Integrated Business Processes with ERP Systems

CHAPTER 4

The Procurement Process

LEARNING OBJECTIVES

After completing this chapter you will be able to:

1. Describe the major organizational levels associated with the procurement process.
2. Discuss the four basic categories of master data that are utilized during the procurement process.
3. Explain the key concepts associated with the procurement process.
4. Identify the key steps in the procurement process and the data, documents, and information associated with these steps.
5. Effectively use SAP^® ERP to execute the key steps in the procurement process.
6. Utilize SAP ERP to extract meaningful information about the procurement process.

In Chapter 1 we presented a simple procurement process, which is reproduced in Figure 4-1. This diagram indicates that the initial step in this process is to create a requisition, which is then converted to a purchase order and sent to a vendor. When the vendor receives the purchase order, it ships the materials, which the ordering party receives in the receive materials step. The ordering party also receives an invoice from the vendor, and it then makes a payment to the vendor.

This simple process has served GBI well until now due to its small size and closely connected operations. However, as GBI has grown and its operations have become more dispersed and complex, GBI's management has come to realize that it needs to reevaluate how GBI procures materials so that the company can take advantage of the most effective and efficient processes. To accomplish ...