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Precious metals procurement process in hi-tech industry

Precious metals procurement process in hi-tech industry

I have over 10 years of experiences in supply chain management domain and I have worked various industries in SAP implementation and support projects. Currently I am working for Intelligroup Inc as a Principal Consultant. I thought of sharing my knowledge on precious metals procurement process in hi-tech industry and this might help members in SAP community some extent. In this blog, I am covering, how we can procure precious metals in hi-tech industry and how SAP helps to achieve this objective.

Introduction – Precious Metals
  • A metal is considered to be precious if it is seldom available on the earth. 
  • The category of a “precious” metal can also be determined by high demand as well as market value.
  • The well known precious metals are gold, silver, Platinum, Rhodium and Palladium etc.  
  • Precious metals have been extensively used in various industries including hi-tech industries.
Usage of Precious Metals in Hi –Tech industry
  • Precious metals are used for manufacturing various components in hi-tech industry.
  • Precious metals are used for plating process in hi-tech industry.
How Precious Metals are traded?

Now a day’s precious metals are traded like stock in various exchanges around the world. Traders will be buying or selling precious metals on behalf of their customers. Based on the quantity, the dealer will notify the prices for buying or selling. The agreed price will be trading price of precious metals. Precious metals can be traded through online and it’s becoming easy and convenient. Like stock, there will be trading limit for precious metals and trading companies follow the rules set by the exchange. The funds can be transferred electronically. Handling, transportation, and insurance charges vary with the weight of the precious metals and distance and mode of delivery.

How can we procure Precious metals using SAP?

In SAP, the process steps involved in procuring precious metals are almost similar to stock item procurement process, except the pricing procedure and few customization changes. Purchase info record has to be created for precious metals and relevant condition record has to be maintained on going basis. I will briefly cover the customization required in SAP to map precious metals procurement process.

Customization in SAP for precious metals

We have to ensure the following settings for each precious metal in Customizing:

  •  Define a non-dimensional unit of measurement (Global settings  Check units of measurement) 
  • Set up two new condition types (Purchasing – Conditions – Define price determination process – Define condition types)
  •  Make new entries in the calculation schemas Purchasing – Condition -Define price determination process – Define calculation schema)
 Unit of Measurements for precious metals

We have to create necessary unit of measurements for precious metals and conversion unit has to be entered in the material master record

New condition types for Precious Metals 

We have to create necessary condition type as per the requirement. Condition types have condition class A, condition category U, and calculation rule C (quantity-dependent), An access sequence must be assigned to the condition type for the current daily ruling price.

Adding condition types in Calculation Schemas

The new condition types have to be included in the pricing procedure and have to be assigned correct price calculation formula in the pricing procedure.




Principal Consultant for Intelligroup Inc., USA 

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      Author's profile photo Stefan Weisenberger
      Stefan Weisenberger

      Nowadays you should also take a close look at SAP Commodity Management - this is a new solution that addresses exactly this business problem:

      Videos of Commodity Management