SAP Special Procurement Type is a parameter in a material master record that tells the SAP system to procure that material using a special procurement process. Before we dive deeper into the specifics of the special procurement processes in SAP, let’s first understand what is included in the usual SAP procurement process. The SAP procurement is the process of obtaining material and services from external suppliers.
The SAP procurement process consists of several steps.
- Determination of requirements
- Determinations of the source of supply
- Vendor selection
- Purchase order processing
- Purchase order monitoring
- Goods receipt
- Invoice verification
- Payment processing
This is the standard procurement process. SAP provides several other methods of procurement. These are called special procurement types or processes. There are mainly three special procurement types in SAP:
Now, let us look at each of these special procurement scenarios in detail.
SAP Stock Transport Order
SAP Stock Transport Order or commonly known as STO is a special procurement type that happens through a stock transfer between two plants within a company. Goods are procured and delivered within the company. The plant which has a requirement for the materials will place an order to the supplying plant. The supplying plant will deliver the materials against the STO placed. This process involves both inventory management and purchasing in the receiving plant.
Below are the steps in a stock transport order scenario:
- The receiving plant will create an STO. This will be done by the purchasing department.
- The supplying plant will get the STO and the requirement for the materials. The supplying plant will do a goods issue against the STO. When the goods issue is done, the stock is considered a special stock. This stock is called a “stock in transit” and it will be managed by the receiving plant.
- Goods receipt is done at the receiving plant with reference to the STO. The stock will be transferred from the stock in transit location to the goods receipt location in the receiving plant.
The STO process can be subdivided into:
- Intercompany STO – STO process between plants in different company codes.
- Intracompany STO – STO process between plants in the same company code.
SAP provides the below standard methods for the STO:
- One-step stock transfer. For this method, we need to use movement type 301.
- Two-step stock transfer. For this method, movement type 303 will be used by the supplying plant and movement type 305 will be used by the receiving plant. Goods issue and goods receipt will happen separately and will be recorded separately in SAP.
- Stock transport order without delivery in two steps. In this process, the delivery document and billing are not done.
- Stock transport order with delivery in one step. The receiving plant will create the goods issue document and shipment details with movement type 647 and the goods receipt document with movement type 101 in one step.
- Stock transport order with delivery in two steps.
Using the above methods, we can perform an STO process in SAP. To perform a stock transfer, the necessary configuration must be done. Follow the below menu path to carry out the configurations.
SAP IMG -> Material Management -> Purchasing -> Purchase Order -> Set Up Stock Transport Order
The below settings must be done in the above configuration path:
- Define shipping data for plants
- Create checking rule
- Define checking rule
- Assign delivery type to check rule
Subcontracting in SAP Special Procurement Type
Subcontracting is a special procurement process where a company purchase materials from an external supplier. But in this process, the company will provide some or all the components to the external supplier or subcontractor to manufacture the materials.
Below are the steps in the subcontracting process:
- Subcontracting purchase order is raised. This purchase order will have the finished product which needs to be manufactured and will also list down the materials provided for the subcontractor.
- Components are provided to the subcontractor. In SAP, this process will be handled as a transfer posting. The stock will be shown under the company storage location even though it is not physically available. This stock is managed as a special stock called “stock of material provided to vendor”.
- The subcontractor will deliver the materials to the company. A goods receipt will be done against the subcontracting purchase order. When the receipt of the goods is posted, material stocks that were maintained as stock of materials provided to the vendor will also be posted.
- Finally, the payment will be processed against the invoice.
Subcontracting can be done for raw materials, semi-finished goods, and finish goods. It is also possible to perform an operation subcontracting. Operation subcontracting is a scenario where you subcontract one or more operations in your manufacturing process.
To perform subcontracting for a material, SAP special procurement type 30 must be maintained in the material master MRP 2 view.
SAP Vendor Consignment
When a vendor supplies you with materials that you are not required to pay immediately, it is called vendor consignment. The vendor remains the owner of the stocks and when you remove a quantity from the consignment store, a liability arises for the vendor. Consignment withdrawals are settled in agreed periods with the vendor.
Before you procure material for a vendor as a consignment, the material price needs to be agreed upon with the vendor. This price information will be stored in a consignment information record. Once the information record is created, we can post a consignment stock in SAP.
SAP vendor consignment process is included in the below steps.
- Consignment order is created in SAP. This is the formal request to the vendor to provide consignment stocks.
- When the vendor delivers the materials, the receipt of the goods with reference to the consignment order will be posted. The delivered material stocks will be managed as a special stock called “consignment stock”. Payment will not be processed at the goods receipt point because, in the consignment process, payment will be generated once the stocks are withdrawn.
- When the goods issue is posted, liability arises against the vendor.
- Consignment liabilities need to be settled in agreed periods with the vendor. These liabilities are settled with a credit memo. SAP provides special programs to do this settlement.
This concludes the tutorial about the SAP Special Procurement Type.
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