BPML-MM

SRSL Organizational Structures Plants-Munoli Com pany Code -1000

Sugar Plant(1101)

Pow er Plant (1102)

Dist Plant(1103 )

BGM Depot(1801)

CAL Depot (1802)

Export(1901)

Yellow :M fg Plants Ash:Logical Plants

 S AP AG2003, Title of Presentation, Speaker Nam /6 e

Storage Locations Various store Locations identified are 1. General Stores 2. Finished Goods Stores 3. Bagasse Yard 4. Compost Yard 5. Coal Yard 6. Press Mud 7. Raw Sugar 8. Packing 9. Sulphur 10. Lime 11. Oxygen 12. Tools & Tackles 13. Molasses Tanks 14. R.S. 15. Ethanol

16. 17. 18. 19. 20. 21.

Diesel Scrap Bamboo mats & Bamboo Project Items Power Steam

The same will allocated according to the requirements Purchase Organisation: A central Purchase Organisation shall be created which shall be responsible for Central Purchases made by Mumbai- Corporate Purchase office and Belgaum Purchase office. This organisation shall be across company codes and will serve all the Plants. For unit / Plant Purchases, a separate Purchase organisation will be created for each Plant and will cater to the respective Plants Purchasing Groups Different purchasing groups identified are: 1. Mr. Josesh Fernandes 2. Mr. Umesh Malvia 3. Mr. Dharmesh Rana 4. Mr. Umesh Yelgi 5. Mr. S.N. Akki 6. Mr. Adam Pakali 7. Mr. Sayed Material Types 1. RAW Material 2. Finished goods 3. Packing Material 4. Trading Goods 5. Consumables 6. Tools and spares 7. Capital items 8. Service Items 9. Semi Finished Material Group The following Material groups are identified 1. Machinery spares 2 Electrical 3 Tools 4 Hardware 5 Iron & steel 6 Rubber goods 7 Welding materials 8 Bearings 9 Civil goods paints & varnishes 10 Pipes and fittings 11 Oil & lubricants

12 13 14 15 16 17 18 19 20 21 22 23 24. 25. 26. 27. 28. 29.

Jointing materials General materials Manufacturing materials Vehicle stores Fuel Other materials. Turnkey base job (sugar plant) Stationary materials. Repaired materials. Turnkey base (distillery) Cane harvesting & transportation materials. Distillery materials. Sugarcane Sugar Packing materials Molasses Rectified Spirit Ethanol

Material Code Material Coding will be decided mutually

4.1Master Data Maintenance Definition of Maintaining the following master data: Process 1. Materials 2. Services 3. Vendors 4. Purchasing Info Records 5. Source List Existing Process (ASIS)

Business Requirements

To-Be

Master data is maintained for the following • Materials • Vendors (Farmers/ Transporters/Harvesters) • Source list • The following master data is required. Material, Vendor, Purchase info records, Source list have to be maintained in SAP R/3. SAP R/3 provides functionality for maintaining the following master data: Materials Services Vendors/Farmers

Purchasing Info Records Source List Flow Chart Gap Analysis Reports

NA A NA

4.1.1 Sub-Process Scope: Maintenance of Material Master Definition of The material master is the central master record for logistics. For Process example, data for sales, production and procurement are stored in the same master record but can be related to different organizational units Maintenance of Raw materials, Packing, Finished material etc.in the material master for day to day transactions and Modifications when ever required Existing At COMPANY Material details are maintained for Raw materials, Process (ASPacking, Finished material etc. Materials are maintained in the IS) material master for day to day transactions and to maintain information Business All materials and their related information should be maintained in Requirements SAP. Re-order level should be maintained for Raw and Spares material. Quality checks are to be in place for all the materials To-Be

Flow Chart Gap Analysis Reports

SAP Standard Material types shall be used for all the materials. For example FERT, ROH, PIPE, HALB, VERP, etc. Materials with the same basic attributes are grouped together and assigned to a material type. The material type also decides • Whether the material number can be assigned internally or externally • Which screens appear and in what sequence • Which departmental data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both (for Semifinish) At COMPANY on material Industry wise, Material type wise, material group, valuation, Class, Storage location, Quality, Classification views are maintained. Only for Raw material and packing material MRP views are maintained 1. Material coding for all material types will be provided as per the requirement. 2. Material groups are maintained in order to meet the analysis & reporting requirements NA A NA

4.1.2 Sub Process Scope: Service Master Maintenance Definition of . Maintenance of Service master for day to day transactions and Process

Modifications when ever required

Existing Process (ASIS) Business Requirements To-Be


Services are procured for Plant maintenance. for Maintenance of Equipments, Plant and machinery The same should be captured in the system Service masters shall be maintained for various Services with Description, Category and Unit of Measure using the ‘Master Data Maintenance’ in ‘External Services management’ of Materials management Module. Following critical information shall be maintained in the service master record: 1. Service Number, which gives a unique identification to the service. This shall be internally generated by the system. 2. Service Category, which describes whether a service is an internal service or a service to be procured externally, or services performed for third parties. In conjunction with the organizational (maintenance) status of the service master, the maintenance views can be controlled i.e. whether a service master can have – a basic data view, controlling view, sales & distribution view. Based on the type of service, the service category shall be maintained. 3. Description which describes the service in brief Examples of Services for which Master records shall be created: 1. Annual Maintenance Contracts 2. Repairs in COMPANY premises 3. Repairs outside NA A NA

4.1.3 Sub Process Scope: Maintenance of Vendor Master Definition of Vendor Master Records contains all the information necessary for Process any contact with a certain vendor, in particular for conducting business transactions Existing The following details for Vendor are Maintained at COMPANY like Process (ASVendor code, Farmer code Address, Contact Number, e-mail ID, IS) Payment Terms and conditions etc. • Business Vendor Master with all the necessary data should be maintained Requirements To-Be Vendor Master Data shall be maintained at the following levels: • • •

General data Company Code Data Purchase Organisation Data

• • • • • •


The following Groups also will me maintained Service vendors Farmers Import Vendors Domestic Vendors One time Vendor Internal Vendor

NA A NA

4.1.4 Purchase Info Records Definition Purchasing Info records shall store vendor - material details for various of Process types of procurement like standard, sub-contracting, etc Existing Process (AS-IS) Business Requireme nts To-Be


At COMPANY, Purchase Info Records are Maintained for Raw Materials, Consumable and Engineering materials Provision Should be made to capture the same in the system These info record details shall be maintained for a Plant and Purchasing Organization. Details like Prices & other conditions, under and over delivery tolerances, are stored in these records. The information in the latest purchasing info record for a combination of vendor and material for that purchasing organization and plant shall always be defaulted when creating a Purchase Order. Purchasing info records shall be created manually or automatically. Manual Creation shall be done when a purchasing info record doesn’t exist already for a vendor – material combination for a purchasing organization and plant. Manual Update shall be done. When there are changes in the values of the Purchasing Info Records. Automatic Updation/Creation shall be done at the time of creation of Request for Quotation, Quotation or Purchase Order for those records, which already exist. Provision for deleting obsolete info records shall be provided. NA A Ref Reporting section 4.7

4.1.5 Source List Maintenance Definition of The source list shall be used to maintain the possible sources of Process supply of material for a given period or to block a possible source

of supply for a specific period or to completely block the external procurement of a material Existing Process (ASIS) Business Requirements

To-Be


At COMPANY standard source Lists is Maintained Allowed (and disallowed) sources of a material for a certain predefined period should be Maintained

1. A Source List shall be created automatically or manually. 2. Automatic creation of a record in the source list for a particular material is done when a purchasing info record is created. Source list shall also be automatically created when an outline agreement is created. 3. Manual maintenance shall be done when a new source / new material is identified.

NA A Ref Reporting section 4.7

4.1.6 Sub-Process Scope: Maintenance of Conditions for Procuring Materials Definition of Maintaining of Oricing conditions like Gross Price, Net price, Taxes Process applicable etc Existing Process (ASIS) Business Requirements To-Be

Flow Chart Gap Analysis

All applicable Pricing Conditions are maintained at COMPANY Same to incorporated in the system Pricing conditions shall be maintained in the purchasing info records or in the header or item level as applicable. Vendor, Material and other factors that determine the Excise duty shall be maintained through the CIN Module of SAP R/3. Tax condition records can be maintained in the system for various levels of taxes, like central and state level, which will be automatically determined during a transaction depending upon the receiving plant and the vendor’s locations The Planned Freight costs shall be booked in the same Purchase Order for which the procurement is to be done. In cases where the Material carrying party is different from the one on whom the PO is raised the Freight Vendor shall also be maintained in the same PO. Service Tax will be maintained as condition type

NA A

Reports

Ref Reporting section 4.7

4.1.7Payment Terms Definition of Defining Various Payments required for Procurement activities Process Existing There are different payment terms existing Process (ASIS) Business The same should be captured in the system. Requirements To-Be


4.2 MRP Definition of Process

Existing Process (ASIS) Business Requirements

To-Be

COMPANY shall use the standard payment terms wherever possible. Wherever required, specific payment terms shall be defined in the system NA A NA

Material Requirements Planning activities involved in creating an external procurement plan for all the materials in a plant or company Planning is done as of now for Spares, routines & Packing Material. Planning to be done on the basis of reorder level. Automatic triggering of PR’s to be done based on MRP for the above Materials. This Business Requirement is taken care of by MRP/CBP SAP Consumption Based Planning: - Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. It is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values. All the materials should be classified under MRP/CBP. Accordingly MRP type should be assigned to the Material. If a material falls under CBP, Re-order level (ROL) is to be identified with maximum stock level. When MRP is run, the system will check the current stock levels against the re-order level. If the stock level is less than the ROL then a procurement proposal is raised up to the Maximum stock level quantity. In consumption-based planning, the following MRP (Material Requirement Planning) procedures are available: Reorder point procedure Forecast-based planning

Time-phased materials planning



4.3 Procurement Processes 4.3.1 Procurement of Goods (Spares & Routines) Definition of The Spares and Routines material procured is owned by COMPANY. Process All subsequent activities of stock management and delivery are the responsibilities of COMPANY Existing Process (ASIS)

Purchase Requisitions are generated by concerned departments and forwarded to Purchase. Purchase Dept Sends enquires, Receives Quotations, Compares Prices and Negotiates/renegotiates prices. And Purchase orders are sent to respective vendors based on which materials are received. Vendors invoice is verified with goods receipt and forwarded to finance department. •

Business Requirements To-Be

Same has to be captured in the system The process of Stock material procurement starts with the raising of the Purchase Requisition (PR) for a specific material. The PR can be raised via the MRP run or ad hoc manual creation. From a MRP run, MRP controller will firm and convert plan orders to a PR The fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR. The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor. When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will require the quantity to be changed at GR creation level IM storage location /bin location of goods to will be done manually. For materials managed in batches, the system automatically assigns a

batch number to the batch if no external batch number is entered. For the category of Stock material with expiration management, the auto assigned batch number will be the material expiry date in the format of YYYYMMDD. In this category of goods, if the vendor batch number is entered, the system will not auto assigned the batch number and instead use the vendor batch number as the material batch number. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly. Note: Cash Purchases will be decided in consultation with FICO requirements Flow Chart

Procurement of Spares & Routine Material SRSL

Vendor

SAP R/3 Create PurchaseRequestion ME51N

Local / Return

Create Request ForQuotation (Enqy) ME41 Create Quatation ME47 Price Comparision ME49

Update Quoted Price in the Info Record

CreateContract/PO ME51N/ME21N

Capture EI, Post Goods Receipt, Assign Batch Number and Post cenvat-Part II (MIGO)

Companycode MFG. Plant Organizational Elements Plant Storage Location Purchase Organization Purchase Group Excise Group Excise Series Influencing factors Excise Chapter Id CENVAT Determination Master Data Requirement Material Code Vendor Code Tax code ED+CST/LST

Perform Goods Receipt Inspection & Record Results. (QM) QE51N

Rejected Return Delivery to Vendor MIGO/MBRL (System will create Part I Automatically) Generate Excise Invoice (Other movements) J1IS

Perform Usage Decision (QM) QE51N

Accepted Invoice Verification ERS/MIRO Subsequent rejections and Returns

Post & Print Excise Invoice J1IV

Credit Memo MIRO

 SAP AG 2005, Title of Presentation, Speaker Name / 7

Gap Analysis Reports

A- only Retrospective amendments are not available in SAP Ref Reporting section 4.7

4.3.2 Procurement of Non-Stocked Material (Consumable) Definition of Non-stocked materials are not held in stock because they are

Process

consumed immediately. Example of non-stocked materials can be stationery

Existing Process (ASIS)

Purchase Requisitions are generated by concerned departments and forwarded to Purchase. Purchase Dept Sends enquires, Receives Quotations, Compares Prices and Negotiates/renegotiates prices. And Purchase orders are sent to respective vendors based on which materials are received. Then the material is issued to the respective indenter with out stocking at stores. Vendors invoice is verified with goods receipt and forwarded to finance department. •

Business Requirement s To-Be

Same has to be captured in the system The process of procurement for non-stocked material starts with the manual creation of the Purchase Requisition (PR) for a specific non-stocked material. The type of procurement will be to expense using the account assignment category ‘K’. The goods will be procured and expensed to a cost center. The corresponding expense GL and cost center will be automatically determined by the system. If there are available materials on hand for the requisition then it will be issued out manually to the requester. If not, the requested material will need to be procured. The buyer will perform the sourcing activities with existing standard order or execute a call for quotations exercise and vendor selection. At this stage, if a standing order exists for the order item then the vendor will be informed to initiate the goods delivery. If there is no standing order in place, the buyer can do the procurement via adhoc Purchase Order (PO) or choose to negotiate a Blanket Order. The Blanket Order is created by using the Framework Order (FO) document type. And in this case, the item category to use is ‘B’ for Limit. The stipulated validity periods in which the materials to be delivered as well as the amount limit can be defined in the FO. Alternative, the ad-hoc PO can also be created with reference to the PR. Both the PO and FO will be subjected for approval via workflow. The approver will receive and release the PO or FO via Workflow. After approval, the PO or FO will be faxed or sent electronically to the vendor. When goods arrived, the correct items and quantities will be received with reference to the PO or FO. The goods receipt process

is required for items ordered via the PO. No goods receipt process is required for FO. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly. As for invoice items entered with reference to the FO, there will be a validity period and limit check. The system will return a warning message if these values are exceeded.

Flow Chart

Procurement for Consumable Material SRSL

Vendor

SAP R/3 Create purchase order

Assign account assignment during purchase order creation (eg. Cost Center)

Is goods receipt necessary? Y Post goods reciept

Invoice verification



A Ref Reporting section 4.7

N

4.3.3 Procurement of Services Definition of Services are regarded as being consumed at the time of their Process performance. It can be performed internally or procured externally (outsourced). Examples of services include AMC, Motor Servicing and construction etc Existing Services are procured by COMPANY depending on the services Process (ASrequested by Requester Dept. IS) AMC exist for the maintenance of Equipments, in which the Company supplies material. Payment is done on yearly basis Business Same has to be captured in the system Requirement s To-Be The process for the procurement of services starts with the manual creation of the Purchase Requisition (PR). The type of procurement will be to expense using the account assignment category ‘K’. The service will be procured and expensed to a cost center. Services will be represented either by using service master or material master (material type ZSV). If service master is used then the item category ‘D’ for Service is entered. For this, the service number will need to be entered and the corresponding expense GL and cost center will be referred to according to the service master record. The overall limit also needs to be defined for the order item. The PR will be subjected for approval via workflow. The approver will receive and release the PR from their Work Flow. Once the PR is approved, the fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR. Next, the Purchase Order (PO) will be created with reference to the PR. The PO will be subjected for approval via workflow. The approver will receive and release the PO from their workflow. After approval, the PO will be faxed or sent electronically to the vendor. For PO using service master, the services performed are entered using the service entry sheet. For PO using material master, it will be captured in the normal Goods Receipt (GR) transaction. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. For PO using material master, the invoice items might be blocked when the entries go beyond certain tolerance limit configuration. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly. As for invoice items entered with reference to PO using service master, there will be a limit check. The system will return a

warning message if these values are exceeded.

Flow Chart

Procurement of External Services SRSL Mfg Plant

Vendor

SAP R/3

Message output

Create Service Purchase Order

Creation and Accepting Service Entry Sheet

Invoice Verification with TDS deduction

Vendor Vendor with Advance Payment Advance Payment with TDS deduction TDS deduction

TDS Process Prepare the cheque / TDS Challan manually & Submit to House Bank

TDS Challan Payment (FI - outgoing payment)

Receive the TDS Challan from House Bank

Update the TDS Challan No, House Bank, Date of Payment

Generate & Print TDS Certificate Vendor wise / Section wise

Generate the TDS Annual Return Section wise




TDS Certificate sent to Vendor

4.3.4 Procurement of Packing Material Definition of The material of packing is the supporting material that facilitates Process the packing of the main components (sugar). For example – Gunny /PP bags, box, etc. These materials can be procured by COMPANY and provided to the subcontractor or used by Stores during shipment packing or internal co-packing Existing Process (ASIS) Business Requirements To-Be

Same as Procurement Spares & Routines. Packing Material Procurement has to Captured in the system The process of procurement for packing material starts with the creation of the Purchase Requisition (PR) for a specific packing material. The PR can be raised via the MRP run or ad-hoc manual creation. Packing material is planned as BOM (bill of material) dependent demand requirements of the finished goods. Depending of the demand for the finished goods, the corresponding quantity of packing material is calculated based on the BOM and shortage is proposed for replenishment. The type of procurement will be to expense using the account assignment category ‘K’. The goods will be procured and expensed to a cost center. The corresponding expense GL and cost center will be automatically determined by the system. The fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR. The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Material pricing will be maintained in info record or retrieved from the material master standard price. Source of supply determined at PR is automatically assigned to the PO. Instead of to COMPANY Stores, the goods can be specified to be delivered directly to the subcontractor. In this case, the delivery address in the PO will need to be amended accordingly. This is accomplished by selecting the ‘SC Vendor’ indicator in the PO and specifying the subcontracting vendor code. This will cause the material to directly get posted to ‘material provided to vendor’ upon goods receipt. The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval; the purchase order will be mailed, faxed or sent electronically to the vendor. If the goods are delivered direct to the subcontractor, upon receiving the goods, the subcontractor will need to inform the Stores. Upon receiving this arrival information from subcontractor, Goods Receipt will be posted. The material is posted direct to the

stock of ‘material provided to vendor’. When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will require the quantity to be changed at GR creation level IM storage location /bin location of goods to will be done manually Finally at the logistics invoice verification stage, invoice items are entered with referenced to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly.


Same as Routines& Spares A Ref Reporting section 4.7

4.3.5 Procurement of Assets Definition of Assets are Procured and maintained by COMPANY Process Existing Assets are Procured based the Management decision and same Process (AShas be maintained by COMPANY in various locations IS) Business Asset Procurement has to Captured in the system Requirements To-Be The process of procurement for asset starts with the ad-hoc manual creation of the Purchase Requisition (PR). The PR will

function as an item requisition request document. The account assignment category ‘A’ for asset has to be specified for the order item. At this stage, an asset number has to be provided by the Finance department and input to the PR. The estimated price of the asset acquisition (based on draft quotation or previous purchases) will be entered in the PR. A budget check based on the asset number and estimated price will be applied to the PR. If the purchase amount is close to the budget deficits, the system displays an appropriate warning message. If a root budget unit does not have enough funds to cover the subordinate budget amounts, the system displays an error log. The PR will be subjected for approval via workflow. The approver will receive and release the PR from workflow Once the PR has been approved, the buyer will perform the sourcing activities with a call for quotations exercise and vendor selection. After the vendor is selected, the PR is converted to the Purchase Order (PO) with the selected vendor. There will also be a budget check applied for the PO. This is a formality check if there is no price or quantity change from that of the PR. The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval; the purchase order will be mailed, faxed or sent electronically to the vendor. When the asset arrived, the correct items and quantities will be received with reference to PO in the Goods Receipt (GR) transaction and the relevant documents will be handed over to Finance for asset tagging. Asset with serial number will have the serial number maintained in the asset master. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly. Capitalization of asset will be at logistic invoice verification stage. Note: Asset Transfers will handled by FICO module


Same as Regular Purchase except asset No assignment A Ref Reporting section 4.7

4.3.6 Procurement of Subcontracting Definition of This is the procurement of subcontracting service to a finished/end Process product from a constituent range of component materials. The subcontracting services can be procured from an external vendor or performed internally within COMPANY Existing Process (ASIS)

• COMPANY needs to get its material processed from Service providers due to lack of that capability / capacity with in COMPANY. • After processing, COMPANY will take back the entire processed material. • The Subcontracting charges are settled to the Vendor through normal Payment Procedure


Subcontracting Procurement has to Captured in the system The process of procurement for subcontracting starts with the creation of the Purchase Requisition (PR) for the finished/end product. The PR can be raised via the MRP run or ad-hoc manual creation. The item category ‘L’ for subcontracting will need to be specified in the order item. If a Bill of Material (BOM) of the component materials required exists, then BOM will be automatically exploded to its individual components in the PR. The fixed vendor from source list or info record will be used for automatic source determination and assignment of the subcontractor to the PR. The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO. The net price denotes the service charge for the packing work. The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the PO will be faxed or sent electronically to the vendor. The components are then issued to the external subcontractor via the system. If the subcontracting is done in-house, an internal vendor representing the packing entity will represent the subcontractor. For internal subcontract work, the outbound delivery is not required. Instead components are moved to the work site storage

location for the packing to commence. The stocks to be provided to the subcontractor will be monitored under stock overview as ‘material provided to vendor’. This stock type is managed at plant level (not storage location) which means the stock remains valuated at plant level (although it is no longer stored in COMPANY). Alternatively this can be viewed as WIP (work in progress) stock. For internal subcontracting, the receiving of the finished goods into stock will be via inventory transaction movements. But for external subcontractor When the finished goods arrived from the external subcontractor, the correct items and quantities will be received with reference to the PO document that had been created earlier. IM storage location /bin location of goods to will be done manually During GR, the components consumed according to the amount of finished goods received will be proposed according for back flushing. This consumption of components will happen automatically upon the execution of the GR. This will mean that the increase of finished goods will automatically reduce the components quantity correspondingly. If variances occur in the consumption of components materials by the subcontractor during the packing job, the amount of any over or under-consumption must be adjusted/reflected back in the stock. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. The Finance department will make payment accordingly.

Flow Chart

Subcontracting without Payment of Excise Duty Subcontractor

SRSL SAP R/3

Message Output

Create Subcontracting Purchase Order

Transfer of Components to Subcontractor

Create Subcontracting Challan

Subcontract Processing

Post Goods Receipt

Reconcile Subcontracting Challan Complete / Reversal / Re-credit Subcontracting Challan

Logistics Invoice Verification

Annexture IV entry




4.3.7 Stock transport order/Depot Sales Definition of Stock can be cross - replenished between plants. The stock Process transfer can be from one plant to another plant within the same company (intra-company) A stock transfer will either be initiated from within Stores or from the sales & marketing (sales from Depot).

Existing Process (ASIS)

SCOMPANY moves goods from one plant to another plant depending on the requirement Sales from Depots are also taking place


Stock Transfers and Depot sales has to Captured in the system For transfer initiated from sales & marketing and also whereby shipment is required over a distance, the Stock Transport Order (STO) will be used as the request for transfer to the Stores to execute the delivery. The Stock Transport Order (STO) will be used for intra-company plant-to-plant stock transfer. Apart from its function as the request for the source plant Stores to execute the delivery, it will also act as the same document for the destination plant to plan the inbound delivery of the goods. The process starts with the creation of STO, which is a form of Purchase Order (PO) of the document type UB. In STO, instead of an external vendor, the source plant functions as the supplier of the stock. With the shipping data for plants involved in the transfer appropriately configured, the shipping information such as shipping point, loading group etc will be automatically determined by the system and appear under the new Shipping tab in PO. When the Shipping tab and its relevant information appear in the PO, a SD delivery (Outbound Delivery) can be created based on the PO. The STO will be subjected for approval via workflow. The approver will receive and release the STO from workflow The Outbound Delivery will be created with reference to the PO. Stores will pick, pack and post goods issue of the material with reference to the Outbound Delivery document. Material will be posted and appear in stock overview as goods in-transit during the shipment period. The destination plant can use the listing of goods in-transit and STO

to plan for the incoming goods. When goods arrived, the correct items and quantities will be received with reference to the STO document that had been created earlier. IM storage location /bin location of goods to will be done manually. For materials managed in batches, the system will take the origin batch number Flow Chart

Internal Procurement (Stock transfer to Depot with Delivery) SRSL SAP R/3 MFG. Plant

Create Outbound Delivery

Change Outbound Delivery

DepotPlant Create Stock Transfer Order

Goods Receipt for Purchase order

Create Billing document

Create Excise Invoice

Print Excise Invoice

Organizational Elements Plant Storage Location Purchase Organization Purchase Group Company Code Influencing factors Customer attached to Plant Delivery Type and Checking Rule Assignment for Order Type and Supplying Plant Delivery Tyoe NL attached To Proforma Inv. Type JEX Master Data requirement Customer Vendor Material

RG23D entry

 SAP AG 2005, Title of Presentation / Speaker Name / 2



4.3.8 IMPORTS Definition of This process Procurement of Imported Materials shows you how to Process handle the Countervailing duty (CVD) on imports, which is levied in place of excise duty. Unlike other forms of customs duties, such as basic customs duty or special customs duty, you can credit CVD paid on imports to your CENVAT account. Existing Process (ASIS) Business Requirements To-Be

Imports Procurement is presently there in COMPANY for Sugar, Coal, Machineries Same to captured in SAP Import PO will be raised based on PR. This PO is without GR based IV This PO will be identified with clear Material Code & associated costs related to import Purchase that need to be loaded in to Inventory When the purchase order is issued in a foreign currency, the system calculates the net value based on the rate defined in the exchange rate table. You can choose to overwrite this exchange rate in the purchase order. The PO will be subjected for approval via workflow This PO will be identified with Customs duty related Conditions The Customs duty, Cess., shall be identified as Delivery costs CHA charges shall be based on % basis Shipping notification will be used to Calculate ETA of Materials No Inspection Process at the time of Material Receipt. Note: Customs Office and CHA will be identified as Domestic Vendors User cannot amend the PO for delivery charges once GR is made. Inspections charges / Transportation charges if any identified will be brought as PO condition on% Basis. Hence separate PO shall be raised on the Vendor out side the system for reference

Flow Chart Imports.shs



4.3.9 CAPITAL PURCHASE Definition of The Capital Items business is processed differently as far as excise Process duty is concerned. Manufacturing Plants are allowed to set off excise duty on purchases of capital items against excise duty on outputs. However, unlike with raw materials, you can only set off half of the duty in the first year, and the rest in any year after that Existing Capital Procurements are made at COMPANY Process (ASIS) Business Same to be captured in the system Requirement s To-Be The Budget for Capital Items will monitor using Internal Functionality of FI. Different PO type will be maintained for this. Other than this regular Procurement (Routine Purchase) process will be applicable to this This main feature is 50% of Cenvat credit in the first year Flow Chart Procurement of Capital Material to Manufacturing Plant SRSL

Vendor

SAP R/3

Create Purchase Order

Message Output

Release Purchase Order

Post Goods Receipt And Post CENVAT – Part I and II Only 50% CENVAT is availed


Balance 50% CENVAT to be transferred to RG23C subsequent fiscal year

Part I entry  SAP AG 2004, Title of Presentation, Speaker Name / 2



4.3.10 Procurement of Trading Goods Definition of In COMPANY apart from own production and sales activities, lots Process of trading activities also take place. To fulfill that requirement, this Process is taken up. For such trading scenario there will not be any Excise Duty related entries and also there will not be any Excise registers. There is a possibility of Sales Tax being applicable on some products. Existing Process (ASIS) Business Requirement s To-Be

Trade Sale are happening COMPANY Same has to Captured in SAP system

The process of Trading material procurement starts with the raising of the Purchase Requisition (PR) for a specific material. The PR can be raised via the MRP run or ad hoc manual creation. From a MRP run, MRP controller will firm and convert plan orders to a PR The fixed vendor from source list or info record will be used for automatic source determination and assignment to the PR. The next step is the conversion of the PR to the Purchase Order (PO). The PO will be created with reference to the PR. Pricing conditions and procedure will be maintained in info record and retrieved into the PO The PO will be subjected for approval via workflow. The approver will receive and release the PO from workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor. When goods arrived, the correct items and quantities will be received with reference to the PO document that had been created earlier. Partial arrival of goods that had initially been ordered will require the quantity to be changed at GR creation level IM storage location /bin location of goods to will be done manually.

For materials managed in batches, the system automatically assigns a batch number to the batch if no external batch number is entered. Finally at the logistics invoice verification stage, invoice items are entered with reference to the PO. Invoice items might be blocked when the entries go beyond certain tolerance limit configuration. For example, difference between PO and invoice amount exceeding the tolerance limit. When this occurred, the system will automatically inform the buyer responsible for the PO via workflow to release the invoice items by deleting the blocking reason or changing the PO. Once the invoice is released, the Finance department will make payment accordingly.

Flow Chart

Procurement of Trading Materials Depot /Plant

Vendor

SAP R/3

Message Output

Create Purchase Order

Post Goods Receipt


Part I entry  SAP AG 2004, Title of Presentation, Speaker Name / 2



4.3.11 P007 Procurement of Consignment Goods (Ethanol, Molasses) Definition of Consignment goods are stock made available by the vendor Process (Sugar Plant) which is stored on COMPANY’s (Power Plant, Distillery Plant) premises but remains the vendor’s property until withdrawn for use or transferred to the COMPANY’s own valuated stock Existing Presently Power Plant & Distillery Plant consumes Molasses & Process (ASEthanol produced from Sugar Plant, which comes in Pipeline. IS) Business Same has to captured in The SAP system Requirements To-Be

The procurement of vendor consignment goods starts with the creation of the Purchase Order (PO) for a consignment material. The item category ‘K’ for vendor consignment will need to be specified in the order item.

If a particular material is under consignment from a specific vendor (Sugar plant), this Vendor-material will need to be indicated as such by creating and using the vendor consignment info record. At the same time, the procurement type for the material under material master MRP view will also be indicated as type ‘K’. Both the setup will prevent any accidental omission of the ‘K’ indicator during PO creation for a consignment material to a vendor. The material’s consignment price as agreed with vendor is maintained in the consignment info record. In the PO, the confirmation control key will be automatically set to initiate the use of the Inbound Delivery document. The PO will be subjected for approval via workflow. The approver will receive and release the PO. From workflow After approval, the purchase order will be printed, faxed or sent electronically to the vendor. The correct items and quantities will be received with reference to

the PO. For materials managed in batches, the system automatically assigns a batch number to the batch if no external batch number is entered. No invoice will be expected from vendor for consignment stock as the vendor is not able to track material consumption directly. Instead on a regular basis, a consignment settlement report that monitors all the withdrawals and returns from consignment stock will be generated. This provides the vendor a liability statement as well as the basis to enable the Finance department to proceed with payments. Flow Chart Gap Analysis Reports

Same as Regular procurement A Ref Reporting section 4.7

4.3.12 Contracts Definition of Contracts are long-term agreements with the supplier, for the Process supply of materials or the contribution of services, with predetermined conditions within a certain period.

Existing Process (ASIS) Business Requirement s To-Be

Contracts are presently available with COMPANY for certain vendors Same to be Capture in the System.

In SAP, Quantity contracts (definition of a delivery volume by supplier materials to those conditions were agreed upon firmly) Value contracts (definition of a value boundary for the material procurement according to the agreed upon conditions) This Process starts with the purchase organization entering in to a basic agreement with a supplier, in form of a quantity /value contract. In this contract the material (or material group) and the quantity or Service is defined. Based on a purchase requisition; the quantity contract is assigned as source of supply. In the next step the purchase requisition is transferred into a purchase order. After entry of the incoming goods the invoice verification takes place.

Flow Chart

Procurement - Contract Vendor

SRSL SAP R/3 Create Value/Quantity Contract

Create Purchase Requisition

Organizational Elements Plant Storage Location Purchase Organization Purchase Group Excise Group Excise Series Influencing factors Excise Chapter Id CENVAT Determination

Assign & Process Purchase

Requisition

Master Data Requirement Material Code Vendor Code Tax code ED+CST/LST

Convert Purchase Requisition into Purchase Order

Post Goods Receipt, Capture and Post Excise Invoice

Invoice Verification




4.3.13 Miscellaneous Procurements Definition of COMPANY procures certain materials /services like Rent, AMC etc, Process which are supposed to be paid monthly/quarterly Existing Same as above Process (ASIS) Business Same to be Capture in the System. Requirements To-Be For these cases PO shall be raised using a normal PO or Framework order in SAP. For identifying the billing dates, the Invoice plans shall be configured in the system This plans defaults all the billing date within specified period in the PO, on which liability to Vendor can be booked. For this type GR is not mandatory but will be created for information purpose Flow Chart Gap Analysis Reports

NA. A Ref Reporting section 4.7

4.4.1 Receiving (Goods Receipt) Definition of This process applies to goods receipt for all storage locations. Process Existing Process (ASIS) Business Requirements

• •

To-Be

The goods receipt transaction will be posted using IM movement type with reference to a Purchase Order, Stock Transport Order or Inbound Delivery document. During posting, batch information for batch-managed stock will be required. This will largely be batch information pertaining to the production date of the goods or direct entry of the expiry date itself.

Good s Receipt Process exists. Based on this only Payments are made

Same to be Capture in the System .The supplier should get the Intimation of receipt of material, status of goods.

The transaction is able to generate a goods receipt slip for manual reference. The materials, which require quality inspection, will be defaulted to Quality Inspection during the GRN. The Stock is transferred to the unrestricted use thru quality procedures. The quality decision when made the stock gets transferred into unrestricted use stock or blocked stock. The quantity posted in Blocked stock will not be usable unless cleared for quality reasons. The control for these transactions can be done through the authorizations for the users. Flow Chart Gap Analysis Reports

Ref flow chart of Procurement of Spares and routines. A Ref Reporting section 4.7

4.4.2. Goods Issue

Definition of Process Existing Process (ASIS) Business Requirements To-Be

Issuing Process of Material to the Plant/Departments



Goods issue to Production/ Plant maintenance /other Departments are performed in COMPANY Goods issue Process has to be captured in the system This is a standard feature of SAP

4.4.3 Goods Issue to Cost Center Definition of Goods Issue Process to the Cost Centre Process Existing Goods issue Cost centre/other Departments are performed in Process (ASCOMPANY IS) Business Goods issue to cost centre Process has to be captured in the Requirements system To-Be For Non-stocked material, upon goods receipt, the stock is immediately expensed off and charged to a cost center. Since nonstocked items are not quantity managed, they will not be visible logistically after being expensed off. Additionally Stock material stock can also be expensed off direct from stock and issued to a cost center. This can be the case for staff sales


The process starts with the identification of all stocks that are to be issued to a cost center. This is followed by executing the goods issue via IM stock movement from the source storage location. In this movement the cost center need to be entered. Upon issuance, the cost will be reallocated to the new cost center Ref Flow chart of Procurement of Consumables A Ref Reporting section 4.7

4.4.4 Stock Transfer Storage Location to Storage Location

Definition of Process

Stock can be replenished between storage locations within the same plant. The stock transfer can be from a storage location to another storage location in the same Stores and plant.. Transfers can be based on purpose of replenishment. The transfers are initiated within Stores.


Stock Transfers are taking place in COMPANY with in the Same Plant Same to be Captured in the System Stock transfer from storage location to storage location within same Stores For this scenario, the process starts with the creation of stock transfer movement in the Inventory Management (IM). It will have the complete details of the plant, Stores, storage location (from and to), material details, quantities and movement type. Stores will manually post the transfer and move the stock to another storage bin if required and finally the Transfer Order is confirmed. Stock transfer from storage location to storage location within same plant For this scenario, the process starts with the Stores receipt of stock transfer request. It will have the complete details of the plant, Stores, storage location (from and to), material details, quantities and movement type. Stores personnel will process the request with Movement type in Inventory Management (IM). The material document has to be printed out for control purposes before the goods can be moved. Lastly, the physical goods are moved to the new storage location.



4.4.5 Return To Vendor Definition of This Process Describes the returning material to the vendor for Process various reasons Existing Process (ASIS) Business Requirements To-Be

Vendor Returns are happening COMPANY Same to be Captured in the System Product will be returned to vendor either with 1) An inventory movement that reference an existing PO or goods receipt material document 2) a new PO (Return PO) For cases of not referencing an existing document, the return of material to principal will be carried out via the creation of a Purchase Order (PO). The return item will be marked with the ‘Return’ indicator. The Return PO will facilitate the outbound planning of the return delivery. If shipping data had been configured for the return delivery and the Shipping tab information appears in the PO, a SD delivery (Outbound Delivery) can be created based on the Return PO. Storage location postings are required and the stock will be manually picked. The goods issue of the material will still be according to the Outbound Delivery. In the event of a Sales return claim, a credit memo will be created to post the claim amount


A Ref Reporting section 4.7 4.4.6 Scrapping


This Process Describes the Scraping material due to various reasons


Scrapping is done at COMPANY Same to be Captured in the System Scrapping is a process whereby stocks storage location (damaged, expired, rejected and etc) will be written off from the books. The process will starts with the identification of stocks for scrapping in the storage location. Stores will create a stock movement for scrapping using Inventory Management (IM). Stocks are moved to a physical location and scrapping process will be executed.

Further Sale of Scrap has been covered in SD Module Flow Chart Gap Analysis Reports


3.4 PHYSICAL INVENTORY WITH ANNUAL COUNTING Definition of Process Existing Process (ASIS) Business Requirements To-Be

Process of Physical Inventory at storage location level Annual stocking is Performed at COMPANY Physical Inventory Process has to be Captured in the system The process will starts with Finance Department and Stores setting the period for physical inventory including stock movement cut off date. All stock movement related activities will have to be completed before the deadline. On the set date, book inventory will be frozen and physical inventory documents will be applied to all the plants and materials involved. No movement of stocks will be allowed during this stipulated date of physical inventory. Physical inventory documents and count tags will be printed out. Counting will commence with the counting teams covering all the materials and location listed on the physical inventory document. The count result for a material will be entered into the counting sheet. The counting sheets result are collected and entered into the system. After that, the stock differences are listed out and a recount will be initiated if required. If recount is necessary, either a new physical inventory documents will be created again or the quantity in the original count document is changed. When the counting teams are satisfied with count results, Finance personnel will list and post the differences in the system.



3.5 INVOICE VERIFICATION


Invoice verification is the process of Bill Matching (Bill Passing) for the Right qty /Right Price/ Right value and for other conditions


Invoice Verification presently done at COMPANY



Same to be captured in the System Invoice verification shall be defaulted Goods Receipt Based Invoice Verification. Exceptions are allowed like Import PO. All the delivery costs (planned & unplanned) shall be coded in the system. And are to be identified at the time of PO or GRN. Invoices can be blocked for the following parameters Price, Qty, Delivery Variance. The Stochastic blocking will be enabled. Difference due to foreign currency fluctuations can be identified. Vendor credit Note shall be generated through FI Module.

3.6 INTEGRATION POINTS Integration with SD • Based on the type of order booking done in SD module, the purchase requisitions or process orders will be generated which will be used for further processing of purchasing documents. • During the MRP Run the requirements will be calculated based on the existing Sales documents. • Delivery of Goods in SD module leads to a reduction in stock and return of goods increases the stock. Integration with PP • Goods Issue for consumption against a production order will be done in the MM Module and this reduces the inventory of the materials. • Goods receipt after production is received through the MM Module. Integration with QM • Whenever the material is received, the quality inspection lot is created and after result recording, a transfer posting automatically proposes the quantity to be posted to unrestricted/block stock after the results recording. • Quality Blocks will be activated for blocking invoices if posted prior to quality inspection. • Procurement of any material can be restricted to a period using the quality info record. Integration with FI During Goods Receipt: Inventory GR/IR Clearing A/c

Dr Cr

During Excise Part II Entries CENVAT Received A/c CENVAT Clearing A/c

Dr Cr

During Invoice Verification Vendor A/c GR/IR Clearing A/c CENVAT Clearing A/c

Cr Dr Dr

During Invoice Verification Vendor A/c GR/IR Clearing A/c

Cr Dr

CENVAT Clearing A/c

Existing Process (ASIS) Business Requirements To-Be Flow Chart Gap Analysis Reports

Dr

During Goods Issue to Production Inventory A/c Consumption A/c

Cr Dr

During Goods Issue to Delivery Inventory A/c COGS A/c

Cr Dr

•

A Std Report

3.7 REPORTS The following are the Reports requirements identified Pending Purchase orders Report Daily Stock report Report showing Pending PR, PO, Pending Bills, Batch & Shelf life 4. ISSUES & RECEIPTS: Main_Store_wise, Sub_Store_wise, Party-wise, Item_wise, Category-wise, Rejected_Material, Short_Receipt, Contractor-wise, Dead Stock, Asset. 5. Goods Issue: Main_group_wise, Department, Chargeable, Non-chargeable, cylinders consumption etc Item_wise /store wise Inventory report 1. Cylinders consumption 2. List of vendors based on ABC 3. Report on material sent to service with vendors 4. All excise related reports

Note: This is broad list of Reports The exact requirement will be finalised Mutually. Excise /statuary Related documentation which are not satisfied by SAP shall also be identified and customisation effort will also be discussed mutually

Print Outputs The following printed outputs are required by COMPANY. 1. Request for quotation. 2. Purchase Order 3. Purchase order amendment 4. Order reminder 1, 2 & 3 5. Goods Receipt (Will be decided Later) 6. Purchase Requisition

BPML-MM

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