MELJUN CORTES Materials Management Transactions Part 2
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Transcript of MELJUN CORTES Materials Management Transactions Part 2
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Unit 13
Materials Management (MM)
- Transactions -
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Business Process Integration
MM
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Transaction Data
• Includes internal and external exchanges that describe business activities
• Unlike master data, aggregate transactional data is dynamic – each transaction is unique
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R/3
FIFinancialAccounting
COControlling
PSProjectSystemWF
WorkflowISIndustrySolutions
MMMaterials Mgmt.
HRHumanResources
SDSales and Distribution
PPProductionPlanning
QMQualityMgmt.PM
Plant Maintenance
SMServiceMgmt.
Client / ServerIntegrated BusinessSolution
ECEnterpriseControlling
AMFixed AssetsMgmt.
Materials Management (MM)
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Unit 13 – Overview
• A company may want to establish a long term purchasing relationship with a vendor
• Its is accomplished through a purchasing contract (outline agreement or blanket order)
• Purchases of that material from that vendor are then simplified and streamlined
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Buyer/Supplier Relationships
• Antagonistic – parties view each other as the enemy (lose/lose)
• Adversarial – each party attempts to maximize their gain (win/lose)
• Cooperative – parties understand the benefits of working together (win/win)
• Collaborative – parties look for opportunities to create value (win/win)
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Buyer/Supplier Relationships
• Long term partnerships are the objective of the supplier evaluation and selection process for contracts
• Traditional purchasing process– Creates an environment of mistrust and low
bidder mentality – Leads to higher total purchasing costs
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Supplier Evaluation and Selection
• Identify need for long term supplier contract• Determine specific sourcing requirements• Identify potential suppliers• Determine method of evaluating suppliers• Select supplier for contract• Negotiate and execute contract
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Benefits of Managing the Supply Base
• Contract with only world-class suppliers• The fewer suppliers the lower the purchasing
overhead• Purchasing can pursue strategic sourcing
issues, instead of clerical functions• Streamline the supply chain• Improved overall quality• Improved delivery performance
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Outline Agreement
• Long-term purchase agreements • Outline agreements can be subdivided into
the following types:– Contracts – Scheduling agreements
• Outline agreements can be subject to a release (approval or clearance) procedure
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Contract Process Overview
• Step one is to identify and evaluate suppliers• It may involve supplier development• The goals are:– Develop partnerships with good suppliers– Reduce total cost of purchased materials and
services
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Contracting Questions
• How will potential suppliers be evaluated and selected?
• What procedures will be required to manage the contracts (and suppliers)?
• How will performance be measured?• How many are too many suppliers?
– Too many suppliers cost money– Supplier integration– Collaborative agreements– Supplier development– Without material production shuts down
• What is the risk?
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Contract Management
• Supplier performance metrics– On-time delivery– Material and/or service quality– Returned materials– Expedite issues– Pricing analysis
• Problem resolution procedures– Improve or else– Continuous improvement process
• When to end the contract
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Creating a Contract
• Is a long-term agreement with a vendor to provide a material or service– For an agreed upon period of time– At a negotiated price or quantity
• Can be created manually or with reference to purchase requisition, Request for Quote (RFQ)/quotation etc.
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Two Types of Contracts
• Quantity contracts are agreements with a particular vendor to purchase a specific quantity of materials. Example: Target quantity of 50,000 meters of electrical wire at $2/meter. (MK)
• Value contracts are similar to quantity contract except the agreement is to purchase an established monetary value of materials. Example: Target value of $100,000 for electrical wire. (WK)
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Quotations/Contracts Process
• Requirement for material is identified• Process followed to select a vendor– Request for Quotation (RFQ)– Maintaining a Quotation– Comparison of Prices– Creating a Contract – Creating a Release Order
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Request for Quotation (RFQ)
• Is an invitation to a vendor to indicate their terms and conditions (in particular, their price) for the supply of a material or the provision of a service by submitting a quotation
• Identifies the required material, quantity, and delivery dates
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Quotation
• A quotation contains the vendor's pricing and conditions for providing the material or service stated in the Request for Quotation (RFQ)
• In the SAP component Materials Management (MM) Purchasing, the RFQ and quotation are the same document. You enter the vendor's pricing and conditions in the original RFQ.
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Maintaining a Quotation
• Enter each vendor's quotation in the associated Request for Quotation (RFQ)
• Compare prices using the price comparison list• Store the best quote in an info record• Optionally, send rejection letters to the losing
bidders
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Comparison of Prices
• You can compare the prices from all quotations from the competitive bidding process using the price comparison list
• The comparison list ranks the quotations by item from lowest to highest price
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Creating a Release Order
• Purchase order that references a contract is called a release orders, they specify:– Number of the contract– Quantity to be released– Delivery date
• Release order documentation (open quantity, quantity released to date, total value) is automatically updated against the contract when a release order is created
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Creating a Release Order (continued)
• The vendor data, price data, and the delivery terms and conditions are copied directly to the release order
• Release orders can be created from a proposed purchase requisition generated off an Materials Requirement Planning (MRP) run (net requirements)– Manually– Automatically
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Unit 13 – Exercises
107. Create Purchase Outline Agreement (Contract) for Stock Items
108. Run Materials Requirements Planning – Single Item, Single Level
109. Convert Proposed Purchase Requisition to Release Order
110. Review Outline Agreements 111. Create Goods Receipt112. Create Invoice Receipt from Vendor113. Post Payment to Vendor