SAP MM Process Flow

The typical procurement cycle for a service or material consists of the following phases:

1. Determination of Requirements :
   Materials requirements are identified either in the user departments or via
   materials planning and control. (This can cover both MRP proper and the
   demand-based approach to inventory control. The regular checking of
   stock levels of materials defined by master records, use of the
   order-point method, and forecasting on the basis of past usage are
   important aspects of the latter.) You can enter purchase requisitions
   yourself, or they can be generated automatically by the materials
   planning and control system.
    
   
   
   2. Source Determination: 
   The Purchasing component helps you identify potential sources of supply
   based on past orders and existing longer-term purchase agreements. This
   speeds the process of creating requests for quotation (RFQs), which can
   be sent to vendors electronically via SAP EDI, if desired.
    
   
   
   3. Vendor Selection and Comparison of Quotations:
   The system is capable of simulating pricing scenarios, allowing you to
   compare a number of different quotations. Rejection letters can be sent
   automatically.
    
   4. Purchase Order Processing :
   The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, you can generate PO's yourself or have the system generate them automatically. Vendor scheduling agreements and contracts (in the SAP System, types of longer-term purchase agreement) are also supported.
    
   5. Purchase Order Follow-Up:
   The system checks the reminder periods you have specified and – if
   necessary – automatically prints reminders or expediters at the
   predefined intervals. It also provides you with an up-to-date status of
   all purchase requisitions, quotations, and purchase orders.
    
   6. Goods Receiving and Inventory Management: 
    Goods Receiving personnel can confirm the receipt of goods simply by entering the PO number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods.
    
   7. Invoice Verification: 
    The system supports the checking and matching of invoices. The accounts
   payable clerk is notified of quantity and price variances because the
   system has access to PO and goods receipt data. This speeds the process
   of auditing and clearing invoices for payment