Organization of Purchasing

This section describes different variations of organizing your purchasing function to support central procurement and how to use the 'Purchase organization' and 'Buying facility' to achieve the desired method of purchasing.

Methods of purchasing

Central procurement: Purchase order creation across division is not supported.
Divisional central procurement: One purchase organization per division.
Regional procurement: Multiple purchase organizations per division. Each organization is responsible for a group of facilities or warehouses.
Assortment-based procurement: Multiple purchase organizations per division. Each organization is responsible for an assortment of products.
Local purchasing: One purchase organization per division. One or several divisions should be excluded from the central procurement.
Mixed forms of purchasing: Mixed forms of purchasing methods.

Central procurement across divisions

Central procurement across divisions is not supported in terms of the process described in this document. For across divisional stock transfers that can support internal billing and goods in transit management refer to the internal sales order solution.

Local purchasing

Exceptions can be set up to provide flexibility for both local and central procurement:

For divisions or warehouses, where purchasing is managed locally.
For products that should be purchased locally in warehouses, where procurement is usually managed centrally.

Example: Local purchasing for a warehouse

'Purchase Organization. Open' (PPS099)
Create type 1='Planning' purchase organizations (LOCAL).
- Leave 'Buying facility' blank on Purchase Organization (LOCAL).
'Purchase Organization. Connect Warehouse' (PPS199)
Connect purchase organization (LOCAL) to all warehouses, where local purchasing should be permitted.
- Action F14='Generate' can be used to connect a purchase organization to all warehouses in division, in one run.
- Select the check box Default purchase organization to assign the purchase organization automatically to planned purchase orders created for the warehouses. Only one purchase organization can be a default purchase organization for a warehouse.

Planned purchase orders for warehouses connected to the default purchase organization (LOCAL) are assigned to the purchase organization (LOCAL) and to the facility of the warehouse.

Divisional central procurement

One central purchasing department is responsible for procurement activities for an entire division. Planned purchase orders are assigned to the facility of the central purchasing department. The central purchasing department creates and manages purchase orders for all warehouses within a division and submits orders to suppliers with delivery to the demanding warehouses.

Example:

(PPS099)

Create type 1='Planning' purchase organization (USA).
Assign 'Buying facility' (BUS) to purchase organization (USA).

(PPS199)

Connect purchase organization (USA) to all warehouses with the division (AAA).
- Action F14='Generate' can be used to connect a purchase organization to all warehouses in a division, in one run.
- Select the check box 'Default purchase organization' to assign the purchase organization automatically to the planned purchase orders created for the warehouses.

Planned purchase orders for warehouses within division (AAA) are assigned to purchase organization (USA) and on facility (BUS).

Regional procurement

Central purchasing departments are responsible for procurement activities for different regions within a division.

Central purchasing department creates and manages purchase orders for a group of warehouses within a region and submits orders to suppliers with delivery to the demanding warehouses.

Example:

(PPS099)

Create type 1='Planning' purchase organization (US-EAST) and (US-WEST).
- Assign 'Buying facility' (BUS) to the 'Purchase Organization' (US-EAST).
- Assign 'Buying facility' (BUS) to the 'Purchase Organization' (US-WEST).

(PPS199)

Connect purchase organization (US-EAST) to all warehouses that are part of that region.
- Action F14='Generate' can be used to connect a purchase organization to multiple warehouses, in one run.
- Select the check box 'Default purchase organization' to assign the purchase organization automatically to the planned purchase orders created for the warehouses.
Repeat the steps for purchase organization (US-WEST).

Planned purchase orders for warehouses in division AAA that are connected to default purchase organization (US-EAST) are assigned to the purchase organization (US-EAST) and to the facility (BUS).

Planned purchase orders for warehouses in division AAA that are connected to default purchase organization (US-WEST) are assigned to the purchase organization (US-WEST) and to the facility (BUS).

Product-based procurement

Central purchasing departments are responsible for procurement activities for different product groups within a division.

The central purchasing departments create and manage purchase orders for items connected to the purchase organization with demand in warehouses within a division. They also submit orders to suppliers with delivery to the demanding warehouses.

Example:

(PPS099)

Create type 1='Planning' purchase organizations (GERMANY) and (LOCAL).
- Assign 'Buying facility' (BGE) to the Purchase Organization (GERMANY).
- Assign blank 'Buying facility' to the Purchase Organization (LOCAL).

(PPS199)

Connect purchase organization (GERMANY) to all warehouses in division BBB.
- Action F14='Generate' can be used to connect a purchase organization to all warehouses in a division, in one run.
- Leave the check box 'Default purchase organization' blank.
Repeat the steps for the purchase organization that is LOCAL.

(CMS017)

Create a priority, that includes a product related object from the available fields in the field group POPSL, for example 'Item group'.

(PPS198)

The purchase organization selection solution is used for assigning purchase organization automatically to the planned purchase orders. It overrides the default purchase organization for a warehouse in (PPS199).

Create a purchase organization selection record for item group (GRP_SPECIFIC) and assign it to purchase organization (GERMANY).
Create a purchase organization selection record for item group (GRP_NONSPECIFIC) and assign it to the purchase organization (LOCAL).

Planned purchase orders for items connected to the item group (GRP_NONSPECIFIC) in warehouses within division BBB are assigned to the purchase organization (LOCAL) and the facility of the warehouse.

Planned purchase orders for items connected to item group (GRP_SPECIFIC) in warehouses within division BBB are assigned to the purchase organization (GERMANY) and to the facility (BGE).

Mixed forms of procurement

Mixed forms of the procurement methods can be used. For example, a central department represented as buying facility (X) can be responsible for procurement of the entire division. However, it can operate for multiple purchase organizations based on groups of warehouses or products for which planned purchase orders should be consolidated. At the same time, certain products can be excluded from being centrally purchased in those warehouses.

Example:

(PPS099)

Create type 1='Planning' purchase organizations (GERMANY), (USA), and (LOCAL).
- Purchase organization (GERMANY) has 'Buying facility' (BGE).
- Purchase organization (USA) has 'Buying facility' (BUS).
- Purchase organization (LOCAL) has blank 'Buying facility' and is used for local buying.

(PPS199)

Connect purchase organization (USA) to all warehouses within division AAA.
- Action F14='Generate' can be used to connect a purchase organization to a range of warehouses, in one run.
- Select the check box 'Default purchase organization' to assign the purchase organization automatically to the planned purchase orders created for the warehouses.
Connect purchase organization (GERMANY) to all warehouses within division BBB.
- Action F14='Generate' can be used to connect a purchase organization to a range of warehouses, in one run.
- Select the check box 'Default purchase organization' to assign the purchase organization automatically to the planned purchase orders created for the warehouses.
Connect purchase organization (LOCAL) to all warehouses within division SE1.
- Action F14='Generate' can be used to connect a purchase organization to a range of warehouses, in one run.
- Select the check box 'Default purchase organization' to assign the purchase organization automatically to the planned purchase orders created for the warehouses.

(CMS017)

Create a priority, that includes a product related object from the available fields in the field group POPSL, for example 'Item group'.

(PPS198)

The purchase organization selection solution is used for assigning purchase organization automatically to the planned purchase orders. It overrides the default purchase organization for a warehouse in (PPS199).

Create a purchase organization selection record for division AAA and item group (GRP_NONSPECIFIC) and assign it to the purchase organization (LOCAL).
Create a purchase organization selection record for division BBB and item group (GRP_NONSPECIFIC) and assign it to the purchase organization (LOCAL).

Planned purchase orders for warehouses within division AAA are assigned to the purchase organization (USA) and to the facility (BUS).

Planned purchase orders for items connected to product group (GRP_NONSPECIFIC) in warehouses within division AAA are assigned to the purchase organization (LOCAL) and the facility of the warehouse.

Planned purchase orders for warehouses within division BBB are assigned to the purchase organization (GERMANY) and to the facility (BGE).

Planned purchase orders for items connected to product group (GRP_NONSPECIFIC) in warehouses within division BBB are assigned to the purchase organization (LOCAL) and the facility of the warehouse.

Planned purchase orders for warehouses within division SE1 are assigned to the purchase organization (LOCAL) and to the facility of the warehouse.