Definitions:
      
 (i) ERP => Enterprise = An organization
      • Resource = Men , Money, Machine, Material
      • Planning = a systematic approach to archive goals.

      ERP is a system to store and integrate the data in a single platform

              There are two kinds of ERP systems

                        (a) centralized
                        (b) De centralized system


  (ii) Material Management: Material management is concerned with
 planning, organizing and controlling the flow of materials which provides right material, right quantity on right time from right source with a right price.

  (iii) Purchase Requisition: Purchase Requisition is an internal document which is given to purchase department to purchase required materials.

  (iv) Purchase order: Purchase order is a legal document between vendor and customer.

  (v) Sales order: A sales order (SO) is an internal document generated by the seller, indicating that the customer is now ready to purchase products and services.
        The document gives a clear understanding about what the customer has decided to buy.

  (vi) Production order: A production order defines which material is to be processed, at which location, and at what time and how much quantity is required. It also defines which components and sequence of operations are to be used and how the order costs are to be settled.

   (vii) RFQ:  It is an invitation to vendor for providing quotation(bid or tender) for the suppling material.


   P2P Cycle:

• In a Company , departments like HR, Admin, Production etc will create Purchase Requisition with list of required materials. Once the PR is approved by consulted managers, it will be sent to Purchasing Department. Purchase Department will check the availability of Vendor for the material and then they create Purchase Order to the Vendor if vendor is already available.

• If vendor is not available, Purchasing department will send the Quotations to different vendors and select the vendor as per the Quotation comparison process.

• Once the PO is received by the Vendor, Goods will be sent by the vendor as per the Delivery date. Stores department will receive the goods.

• The invoice which is sent by Vendor along with the Goods will be verified in the system by Accounts department and then the Payment will be done as per the verified amount.


Organizational Structure:

  (i) Client: It is an organizational unit and it contains set of tables and master records


  (ii) Company Code: Company code is a separate accounting department or separate legel entity and at this level accounts are maintained by FI people.
   Business balance sheet, profit or loss statements are carried out at this level.


  (iii) Purchasing Org: Purchasing organization is responsible for procure material or services by negotiating terms and conditions with an external vendor or from an internal plant.

  Types of purchasing organizations

 (i) Client specific Purchasing Organization/ local plant purchasing organization

 (ii) Cross Plant Purchasing Organization

 (iii) Cross company code Purchasing Organization

 (iv) Central Purchasing Organization

 (v) Standard Purchasing Organization

 (vi) Reference Purchasing Organization

Standard purchasing organization-  If plant is having multiple purchasing organizations, then we can declare one purchasing organization as standard purchasing organization.
           Where the standard purchase organization involves in procurement of special stocks such as consignments, subcontracting, stock transfers, etc.

Reference Purchasing Organization -A purchasing organization linked to one or several purchasing organization is called reference purchasing organization.

Central Purchasing organization- It is required for several plants that is bulk then central purchasing organizations will involves, advantage is better prices are possible.


 Plant: It is manufacturing unit or an operational unit or operational unit or a sales branch (warehouse or FICO) [0-4 characteristics, alphabets (or) digits)

 Storage Location: Keeping the stock of material in one place is known as storage location. Storage location can have reputative code but in different plant.

 Purchasing Group: A purchasing group is an individual or a group of persons who are responsible for the purchasing activities which are maintained by purchasing organization like sub-contracting, consignment, pipeline process etc.

 Valuation Area: If valuation area is plant then material prices varies from plant to plant. If valuation level is company code, the material prices are maintained at company code
       but same prices may vary at other company code level.   * Recommended valuation area is at plant level.

 Controlling area: The main function of controlling area is to capture/ control the expenses that takes place in any company which is defined by controlling consultant people.



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               T codes:
               ===================

                Define company code    -  EC01
                Define company             -  OX15
                Define Purchasing Organization -  OX08
                Maintain Storage Location  -  OX09
                Define Plant      -  OX10
                Define Valuation Area    -  OX14


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                 Tables
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                 Table for company code  - T001
                 Table for Plant - T001W
                 Table for storage location - T001L
                 Define valuation area - T024E