The Business Blueprint (BBP) is one of the most important documents in the project management process of SAP Consultancy. The purpose of this document is to better understand how a company intends to run its business within the SAP System based on the outcome of requirement workshops. The key elements of the document are:
- Organizational Structure
- Master data
- Business processes
The following sections give an overview of a business blueprint focused on the materials management (MM) area.
2. Materials Management
The Materials Management (MM) module in SAP covers all the activities and logistics tasks related to the procurement and control of the supply chain and supports its different phases: purchasing, goods receiving, inventory management, and invoice verification.
Purchasing integrates with other modules in the SAP system to ensure a constant flow of information:
- Controlling (CO): purchase orders for materials intended for direct consumption and for services can directly be assigned to a cost center.
- Financial Accounting (FI): purchasing maintains data on the vendors that are defined in the system jointly with Financial Accounting. The vendor master record represents the creditor account in financial accounting. Through purchase order account assignment, purchasing can also specify which G/L accounts are to be charged in the financial accounting system.
3. Organizational Structure
This section describes the organization of a company in the SAP system and how purchasing is integrated into this structure.
3.1. Purchasing Organization
The purchasing organization level is responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions.
3.2. Purchasing Group
The purchasing organization is further subdivided into purchasing groups which are responsible for day-to-day buying activities. A purchasing group can procure for several purchasing organizations and can be a user or department.
3.3. Company Code
The company code level represents an independent accounting unit with its own balance sheet and its own profit and loss statement.
The plant level is a logistics operational unit within a company code. It can be a branch office or a production facility. A plant can receive, store and issue materials.
3.5. Storage Location
The storage location is an organizational unit allowing the differentiation of material stocks within a plant. The physical location can be a room or some space identified on the floor.
4. Master Data
Master data in purchasing are key data stored in the system database for long-term procurement. The main data records are vendors and materials.
4.1. Vendor Master Data
The vendor master database contains information about the vendors that supply a company. This information is stored in individual vendor master records kept in a central repository for the whole company.
Since to the accounts department vendors are generally creditors (accounts payable), the vendor master record also contains accounting information, such as the relevant control account (reconciliation account) in the general ledger. Therefore, the vendor master record is maintained by both Accounting and Purchasing.
4.1.1. Vendor account group
Each vendor must be assigned to an account group which determines:
- Type of number assignment (internal or external) and the range assigned to the vendor.
- A search criteria for reports.
- Which fields are displayed on the vendor master record screens and whether entries in these fields are mandatory or optional.
4.1.2. Vendor organizational levels and field description
The Vendor master data are structured as general, company code and purchasing data.
|Data that applies equally to each company code within the company (address, telephone number, etc.).
||Company code level data (reconciliation account, etc.). Usually entered by the Finance department.
||Important purchasing data kept at purchasing organization level (contact person, order currency, etc.).
The table below shows a sample list of fields defining a vendor, column "L" is the maximum length of the corresponding coding in the system.
|Company code||4||Company code where the vendor is created.|
|Purchasing organization||4||Purchasing Organization where the vendor is created.|
|Account group||4||Classification defining common characteristics.|
|Street and house number||60||Address.|
|Postal Code||10||The format of the postal code is dependent on the country.|
|Language||2||Language of communication with the vendor.|
|Tax number||16||An identification number issued by the tax authorities to taxpayers.
Each country has its own system. In countries where taxes are levied not just at national (or federal) level, but also at local level (by states or municipalities), multiple tax numbers may be issued. i.e. tax jurisdiction code for USA
|Bank country||2||Identifies the country in which the bank is located.|
|Bank key||15||Bank key under which bank data from the respective country is stored.|
|Bank account||18||Number under which the account is managed at the bank.|
|Control key||2||Key for checking the combination of bank number and bank account number and is country specific.|
|Reconciliation Account||10||The reconciliation account in G/L accounting.|
|Cash management group||10||In cash management, vendors are allocated to planning groups by means of an entry made in the master record.|
|Payment terms||4||Key for defining payment terms composed of payment periods.|
|Payment method||10||List of payment methods which may be used in automatic payment transactions with this vendor.|
|Order currency||3||Key for the currency on which an order placed with a vendor is based.|
|Sales person||30||Responsible Salesperson at Vendor's Office.|
|Account with vendor||12||Account number which the vendor uses for our company.|
4.2. Material Master Data
The material master database contains descriptions of all materials that a company procures. It is the central repository of information on materials for the whole company.
The integration of all material data in a single database eliminates the problem of data redundancy and permits the data to be used not only by purchasing, but by other applications such as Invoice Verification.
Material master records may be created and changed either centrally or by individual departments. In the latter case, the department will be responsible for continually updating the corresponding purchasing data.
4.2.1. Material types
Each material must be assigned to a material type which determines:
- Type of number assignment (internal or external) and the range assigned to the material.
- A search criteria for reports.
- Which fields are displayed on the material master record screens and whether entries in these fields are mandatory or optional.
- Account determination when the material is consumed.
- Whether the material is intended for stock, and whether the material will be updated in terms of quantity and value.
4.2.2. Units of measure
The system distinguishes between different units of measure.
|Unit of Measure||Description||Example|
|Base||Unit of measure in which the stocks of a material are managed. The system converts all quantities entered in other units to the base unit of measure.||EA (each)|
|Alternative||Individual departments (i.e. purchasing) may have their own units of measure.||BOX, CARTON|
|Order unit||Allows a material to be ordered in a unit differing from the base unit of measure. The order unit is proposed automatically in purchasing functions.||1 BOX = 4 EA|
1 PAL = 72 EA
4.2.3. Material organizational levels and field description
The material master data are structured as views. At plant level, the main views are basic data, purchasing and accounting.
|Basic Data View
||Data applicable to all individual group companies and all plants (description, units of measure, etc.).
||Data provided by the Purchasing department for a material (order unit of measure, tax indicator, etc.).
||This level contains accounting information related to valuation and price calculation (valuation class, price control, etc.).
The table below shows a sample list of fields defining a material, column "L" is the maximum length of the corresponding coding in the system.
|Industry sector||1||The industry sector determines which screens appear and in what order and which industry-specific fields appear on the individual screens.|
|Material type||4||The material type defines certain attributes of the material and has important control functions.|
|Plant||4||The plant level is a logistics operational unit within a company code.|
|Basic Data View|
|Material description||40||Text that describes the material. The description can be defined in any language supported by the system.|
|Base Unit of Measure||3||Unit of measure in which the material is managed. Quantities in other units of measure (alternative units of measure) are converted to the base unit of measure.|
|Material group||9||Key to group together several materials or services with the same attributes. Useful to Restrict the scope of analyses and search specifically for material master records via search helps.|
|Base Unit of Measure||3||Unit of measure in which the materials are managed.|
|Order unit||3||Unit of measure in which the material is ordered.|
|Tax indicator||1||The tax indicator is used in the automatic determination of the tax code in Purchasing.|
|Valuation class||4||Determines the G/L accounts updated for a valuation-relevant transaction (such as a goods movement).|
5. Business Processes
5.1. Business Scenario
A standard procurement cycle in SAP includes the following activities.
- Determination of requirements: a user can manually pass a requirement for materials to the purchasing department via a purchase requisition.
- Determination of the source of supply: the system helps the buyer to create requests for quotation and then enter the quotations or check existing purchase orders and conditions in the system.
- Vendor selection: the system simplifies the selection of vendors by making price comparisons between the various quotations.
- Purchase order processing: the system facilitates data entry by providing entry aids when entering purchase orders.
- Purchase order monitoring: the buyer can monitor the processing status of the purchase order at any time and can determine whether goods or an invoice have been received for the relevant purchase order item.
- Goods receipt: the system compares the goods receipt quantity with the purchase order quantity.
- Invoice verification: vendor invoices are checked for accuracy of prices and contents.
- Payment processing: financial accounting deals with vendor payments.
5.2. Purchase Requisition
When a need arises for a new purchase, the buyer enters a purchase requisition that determines what and how much to order and the delivery date. The Purchase Requisition is therefore an internal document with no header information (such as vendor details).
5.3. Purchase Order
A purchase order is a formal request or instruction from a purchasing organization to a vendor to supply a certain quantity of goods or services at or by a certain point in time.
A purchase order consists of a document header and a number of items. The information shown in the header relates to the entire order, for example, currency, date, terms of payment.
5.3.1. Purchase Order types
The purchase order type determines:
- Number range assigned to the document.
- Search criteria in reports.
- A key parameter in the release strategy.
5.3.2. Price conditions
Price conditions can be setup in the purchase order in order to accommodate any agreement with the vendor. These conditions types are used in the calculation schema as the framework for price determination:
- Gross price: base price.
- Net price: gross price with any applicable discounts and surcharges.
- Effective price: net price with allowance for taxes and delivery costs.
5.3.3. Release strategy
The release strategy defines the approval process for purchasing documents. The strategy specifies the release codes (users) and the sequence in which releases have to be effected. The assignment of the release strategy to a purchasing document is based on release conditions (price).
The release strategy can be linked to an SAP Business Workflow in order to automatically notify the user of any awaiting release process (SAP inbox, E-mail, etc.).
The following table shows an example of a release strategy applied to the total amount of a purchase order (P1, P2 and P3 are users in the system and Level 1 and Level 2 are levels for approval in order of precedence ):
|PO Type||Purch. Org.||Company code||Plant||Purch. Group||Amount (€)||Level 1||Level 2|
|TTTT||XXXX||YYYY||ZZZZ||GGG||0 - 4999||P1||
5.3.4. Purchase Order form
A smartform is an SAP tool to define the format and content of purchasing document forms. The form determines the layout, what information needs to be printed and whether the output is sent to a printer or by E-mail.
5.4. Goods Receipt
Goods receipt is the process of receiving materials from a vendor with reference to a purchase order. The purchasing department can procure materials either for stock or for direct consumption.
Procurement for stock involves materials that are placed in storage following a goods receipt. The stock is therefore increased or reduced by the quantity received or issued. Automatic postings to stock and consumption accounts follow each goods movement. The value and the quantity of the stocked material are updated in the material master record.
On the other hand, procurement for direct consumption requires an account assignment, for example a cost center. On goods receipt, the material or service counts as having been consumed and the consumption accounts in Financial Accounting are posted. The total quantity and value of existing stocks of the material are not affected.
5.4.1. The document concept
A document must be generated and stored in the system for every transaction that causes a change in stock. When posting a goods movement in the SAP System, the following documents are created:
- Material document: a material document is a proof of physical goods movements and serves as a basis of information for subsequent processes. It contains a header (date, etc.) and one or more items describing a movement type.
- Accounting document: If the movement is relevant for financial accounting, an accounting document is created. The G/L accounts involved in a goods movement are updated through automatic account assignment.
5.4.2. The movement type concept
A movement type differentiates between the various goods movements. It plays a central role in updating the quantity fields, in the automatic account determination and also determines the structure of the screen .
The following table shows the basic movement types:
||Goods receipt for purchase order.
||Cancellation of movement type 101 (due to error, etc.).
||Return delivery to supplier (due to bad quality, etc.).
||Reversal of return delivery, i.e. cancellation of movement type 122.
5.5. Logistics Invoice Verification
In Materials Management, the procurement process is concluded by the invoice verification process where contents and prices of incoming invoices from a vendor are checked for accuracy.
The invoice generally makes reference to a business transaction, i.e. purchase order. In such case the system retrieves data stored in the database (master and transaction data) in order to compare suggested quantities and values for each item from the purchase order with the data from the vendor invoice.
During the invoice verification process, the balance specifies whether the vendor invoice amount is equal to the total amount of invoice items, taxes, and unplanned delivery costs. If the balance is zero then the invoice is posted and logistics and accounting documents are created. The appropriate information is passed on to the finance department for payment and analyses.
5.5.1. Invoice Master Data
- Material master data: information on the materials bought by or produced in the company.
- Vendor master data: information on the suppliers that a company deals with.
- Accounting master data: information on G/L accounts.
5.5.2. Invoice Transaction Data
- Purchasing document: information on the purchase order such as amounts, quantities and tax information.
- Material document: information on the goods receipt quantities.
- Accounting document: information on individual postings if the good receipt is valuated.
5.5.3. Invoice Documents
- Invoice logistics document: information on the invoice created with reference to a preceding document such as a purchase order.
- Invoice accounting document: financial information of the invoice that triggered the posting. It consists of one or more line items representing individual postings to an account.