Procurement made hassle free by SAP

Want to get your Procurement Process straight and easy – trust the leader – SAP. SAP’s one stop solution for all procurement, vendor and raw material related hassles – its Material Management (MM) module. SAP MM with its varied, customizable features caters to all domains of the industry irrespective of size and operation. Below is a brief about the business need of SAP MM and its significance.

For any company, raw materials are the most important factor of production process. Quality, quantity, availability, etc. of the raw materials determine the cost of production and thus the profitability of the company. Procure-To-Pay process is a combination of steps which handles the different steps related to purchase and acquisition of raw materials. It also includes vendor, shipment and payments and thus encompasses the critical factors of the raw material procurement process. The below figure will give a detailed picture of the process:

Begins with Purchase Requisition which is nothing but the “need” felt by a company to procure raw materials. A Purchase Requisition or PR can be generated by any department of the company. Upon approval of the PR, a Request For Proposal or RPF is generated by the company and distributed to the vendors. On receiving RFP, the Vendors send Proposals to the company which are duly check and reviewed. A Vendor is selected based on the Proposal and various other criteria set by the company in accordance with its policies. The selected Vendor is then notified and a Purchase Order or PO is sent to the selected Vendor which is acknowledged.

Vendor does the shipping within the date and time agreed in the PO. The Goods are received at the company’s receiving point and verified. The Vendor also sends the Invoice along with the Goods which is also reviewed. Before making payment to the vendor, a verification process is carried out which is called the 3-way Match process. In this process, a match is carried out among Purchase Order, Goods Receipt and Invoice Receipt and then the payment is made as shown in the figure below:

All the different steps mentioned above and more are beautifully taken care of by the SAP’s Material Management Module. It definitely makes your life easy.

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