SAP – External Service Management
External Service Management:
This is an application component of Materials Management and it supports end to end process of Purchase Requisition, Request for Quotation, Comparison, Purchase Order (Service Order) , Service Entry Sheet and Invoice Verification Process.
The following are the process for External Service Management:
Need to have Service Master for all the Service related procurement for example – Equipment Installation, Painting, Construction, Planned Maintenance etc.
Source of Supply:
Identification of Source Of Supply. If the source is already exits, then you can use the source for procurement of Service, else you can find the source and update.
In case of new service, create the service master and raise Request for Quotation (RFQ – with reference to Purchase Requisition or without reference). Forward the RFQ to multiple vendor. Get the quotation from the Vendors and update the price and other terms and conditions and them view the comparison price list.
Raise a Purchase Order with reference to Purchase Requisition and if release strategy is in place, then approval flow will get triggered. Once approval is done, a copy of Purchase Order will go to vendor as per the mail id in our system.
Service Entry Sheet:
Vendor upon receipt of the Purchase Order, will perform the services stipulated in the purchase order. Once the service is carried out (either partially or in full), the respective department will raise Service Entry Sheet for the services rendered. Upon approval of the Service Entry Sheet next process can be initiated.
Finance Department once they receive the necessary document from the department who have done the Service Entry Sheet, will perform the Invoice Verification. This process will check the Invoice Value against the Purchase Order value. If the value matches, then the document can be saved and the next process of vendor payment initiation will follow.
Service Master :
Creation of Service Master:
Transaction Code : AC01
In the Command Field update AC01 and Press Enter
Next Screen will appear as below, click on Create Service Record Icon
Now update the relevant fields:
This can be internal number assignment. This is equivalent to our Material Master Number. Update the Description of the Service Master Record int he next field.
This Service Category is equivalent to Material Type in the Material Master. This is based on the different types of Services we can have in the Service Master. New Service Category can be created as Configuration.
Base Unit of Measure:
This is unit of measurement for the Services. For Example – Painting Charges – in SQ.Ft or SQ. Mtr.
Basic Data Tab:
This is to identify the Service according to Material Group or Service Group. The Service Group can be created as Configuration. Existing Service Group also can be used.
This is needed for accounting purpose. We can have Valuation Class and this valuation class is connected to GL Account. The GL Account will hit when the accounting document is generated while posting/creating Service Entry Sheet.
Update the relevant Tax Code for the Service Master. Tax Code can be created via Configuration.
If you have a formula to be defined for this Service Master, then you can update. For Example L * B * H for the area.
In case of the Service Master Item is obsolete, then you can mark this as “Blocked for Procurement” or “Blocked for Warehousing”. Valid from date need to update from when the status is active.
Internal Work Tab:
In case of conversion of the Service Master – Mtr x Feet, can be accommodated here.
In case of any information you need to update to the Vendor – like special instruction for this Service Master, you can update here. This information is printed in the purchase order and will be passed on to the Vendor.
Finally Click on Save as below:
Service Master will be available for use.
Creation of Purchase Requisition for Service Items:
Transaction Code : ME51N – update the T Code and Press Enter
In this Screen click the Document type drop down menu:
From the drop down choose the appropriate Document Type for the Service Purchase Requisition and press Enter.
Account Assignment Category:
In the screen, click on Account Assignment Category or Click on F4, see the pop up option and there are many account assignment categories available to choose. Choose the appropriate. If the requirement is for Cost Center , then select Cost Center and press Enter (K = Cost Center)
From the second drop down – Item Category – Choose the appropriate one. This PR is for Service, then select Service (D = Service) and press Enter.
Item Details Update:
Short Text – Free Text field – Can enter “Construction Work”
Plant: Enter Plant Code
Storage Location: Enter Storage Location
Purchase Group: Enter Purchase Group
Once the above are updated, then press Enter. Services Tab will open up for update.
Service No : Enter Service Number – Short Text will be populated automatically from the Service Master.
Once the Service Number is updated, a pop-up will come asking for GL Account and Cost Center Number. Get the information from Finance department beforehand and update.
Quantity: Update the Quantity Requested.
Gross Price: Update the Gross Price. This is only indicative price, need not be the correct price.
Click on Check
and Save the Document:
At the bottom of the Window, purchase requisition number will be displayed.
Purchase Requisition (for Service) without Price:
In case if the price is now known at the time of creation of purchase requisition, the creator can give input as 1.00 in Valuation Tab.
and also in the Services Tab of the Purchase Requisition:
This Purchase Requisition after generation, will go to Purchasing Department and respective Purchase will take action on this. This is necessary because the Valuation Price field is a mandatory field. And this only necessary if the Purchase Requisition for the item is initial. If the item was purchase earlier, the price will defaulted from the earlier purchase order.
Source of Supply:
In the Source of Supply tab, we have Assign Source of Supply Button which can be used to check whether we have existing vendor for this item.
Purchaser/Requisitioner can click on this button and check whether we have existing vendor. System will update the Vendor and Purchasing Organization in their respective fields.
and the PR Can be saved now. This will make the Purchaser work easier to process this PR.
If you have multiple vendor for the same item, then the system will show up when you click on Assign Source of Supply and the Purchaser can select and proceed for creation of Purchase Order.