A Document On Auto PO process
1 A Brief Process Introduction:
This process will enable system to create the Purchase Orders automatically from the Purchase Requisitions created in the system, without manual intervention, and at regular intervals of time with predetermined master data set up and with a predefined job schedule to run at regular intervals of time.In this process system will convert the Requirements created in the form of Purchase Requisitions created through MRP or created manually.Auto PO process once introduced in the system will make an Optimized Purchasing in the system.Prior to Going into the Details of the AUTO PO process a Brief overview of the Purchasing Process.
Purchasing Process in SAP an Illustration:
In Order to get fulfilled with the Auto PO process, there are certain prerequisites to get existed in the system.
In order to see that the POs to get created automatically, there are some prerequisites to be defined in the system.
2.1 Material Master Data :
a) Material Master (MM01). Proper material master needed to get created for the material with all the relevant data for Purchasing and MRP to get filled.
b) A check Box for Auto PO in the Purchasing View to be checked.
2.2 Vendor Master Data:
a) Vendor Master (XK01) needed to be created for the company code of the plant by which the PO is to be created and to be created for the Purchase Organization by which the PO is going to be created.
b) The Auto PO check Box in the Purchasing view needed to be checked.
2.3 Outline Agreement :
Outline Agreement ( ME31K) is an internal Purchasing document which will be created with the vendor and the plant for the materials for which the vendor to supply for an agreed price .This acts as a valid source for the Purchase Requisition to get created with a vendor assigned . For a PO to get created automatically, it is a must to assign a vendor.
2.3 Source List :
A valid source list (ME01) which is fixed for a vendor need to get existed in the system
It is a List created in the system under a plant for a material which links to possible vendors for the material supply. Furthermore the source list will have validity and a vendor can be fixed in the system for supply.
2.5 Info Record:
A valid Info record must exist in the system. Info Record is a record created in the system for a vendor and material for the purchase Organization and Plant through which the PO is going to be created. This can be created at the Transaction code ME11.
2.6. Condition Records for Output type:
A Condition Record is a record which will be created for the Output Type which is to be used for assigning an output type automatically to the PO, which in turn either prints, or Fax or Email the PO to the vendor. These can be created at MN04.
3. Process Involved for the Auto PO creation:
1. 1 Purchase Requisition Creation through MRP / or through ME51N screen. If MRP run is made scheduled to run at regular intervals of time Purchase Requisitions will get created automatically.
2. 2. Assign a source of Supply: During the creation of the PR, system needs to assign a valid source of supply to the Purchase Requisitions. Means system is deciding about the vendor who has to supply the requirement at the Requirement generation only. In Order to happen this master data which has been defined earlier will serve the purpose in the order Outline Agreement or Info Record or Source list. With this step, system generates the Purchase Requisitions with a vendor assigned..
1. Process the Assigned Requisitions :
a) a) Assigned Purchase Requisitions will need to get processed to convert into Purchase Orders. The run of the Transaction ME59N for the required input criteria will convert the able Purchase Requisitions into Purchase Orders automaticity without any manual intervention.In this step if the ME59N transaction is scheduled to run at regular intervals of time for the pre-defined input criteria, without any Manual intervention, Purchase Orders will get created automatically.
b) If there exists Proper condition record for the output type, system will pick the condition record assigned for the combination of the Purchase Group and the mode of Transmission, and assigns to the POs created and send to vendor automatically.
1. 4. Normal Process
1. Manually /Auto Run of the program RMMRP000 for the MRP either for the single material MD02 or for the plant
2. Create the PRs through MRP for those materials which are on Materials Requirements Planning.
3. Create the Purchase Requisitions manually for the requirements for those materials which are not on MRP or based upon the independent requirements.
4. Assign the source / vendor to the Purchase Requisition .If the vendor still not known during the requirement generation leaving the PR as such.
5. Enquire for the best source / vendor
6. Create PO using ME21N referring the Purchase Requisition by assigning a vendor or create the PO without referring to the requirement (A PO need not always preferred to be referred with a requirement.
7. Repeat the process to create the POs manually for all the materials and for all the requirements
5. Obstacles in attaining the Optimality in Purchasing Cycle:
1. Buyers need always to find out the Purchase Requisitions which are needed to get executed for procurement. Normally this is a time consuming process.
2. Buyers need always to find the correct vendor to supply the material. This also involves with additional time.
3. Buyers need to quantify the requirements from dependent and independent requirements and their expediting for the actual execution. Especially when the Business activities for sales and for manufacturing are huge, this activity will become time consuming leaving behind inefficiencies in coping up the requirements and supply of the raw materials.
4. Doing the cycle of Purchasing transactions in SAP like the PRs, Finding out the sources, Assigning the vendors to the PRs, Processing the PRs to convert them into SAP PO and output them to the vendor for a high volume based plant is lengthy and involve with additional resources and time .
Normally any Auto process will reduce the cycle time involved in that particular process enabling reduced user intervention. The Cycle Time reduction will save time taken for the Buyer to fall back on the transactions in SAP in creating the documents rather he can spend upon the analysis for his purchases and for expending the purchases and can save the cost involved in purchasing there by meeting the requirement flow in time and can meet the Purchasing Budget . Also the sourcing team will get reduced in a course of time making the purchasing cycle optimized.