Procurement Cycle in SAP MM

Procurement to Pay Cycle

In MM the main process is P2P Cycle i.e. Procurement to Payment Cycle. It starts with Purchase requisition and ends with Invoice verification. In this process we have different stages. Those are listed below:

Ø Purchase Requisition (PR)

Ø Request for Quotation (RFQ)

Ø Purchase Order (PO)

Ø Goods Receipt (MIGO)

Ø  Invoice verification (MIRO )

Purchase Requisition:

Purchase requisition is a request or instruction to purchasing department to procure a certain quantity of a raw materials or consumables, etc. at certain point of time.

It is an internal document, sends to Purchase Department.

Requisitions can be created either manually or they are auto generated by the system.

Request for Quotation:

In the case of approved vendor is not available for procurement, RFQ will be sent to different vendors to finalize the specific vendor for procurement.

It is an invitation to vendor for providing quotation for supplying the material.

RFQ issued to several vendors shall be maintained in the system and the system shall determine the most favorable quotation submitted.

Purchase Order:

Purchasing order is outgoing document. It is a legal document. Purchase order shall be created with reference to approved purchase requisitions, RFQ, and contracts. Purchase orders shall be identified with the document type and item categories. Purchase order should be created with reference of PR, RFQ or Contract.

Goods Receipt (GR):

Goods receipt in plant will happen when goods received from the Vendor.

Vendor delivered the materials then we perform this process, is called GR.

In this the received material quantity are checked.

Invoice verification:

Invoice is received from vendor after GR, it is verified by company.

Verification of vendor invoice refers to a process in which the business makes payment to vendor.

P2P CYCLE