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What are the Types of the Procurement Process in SAP MM?

SAP MM (Material Management) is a crucial element in the SAP ERP package. This module connects with other SAP system modules and covers all aspects of materials management, including purchasing, planning, and control, receiving products, inventory management, and invoice verification. If you are looking to have a career as an SAP MM professional, it is necessary to have proper training. For such a purpose, you have to enroll in the best SAP MM Training Institute in Delhi. Such an institute will make you a professional in this field and help you advance your career goals.

Meaning SAP MM

SAP MM (Materials Management) is a crucial module of the SAP ERP Central Component (ECC) that provides materials, inventory, and warehouse management abilities to several organizations. However, the primary function of material management is to ensure that all materials in an organization are kept in the right quantities and locations. Also, it makes sure that there are no shortages or holes in a company’s supply chain. It aids inventory managers, warehouse managers, and other supply chain professionals in the purchasing of raw materials and commodities.

Types of Procurement Process in SAP MM

The SAP MM comprises two types of procurement. These procurements are as follows:

  • Basic Procurement

It is the process of purchasing appropriate products and services in the correct amounts at the right time and at the best price. You can further divide the basic procurement process into two parts:

  • Procurement for Stock vs. Consumption

The following considerations show the distinction between stock procurement and consumption procurement:

  • Stock Procurement:

Stock material is one that you can easily store in hand. As soon as these materials arrive from the seller, keep them as stock. However, the supply of this material is constantly increasing or decreasing depending on the quantity received or provided. A material must have a master report within the system before ordering any stock.

  • Procurement for Direct Consumption

When purchasing for immediate consumption, the customer should specify the consumption purpose. Thus, the system must contain a master record if you order material for direct consumption.

  • External vs. Internal Procurement

The below points demonstrates the difference between External vs. Internal Procurement:

  • External Procurement

It is the process of acquiring products or services from third-party providers. However, the Purchasing component of the IT system comprises three fundamental types of external purchases. 

  • Internal Procurement

This process obtains materials and services from within the same firm. Thus, each of these firms has a comprehensive bookkeeping system with separate Balance Sheets, Profit, and Loss Statements.

  • Special Procurement

These special stocks you can manage as they do not belong to the firm, and you can keep them in a specific location. However, the categories of this procurement and stocks are classified as follows.

  • Consignment Stocks

Material that is available at your store but belongs to the vendor seller or owner of the material. As a result, if you utilize items from consignment stock, you must pay the vendor.

  • Third-Party processing

In third-party processing, a corporation submits a sales order to an external vendor (seller), who then delivers the items to the consumer. The sales order is processed by the vendor, not by your organization.

  • Pipeline Handling

The firm no longer has to order or store the commodity in the pipeline handling. It is available as needed via a pipeline or any other type of cable, including electricity.

Conclusion

Finally, SAP MM is a powerful software in the material management domain that helps in maintaining the inventory of the organization. Thus, to make a career in this dynamic field, it is necessary to opt for the best SAP MM Training Institute in Gurgaon-Articleswork

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