot size etc.

8. Maximum Stock Level: This is the maximum stock level for the material in storage location

9. Safety stock: This specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period.

10. MRP Group: Used for assigning document types for externally procured material.

11. Planned delivery Time: Number of days needed to obtain the material.

12. GR Processing time: Number of days required for inspection or production

13. Scheduling Margin Key: Used for determining the floats for scheduling and order

14. Procurement Type: Specifies how material is procured.

15. Strategy Group: Defines a procedure for planning a material

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16. Availability Check: Specifies whether and how the system checks availability and generates requirements for materials planning.

17. Individual/Collective Requirement: Defines how the requirement quantities of dependent materials are to be planned.

18. Production Version: Indicates the combination of BOM & Recipe.

19. Forecast Model: defines the forecast model. E.g. constant model, trend model etc.

20. Period Indicator: Indicates the periods in which consumption and forecast values are maintained.

21. Historical Period: Number of historical values system uses for forecasting

22. Forecast Period: umber of forecast period splits

23. Production Unit: Specifies the production Unit

24. Storage bin (For non- warehouse managed materials): This defines the location within a storage location where the material is generally stored.

25. QM procurement: This defines that the quality management is active in procurement for all plants pertaining to a client.

26. QM control key: This key determines which conditions are valid for quality management in procurement.

27. Inspection Intervals: Interval between different quality inspections

28. Inspection Type: Defies how an inspections is performed.

29. Sales Unit: Sales Unit of Measure

30. Tax Data: Tax data related to the material

31. Item Category Group: Grouping that determines the item categories in sales documents.

32. Transportation Group: Grouping of same routes and shipping requirements.

33. Loading Group: Grouping of similar materials based on loading. E.g. Forklift

34. Valuation class: This determines the G/L account to be posted for goods movement of the material

35. Price Control: Indicates the control on the valuation of the stock. E.g. MAP or Std Price.

36. Moving Price: MAP value of the material

37. Standard Price: Standard price of the material

38. Qty Structure: The field identifies if the costing to be done by quantity struxture.

39. Variance Key: Key controls the variance calculation

40. Profit center: Key which with the controlling area identifies the profit center.

Vendor Account Groups:-

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The Vendor account groups will be at client level and will be used at AL Ghanim Group level.

Vendor Account Grp

Description Number range (Internal) Ref Acct Grp

From To

AIEV Employee Vendor 40000000 49999999 HRTPAIFV FI vendors 50000000 59999999   001AIMV Material Vendors 60000000 69999999 001AIOV One time vendors 70000000 79999999 CPDAISV Service Vendors 80000000 89999999 001AIXV Inter-company Vendors 90000000 99999999 001

Vendor Master:-

Following information will be captured for individual Vendor at General data level

Vendor Name

Vendor Address

CIN Data: CIN data includes the following

o CST number o LST numbero PAN number

Excise indicator (small scale etc) for vendor.

Following information will be captured for individual Vendor at purchasing Org level

Order Currency: This defines the default currency for the vendor.

Terms of payment: This defines default for terms of payment for the vendor.

Inco terms: Default Inco terms for the vendor.

Schema group: Determines which pricing procedure is to be used in purchasing documents containing this vendor number.

Contact Person: This defines the contact person at the vendor

GR based invoice verification: Indicator specifying that provision has been made for goods-receipt-based invoice verification for a purchase order item or invoice item.

Confirmation control Key: Determines which confirmation categories are expected for a P.O item (e.g. order acknowledgment, shipping notification)

Following information will be captured for individual Vendor at Company code level

Reconciliation Account:

Purchased Info Records:-

Purchase Info records maintains the relationship between a specific material and the vendor.

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Purchasing info records will be maintained at Purchase Org Level. If any exceptional conditions are there for a plant, then the record is data is maintained at the plant level.

Following information will be captured for Purchasing Info record

Delivery Lead Time

Basic Price

Pricing Conditions like discount, surcharge etc.

Procurement:-

Procurement for stock, consumables, services and assets will be mapped. The purchasing documents - Purchasing Requisition, Request for Quotation, Contract, and Purchase Order - will be created in the system.

Material Item codes are used in the purchasing documents for stock materials procurement.

Services:-

Service masters (AC03) will be maintained for the frequently ordered services in BP01. Service rates will be maintained as condition masters (ML33/ML39/ML45). In the Purchasing documents for services, general text description explaining the service and material group for services is keyed in the item overview of the purchasing document. The item category ‘D’ must be specified for the items in the overview screen of the purchasing documents. The service code is specified in the item details for all those services with service master. In other cases the short description for the activities is inputted. The appropriate account assignment category e.g. Cost centre (K), Order (F) is specified in the PR and PO for the procurement. The relevant account assignment is specified for the service line items depending on the account assignment category.

Assets:-

In BP01, Assets will be procured using the material short text in the document. New Account assignment category will be configured for asset procurement. The fields for Asset Number and Order Number will be made mandatory in the purchasing documents by the account assignment category.

Some materials, like spare parts, required for new machine installations will be maintained as coded items. In the Purchase documents, the relevant account assignment category will be specified along with the material codes. The asset number and internal order will be specified in the PR, PO and Contracts. In other cases, short text is used along with the relevant account assignment category and assignments.

Note: - Account assignment category is only specified in the PR, PO and Contracts.

Consumables:-

The short text is entered in the purchasing documents. The appropriate account assignment category is mentioned in the documents.

Consumption Based Planning:-

Re-order level point planning is carried out for the materials; separate MRP groups will be defined. The Planning run will create the Purchase Requisition and the document type for the same will be determined by the MRP group assigned to the Material Master.

Automatic re-order level point planning is carried out for raw materials whose consumption follows a constant pattern. The MRP type ‘VB’ will be specified in the material master. The lot size for the

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procurement proposal quantity will be fixed lot size (FX) and the lot quantity is specified in the material master. The forecast (MP30) is executed and the re-order level point is determined automatically for the material. The planning run is done for the materials daily which create the PR.

Purchase Requisition:-

The requisition will cover the procurement of stock, consumables, assets & services. One document types will be defined, for BP01. The document types for PR in planning run will be determined by the assignment of document type to the corresponding MRP groups of the plants.

The PR for the MRP relevant materials will be created from the Planning run for the materials. The request for the procurement other than this comes from departments. The MRP controller will inform the Purchase department about the PR from planning run.

The manual creation of PR (ME51N) will be done by the Stores on receipt of request for the material from all departments, except maintenance department. This process is maintained outside the SAP. The request form must have the Material Code, if not a new material, quantity required, name of the requestor, tracking number and location of use. For new materials, all data except the material code will be mentioned in the form. The Stores initiates the process for the creation of new material code, if required. On receiving the request, the Stores will create the PR. The name of the requestor and tracking number will be captured in the document. The Stores informs the purchasing department on the PR to take the subsequent actions.

Automatic PR will be created against the PM order for non–planned items and services. The PR for the assets required for maintenance activities will be created by the maintenance department manually. The information will be sent to the Purchasing department for the subsequent processing of the document.

Request for Quotation and Quotation Maintenance:-

On receiving the PR from various departments, the purchase department decides on placing of RFQ to vendors. The RFQ (ME41) is created by the purchasing department referring the PR. The item category for services is specified in the RFQ. The RFQ are send to vendors as hard copies/email.

Upon receipt of quotations from vendors, the RFQ are maintained as quotations (ME47). The info update indicator ‘A’ is specified in the quotation. This will help in updating the purchase info record with the new prices by the vendor. The price comparison (ME49) is carried out and the suitable vendor is selected.

Purchase Orders:-

After the vendor selection, the Purchase department decides to place a purchase order (ME21N) to the vendor. The Purchase order will be created with reference to the quotation. The pricing conditions maintained in the quotation will be copied to the PO. The PO is sent to vendor through FAX/courier/email. GR based invoice verification is done in the domestic purchases. The same will be specified in the purchase info record.

Different document types will be defined for Domestic, Import, services and stock transfer. Import Purchases, the inbound movement of goods is captured using the inbound delivery document. The inbound delivery document is entered when the information of confirmed quantity of delivery from vendor site is received.

Contracts:-

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For common materials like facing materials, the Reference Purchase Organization enters a common contract with the supplier. The local purchase organizations create release orders against this contract for their requirements. The pricing from the contract is copied to the release orders created. Provision for entering both Value contract and Quantity contract will be defined.

Pricing & Taxes:-

The different pricing components will be maintained as condition types in the system. The components like freight & forwarding charges will be maintained as header conditions. These charges will be delivery costs and loaded to the stock value at the time of goods receipt. Accrual posting for these charges is controlled using different transaction keys specified in the pricing procedure. The conditions will be maintained manually at the header of PO. The freight condition will be attached to different vendor in the header. This facilitates the invoice verification for freight to be captured separately. The value of the header conditions will be apportioned to the individual line items. The Discounts and miscellaneous charges applicable for the entire Purchase is maintained as the header conditions, which will be maintained manually while creating the PO. Item discounts and charges are maintained as item conditions. The basic price and discounts are maintained in the purchase info records. The same will be defaulted to the PO from the purchase info record.

pricing procedure for import will be maintained separately from domestic pricing. In cases of domestic purchases, the taxes are taken into account using the TAXINN pricing procedure. The excise duties, VAT and CST charges will be covered by the TAXINN. The taxes on PO are specified using different tax codes. The tax codes are created for all possible combination of taxes. The VAT amount is posted in the Financials, only at the time of invoice verification. Since the BP01 plant in Kaveli has got excise duty exemption, the value of the same will be loaded to the stock at the time GR.

For import purchases in BP01, the import pricing will determine the customs duty and Counter veiling Duties (CVD). These will be different condition type in the pricing procedure. The customs duty and CVD will be paid to the government.

Purchase Order Release:-

For raw materials, the PO is sent for approval by Technical Manager and subsequently sent to General Manger for final approval. For the other purchases, the PO is sent for approval by the respective departmental heads and followed by the acceptance by Purchase manager. On approval by Purchase manager, the PO is sent to Finance for approval. Subsequently, if the PO value is greater than 50000 INR, the same is sent to General Manager else, to the plant manger for approval.

On rejection at any level and if the PO value is changed, the release strategy will be triggered again.

Expediters/Urging Letters:-

Purchasing Value keys are specified in the material master. The purchase value key determines the days of sending the reminders to vendors. The data is copied while creating the purchase info record. During the creation of PO, the value is copied from the Purchase Info Record. The reminders are send (ME91F) to the vendors as email.

Vendor Evaluation:-

For Vendor evaluation, the main criteria Quality, Delivery, Packing, Price and Service will be maintained in the system and with weighting keys having different weighting factors. The vendor evaluation will be carried out on a quarterly basis.

The main criteria Quality, Delivery, Packing, Price and Service will be configured in the system. One sub criteria for all the main criteria will be configured in the system. The scores for sub criteria Quality, Delivery, Packing and Price will be fully automatic and score for the service will be manually assigned in the system when the vendor evaluation is carried out. The vendor evaluation will be run on quarterly

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basis.

The weighting Key on the ratio 30:25:15:20:10 will be maintained for the main criteria Quality, Delivery, Packing, Price and service respectively. The overall score will be calculated based on the weighting Key assigned to evaluation.

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BP01

BP01

Planning of Raw Materials

BP01Planning Type ‘VB’. Lot Size ‘FX’. Places PR

AA

ASend

Enquiries

Create RFQ. Print and send to the vendors

Y

Maintain Quotation and Price comparison.

Create PO

N

BP01

B

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Rejected

Approved

Y

N

Approved

RM

Other

Rejected

RejectedApproved

B

Send to dept heads/Manufacture

manager for approval

Approved or rejected

Send to Tech Manager for Approval

PO for Raw

Material or

Others?

Amend PO

Approved or

rejected

1

Print the PO and send to vendor

Send to GM for Approval

Send to GM for approval

If value >50000 INR

Send to PM for approval

Approved or rejected

Amend PO Chang

e in value?

1

Change in

value?

2

2

N

Y

Amend PO

Change in

value?

1

N

Y

1.9 Description of Functional DeficitsWhere appropriate, identify any gaps. This section is important when assessing risk, as well as estimating the need for ABAP (or similar) resources.

RFQ & PO Lay Outs

1.10 Approaches to Covering Functional DeficitsDocumentation of any work-around or assumptions that have been made when outlining functional deficits.

Custom development for RFQ & PO Layout to be developed

1.11 Integration considerationsSpecify what integration you need with other modules / sub modules

Procurement activities have influence on the inventory management and later for invoice verification. The GR based IV indicator in the PO controls the invoice verification by the Financials. IV will be only possible if GR has happened for the PO. The pricing elements and the transaction keys for the same determine the account postings at various stages in goods receipt and invoice verification.

1.12 Reporting Requirements

Reports Transaction Code

Pending PR/PO reports ME2M, ME2L, ME2C, ME2N

Vendor Evaluation reports ME65, ME6B

1.13 Authorization RequirementsDocument the level of authorizations that you need for each process in the system

Purchase Organization Purchasing Group Plants General Manager (PO Release) Plant Manager (PO Release) Finance Department (PO Release)

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1.14 File Conversion / Interface Considerations

Open PO will be uploaded from the excel file to the production system

1.15 Workflow Requirement

The SAP standard workflow for the release of purchase order will be activated in the system. The release code configured for release strategy will be workflow relevant. The users responsible for approval will be assigned to the release group and release code combination in the system.The creation of purchase orders satisfying the release strategy will trigger the work flow in the system. The document for approval is sent to the SAP inbox of approver. The user executes the approval or rejection from his inbox. On rejection the document creator is informed on the action through a SAP mail and sent to his SAP inbox. The release strategy is initialized if any subsequent change is made in the purchase order.

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2 Inventory Management

2.1 Requirements/Expectations

Goods Receipt Goods Issue Vendor Returns Physical Inventory

2.2 General Explanations (For Masters and Enterprise structure include Naming Convention)

Receipt of Materials

Upon receipt of delivery (for Imported Materials) Store personnel inspect consignment’s Container and Packing. If OK, signs Delivery Note (from shipping agent).For some materials like Glues and binders batch management will be activated.

For Raw Materials

Store prepares Goods Receipt Note and sends copy to Purchasing, Finance and QC for Inspection. QC then conducts Inspection and prepares Inspection report. If accepted, Material goes into stock and is ready for issue. Finance arranges payment. If rejected, QC prepares rejection report, sends copy to Store and Purchasing. Purchasing informs Supplier. If Supplier agrees, Stores prepares Suppliers Return Voucher or Supplier Replaces material.

At the end of the month, Store prepares Store Return Voucher for Raw Materials which were taken by production but not been used (Work in Process) and Glass Cullet produced (bifurcated into Batch Raw Materials).

For Spare Parts

Stores inform Maintenance Dept and prepare Inspection Report. If Spare part is accepted, Stores prepare GR through Inspection report. Material goes into stock (Bin Locations) and ready for issue. Copy of GR will be sent to purchasing and Finance for payment. If rejected, no GR will be raised. For Local materials, Store will inform Supplier and for imported materials, Store will inform Purchasing and Purchasing will inform Supplier.

For Trading Items:

Store prepares GR and sends copy to Purchasing, Finance and Kuwait Sales Office. Material goes into stock and ready for issue or Transfer to location upon request by sales office.

Location Transfer:

Upon receipt of Order Process Memo (OPM) from Sales Office, Store sends material to warehouse for loading and shipping. Stores prepare Packing list and Issue document.

Physical Inventory

During Inventory, Production will be shut down but Furnace will continue production.

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Pre-inventory CountingFor Spare Parts, pre-counting teams are sent to stores three days before scheduled Physical Inventory for counting the stock items. Counting results will then be kept in the item bins and will be accounted during scanning.

Scanning (for Spare Parts and Consumables only)

The person who handles the scanning equipment is called scanner. He goes to each area location in the stores and scans items as per bins and enters quantities as per the pre-counting. After Scanning each bin, a sticker with the date (scanning Date) is pasted for identification that it has already been counted, It is then uploaded in the system. All spares and consumable items without Bar Codes will be entered in the Inventory Tickets and in the system manually.

Energy, Raw Materials, Trading Items and Finished Goods

For LPG, Diesel and Raw materials, Readings and Work in progress will be taken at 6:00 AM respectively.Energy reading will be entered in the Inventory Tickets and in the system manually.

Batch Work in process will be bifurcated into Batch Raw Materials.

The stock in sales office will be inventoried only after the BP01 Plant physical inventory.

Inventory Tickets which are pre-numbered will be issued to Group of Counters and will be assigned to Areas or Storage Locations for counting. The following data will filled in the tickets. Area Count Team Item Code Description UOM Quantity

The tickets will be duly signed by the counter for acknowledgement after count.

When counted, colored stickers will be pasted in the material labels for identification. Counting will be done twice. If there is a variance, a third count is necessary. Yellow and green stickers are used for first and second counts and red for the third. Once the counting is over, Inventory Tickets are entered manually in the system.

2.3 Explanations of Functions and Events

On arrival of goods, the stores will do the goods receipt to a storage location. The goods are issued to various departments as per the requirements. The Finished goods are transferred to various depots, according to the transport request got from the depots.

2.4 Organizational Considerations

The stores personnel responsible for posting the goods receipt and goods issue. The stores personnel responsible for monitoring the physical movement of batch managed

materials like Glues. Quality department to carry out the quality inspection.

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2.5 Process Diagrams

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Receipt of material

Requester inspects the material and raises the inspection report.

If the material specs is ok

Goods Receipt NoteQuality Control/Maintenance Dept informs the purchase

dept

A B

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A

Preparation of issues to cost centers

Preparation of transfer to locations

Preparation of return from cost centre (End of month

WIP)

One copy to Finance

One copy to Purchasing Department

B

Purchase Dept inform Supplier

If supplie

r Agrees

?

Preparation of supplier return voucher

Supplier replaces the material

2.6 Changes to Existing Organization processes

Not Applicable

2.7 Description of Improvements

The stock quantity and stock value is updated along with any goods movement posting. This removes the process of sending the GR/GI documents to FI department for stock value updating. The goods will be posted directly to quality inspection stock when the quality management is active for the material. All the quality notification and task assignment will be tracked through the system.

2.8 Solution in SAP.

Valuation:-

The valuation of materials is at plant level. Raw materials with shelf life will be managed in batches. The batch number will be internally assigned for these materials. The goods issue for the materials will be based on the First Expiration First Issue basis. The batch determination will be activated for the goods issues.

The raw materials will be valuated at MAP in the plants and the FG will be valuated at Standard price. In BP01, the FG in sales depots will be valuated in MAP.

Goods Receipt for External Procurement

Upon the arrival of goods at the Stores the goods receipt document is posted (MIGO- Movement type 101) in the system. The GR will be done by referring the PO for the delivery. The actual quantity arrived is inputted in the document. The Plant and storage location is entered in the document. If the QM is active for the material, the stock is posted directly to the Quality stock. The QM is activated for raw materials and spares. Other materials will be directly posted to unrestricted stock. On approval by the QM (QA11), the stock is transfer posted from quality stock to the unrestricted stock.

Inspection Lots are created at the time of GR for the materials. In case of any rejection (QA11), the stock is transfer posted to blocked stock and the notification is created (QM01) by the QM department are sent to the purchase department. Based on the quality report, the purchase department will assign the task to the notification (QM02), which will be executed by the stores personnel. The purchase department will monitor the status of the task (QM13). If the task specifies for the acceptance of the material, the stock is transfer posted (MIGO- Movement Type 343) manually from blocked stock to unrestricted stock manually.

If the task specifies for the return of goods back to the vendor, the stores prepares the Return Document (MIGO – Movement type 122).

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During the goods receipt the all the delivery costs will be added to the stock value and the following accounting entries are passed.

Stock Dr.

GR/IR Clearing Cr

Freight Clearing Cr

Forwarding Clearing Cr

During the return delivery document posting the accounting entries will be as follows

Stock Cr

GR/IR Clearing Dr

Freight Clearing Dr

During the GR for posting for any assets or consumable the accounting entries will be as

Consumption Account Dr

GR/IR Clearing Cr

Service Acceptance

The service rendered by the service provider is captured in the system as service entry sheets (ML81N). The percentage or quantity of service completed is entered in the service entry sheet by the recipient of service. Upon the acceptance of service entry sheet, GR document is posted in the background posting the following accounting entries

Expense Account Dr

GR/IR Clearing Cr

Goods Issue for Production:-

For Production activities the following goods movement takes place in the inventory

Transfer posting of facing materials from Stores to production floor (MIGO – Movement type 311).

Goods issue against the process order (MIGO – Movement Type 261)

During the transfer posting no accounting entries are posted. The goods issue against the process order will post the following accounting entries

Stock Cr

Consumption Account Dr.

Goods Issue to Cost Centre

The goods are issued to cost centers for consumption. The goods Issue (MIGO- Movement Type 201) is posted. The cost centre is specified in the material document. The following accounting entries are posted

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Stock Cr

Consumption account Dr

Goods Issue for Sales:-

The process is covered in the SD Blue Print. The accounting entries for any issue is as follows

Stock Cr

COGS Dr

Goods Issue to Reservations:-

Goods are issued (MIGO – Movement Type 201) for reservation created for the PM order from the stores. The process of creation of reservations is covered in the PM module.

The following accounting entries are passed

Stock Cr

Consumption Dr

Physical Inventory

For raw materials, the physical inventory document (MI01) will be created for the materials to be included in the physical inventory. The book inventory will be frozen and the materials will be blocked for any movements. The output for the documents are taken and distributed to the users who do the count. The concerned users will record the count data in the sheet provided and returned to the authorized person to enter the count results (MI04) to the system. A re-count (MI11) is initiated for the materials, if necessary. A new physical inventory document will be generated for the materials which are to be re-counted and all further processing for these materials will be done through the new document. Once the count results are entered to the system, the difference will be posted (MI07) separately. A FI entry is passed accordingly to book the expense or income from the physical inventory difference.

The accounting entries for the difference will be as follows

Inventory Gain

Stock Dr

Expense/Income Cr

Inventory Loss

Stock Cr

Expense/Income Dr

For bar coded items, the count results are captured by the bar code system and the data is sent to SAP using the interface. A physical inventory document along with the material and the count results are posted in SAP. The difference is posed (MI07) in SAP separately.

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Receipt of material

Material QM Manag

ed?Material Posted to Quality

StockMaterial Posted to

unrestricted stock and ready for usage

Quality approv

ed?

Notification created in the system for raw materials

& send to purchasing

Accept with

deviations?

Material transfer Posted to unrestricted stock from quality

stock and ready for usage

Post Return document to vendor

2.9 Description of Functional Deficits

Not Applicable

2.10 Approaches to Covering Functional Deficits

Not Applicable

2.11 Integration considerations

The inventory management is integrated with FI for automatic postings of FI documents at the time of goods movement and physical inventory. All goods movements arising due to requirements from SD and PP are integrated with the inventory management.

2.12 Reporting Requirements

2.13 Authorization Requirements

The stores personnel to be given authorization for good receipt and goods issue. The concerned person responsible for physical inventory to be given with the authorization for physical inventory process. The maintenance team to be given for quality result entry and usage decision entry for spares parts.

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Stock Over view MMBE

Stock Posting on posting date MB5B

GR/IR Balances MB5S

ABC Analysis MC40

Consumption Matrix MB51

Slow Moving Items MC46

Material Receipt Report To be developed

2.14 File Conversion / Interface Considerations

Interface with Bar Code System will be used for the following process

GR label printing for Raw Materials Goods Issue to Production Physical Inventory

2.15 Workflow Requirement

Not applicable

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