A firm orders 500 of a raw material because its production staff requires the material for an upcoming production plan. On arrival at the warehouse 420 units are counted. There are 80 units left with the same original quantity on the purchase order.
What is the next step for the purchasing team? Should the warehouse accept the delivery? What should be the correct amount to record for the received quantity? How will the purchasing department know that there is still more material out?
The following are examples of situations to be familiar with when studying materials management. SAP Materials Management (SAP MM) is used for purchasing, goods receipt, inventory management and other business processes. Understanding the relationships of these activities is an integral component of SAP MM Training in Hyderabad.
What’s the point in partial deliveries in purchasing?
Suppliers do not always send the entire order at one time. The supplier may be out of stock, may claim that the materials are not available for shipment until later in the week, or agree to the materials being sent in several deliveries.
With a partial delivery, there is an imbalance between the quantity of goods ordered and quantity received for the purchasing team. When the difference is not recorded properly, production planners can assume that they will have all the materials needed, if they don’t.
Manufacturing company, for instance, may require 500 steel components to finish a batch of manufacturing. The absence of 80 components would slow production or force the company to make a different delivery.
What’s important, is that the business should have a record of what was placed, what was received, and what is still to be delivered.
How to perform partial goods receipt in SAP MM?
Goods receipt is a document that records the receipt of goods from a purchasing document or other appropriate reference. The Purchase Order contains information like material, quantity, plant, delivery information etc. to be used in a typical SAP MM purchasing.
Once the order is received the warehouse team verifies the actual quantity received and compares with the order received.
When the order was placed for 500 units and the supplier delivers 420 units then 420 can be recorded as the quantity delivered, provided that the required process and system settings are applied. Goods movement posted updates the appropriate inventory and purchasing records.
The purchase order history can then be used by authorised users to check whether there is any quantity that has been received or not. The exact status will depend on the settings of the document, further transactions and the expectation of any remaining delivery.
Learning about a purchase order, goods receipt, material document and the inventory update is not something that happens once, but is important for students.
What about the other 80 units?
Once the partial delivery has been recorded, the purchasing team needs to decide what to do with the remainder.
There are multiple possible scenarios.
1. The Supplier Will Deliver the Balance Later
The supplier might be able to verify that the other 80 units will be in the next shipment. Here, the purchasing team can follow up the quantity that is outstanding and communicate with the warehouse and production teams.
Purchase Order History gives an idea to the team about what they have already received. The next goods receipt is booked on the corresponding purchasing document in the warehouse when the balance is equal, as per the company’s process.
2 Supplier cannot deliver the remaining quantity.
In some cases the supplier will notify the company that the balance is not available. The buying team then will have to determine if they will wait, find another supplier, or adjust the requirement.
This will depend on the business contract and purchase policy. Do not assume that the missing quantity will show up.
3. Actual quantity received (Delivered) is not equal to the quantity ordered (Physically Counted).
The other way round would be where the delivery note is for 420 units but there are 415 in the warehouse. The team must first look into the difference and complete the company’s receiving process before posting receipt.
This is vital as it can impact inventory availability, purchasing follow up, and finances in case of any goods receipt inaccuracies.
What happens if you use a partial delivery when inventory planning?
Planning on inventory relies on accurate data It is possible that the company needs 500 units but ordered just 420, which may affect the production plan of the company or it might want to purchase more units in the future.
SAP MM integrates with other relevant SAP processes and planning functions to enable businesses to manage material requirements. However, a partial goods receipt doesn’t automatically mean that the company should create a new purchase order for the goods not received. Answer will depend on the quality of the order, availability of stock, open needs and planning parameters. Students should be taught to find out the facts concerning the situation before recommending a solution.
For instance, the 80 units that are missing could have already been allocated for delivery tomorrow. If it is possible to have two deliveries, then another purchase order might be created and end up with too much inventory. However, when the supplier has cancelled the balance, and the material is still needed for production, the purchasing team might need to make an effort to find another source for the material.
This example illustrates the importance of business decisions in addition to system transactions for SAP MM knowledge.
Exercise for practical learning for the students of SAP MM.
One of the useful practice scenarios is to develop or review a sample purchase order for the purchase of 500 units of a material.
Use the following procedure:
- Check purchase order and verify the quantity ordered.
- Simulate the delivery of 420 units.
- Document the Goods receipt with the appropriate training-system procedure.
- Check out the material document and purchase order history.
- Verify received and outstanding amount.
- Simulate another delivery for the remaining 80 units.
- Check new purchasing and inventories.
The exercise should additionally cover what changes in the event that the supplier cancels the balance or the physical quantity is different than the delivery document.
These exercises should be done in an approved training facility and not in a live business system without permission.
What Students should learn from SAP MM Training?
An effective SAP MM course must cover the entire business to business purchasing cycle and the inter-relationship of the various activities. Some of the key points that could be included are:
- Material master data and vendor master data.
- Purchase requisition and purchase order.
- Information record purchase and source determination.
- Goods receipt and material documents.
- Stock types and stock management.
- History of purchase orders and outstanding deliveries.
- Concepts of invoice verification and purchase to pay.
- Simple troubleshooting and procurement situations.
The syllabus is dependent on the training provider. Find out if the course has practical components, will involve examples of goods moving, and will have real scenarios of purchasing situations.
Buchleitung SAP MM.
Students planning to opt for SAP MM Training in Hyderabad should opt for the course that relates system activities with real business scenarios. Version IT will provide prospective students with information regarding the current syllabus, training environment and whether or not the training programme will involve buying and inventory exercises.
Sometimes, it is important to find out not just how a transaction works, but why it is needed, what records it affects, and how to check the transaction. All of this information will aid you in your interview to explain scenarios when you were procurement.
Final Thoughts
A supplier who supplies less than what was ordered can be a seemingly minor purchasing problem, but can have an impact on the level of inventory, production schedules, and supplier follow up. Keep an accurate record of the received amount and remaining stock assists the business in making well-informed decisions.
Partial delivery scenarios are useful for students who are interested in learning more about purchase orders, goods receipts, inventory changes, and coordination of procurement. Understanding these interrelated processes can help to provide better basis in SAP Materials Management.
