Direct procurement

Direct procurement process:

The process of procuring materials that are directly used for production purposes is known as the direct material procurement process.

Using the direct procurement procedure, you can order BOM components for a planned order directly instead of via the warehouse.

Business scenario:  Consider the scenario of an enterprise that produces washing machines. The parts or components of a washing machine, such as electromechanical buzzers, suppressors, and electronic timers, are procured from external sources. As these parts are directly used in the manufacturing of washing machines, they are purchased, stored in the inventory, and issued to the production department, depending upon the department’s need.

There are two ways of doing this procedure

1. Using special procurement key

2. Using item category ‘non stock item’

SAP recommends the process to use with special procurement key

Required Settings in SPRO:

Step1: Define Direct procurement in MRP

IMG-> Production-> MRP-> Plant parameters-> Carry out overall maintenance of plant parameters

Indicator 1 or 3 are identical and used if direct procurement is to be triggered during MRP run

Indicator blank or 2 are identical and used if direct procurement is to be triggered only after the creation production order

Step2: Define Special procurement key:

IMG-> Production-> MRP-> Master data-> Define special procurement type

Master data setting: Assign the special procurement key in MRP2 view for the BOM component material master

Process:

To understand the process easily, I just created one simple example where the finished product BOM contains one component.

FERT# 2001682

ROH# 3003340

When you create the production order for the finished product, the MRP creates the  purchase requisition for the components with ‘direct procurement’ as the MRP element in MD04 screen as shown below,

Important points:

1. Purchase requisition created for direct procurement is firmed (marked as * in MRP element) which means you cannot change the quantities and dates for this requisition. The deletion button will be grayed out and deletion of firmed requisition is not possible.

2. You can even set the direct procurement in the BOM component when you want to use it for a particular BOM only. You enter this data in MRP data area of BOM component and this entry overwrites the entry in the material master.

3. You can also use the direct procurement process in networks using item category ‘non stock item’. You can determine whether a purchase requisition is created for each material or whether one collective requisition for all externally procured materials and services is created per network in SPRO under below link

IMG-> Project systems-> Structures-> operating structures-> Networks-> Settings for networks-> Specify parameters for network type.