Direct procurement and Indirect Procurement in SAP AFS

Hi,
Can you diffrentiate between Direct procurement and Indirect Procurement in SAP AFS.
thanks
Aki

Hi Aki,
Direct Procurement
Raw Material and Production Goods
Order Qty: Large
Value: Industry specific (Like shirt in apparel industry)
Direct procurement supports the conversion of planned requirements to purchase orders.
Primary Processes-Direct Procurement
1. Determination of the materials and services required.
2. Create requisition.
3. Request for the quotation.
4. Quotation Management.
5. Vendor selection.
6. Create Purchase Order.
7. Goods Receipt and Invoice Receipt.
8. Invoice Verification/ Vendor Payment.
Indirect Procurement
Maintenance, Repair and Operating (MRO) Supplies
Order Qty: Low
Value: Generic (Machine Spare Parts in any industry)
Indirect procurement supports the purchasing of indirect materials and subcontracting.
This process can be dealt with using standard functions such as material requirements planning, purchase requisition, stock transport order, transportation planning and the handling of internal deliveries.
The cross-plant, internal procurement of materials can be carried out within one company code (intercompany) or by using several company codes (cross company).
Primary Processes-Indirect Procurement
1. Requisitioning
2. Purchase Order Management
3. Receiving
4. Financial Settlement
Hope it helps.
Regards,
Anirban Roy

Similar Messages

Direct Procurement and Indirect Procurement

Please explain the different between direct procurement and Indirect procurement??

Hi,
Direct Procurement
Raw Material and Production Goods
Order Qty: Large
Value: Industry specific (Like shirt in apparel industry)
Direct procurement supports the conversion of planned requirements to purchase orders.
Primary Processes-Direct Procurement
1. Determination of the materials and services required.
2. Create requisition.
3. Request for the quotation.
4. Quotation Management.
5. Vendor selection.
6. Create Purchase Order.
7. Goods Receipt and Invoice Receipt.
8. Invoice Verification/ Vendor Payment.
Indirect Procurement
Maintenance, Repair and Operating (MRO) Supplies
Order Qty: Low
Value: Generic (Machine Spare Parts in any industry)
Indirect procurement supports the purchasing of indirect materials and subcontracting.
This process can be dealt with using standard functions such as material requirements planning, purchase requisition, stock transport order, transportation planning and the handling of internal deliveries.
The cross-plant, internal procurement of materials can be carried out within one company code (intercompany) or by using several company codes (cross company).
Primary Processes-Indirect Procurement
1. Requisitioning
2. Purchase Order Management
3. Receiving
4. Financial Settlement
Hope it helps.
Regards
KK

What is direct procurement and indirect procurement?

Dear Gurus,
What is What is direct procurement and indirect procurement from purchasing point of view.
Pls briefly explain with examples.
Thanks in advance..

Direct procurement. Direct categories are all goods purchased by the company which directly enter into the production process of that company. For the food industry as an example, ingredients and packaging will be the key direct procurement categories.
Indirect Procurement. Indirect categories are all the goods and services that are bought by the company to enable its activity. This entails a wide scope, including marketing related services (media buying, agencies), IT related services (hardware, software), HR related services (recruitment agencies, training), facilities management and office services (Telecoms, furniture, cleaning, catering, printers), or utilities (gas, electricity, water)...etc
Regards
Lakshminath Gunda

DIRECT MATERIAL PROCUREMENT and INDIRECT MATERIAL PROCUREMENT

please explain , what is the differance between DIRECT MATERIAL PROCUREMENT and INDIRECT MATERIAL PROCUREMENT.please explain with example.

source: http://www.ftpress.com/articles/article.aspx?p=24168
Procurement materials can be broken down into two major categories: indirect and direct.
u2022
Indirect procurement involves any commodity or service that a company buys that does not result directly in finished goods.
u2022
Indirect procurement can be divided into two groups: ORM (Operations Resource Management) materials such as office products and travel services, and MRO (Maintenance, Repair and Operations) materials such as replacement parts.
u2022
Direct procurement involves materials purchased for use in the manufacturing or distribution supply chain that are "directly" related to the production of finished goods.

Direct Purchasing and Indirect Purchasing in AP ?

Hi Experts
Please let me know what is direct purcdahsing and Indirect purchasing inlcuding the T codes and what are the implications in both cases on FI?
Thanks in advance and points assigned accordingly.
Meenakshi.N

Dear Meenakshi,
We can relate indirect purchasing & direct purchasing to PO based material procurement & with out PO based procurement resp.
In case of indirect purchasing, a procurement cycle starts from generating the PR -> PO -> Goods receipt -> Invoice verification.
Where as in direct purchasing no PO is generated & invoicing is done directly in FI.
Hope this of help to u.
Regards,
Ajay

Difference between std procurement and service procurement & advantages?

Dear Gurus,
what are the differences between standard procurement and service procurement &
advantages of External services management?
Thanks...

hi,
In std procurement we procure materials while in the service procurement we procure services...sap has given these two differently may be bacause while procuring the services you never know in advance that how much exact amount is req. just because you don't know for eg wether there is any req. of changing the parts, or general maintenence or anything else...
so due to this you use the value limits....
Advantage: As the services procured are not FIXED as in the std procurement, we do have flexibility for adding up the new services as per the req...
and as we provide the value limits, in the real time scenerio it doesnot cause any FI problem later...
Regards
Priyanka.P

Direct tax and indirect tax

What is the difference between Direct Taxes and indirect Tax. In which Cases those are both are applicable .
please give to me details
regards
RAM

Hi
a direct tax is one paid directly to the government by the persons (juristic or natural) on whom it is imposed (often accompanied by a tax return filed by the taxpayer). Examples include some income taxes, some corporate taxes, and transfer taxes such as estate (inheritance) tax and gift tax.
an indirect tax or "collected" tax (such as sales tax or value added tax (VAT)); a "collected" tax is one which is collected by intermediaries who turn over the proceeds to the government and file the related tax return.
assign points if useful

Direct material and indirect material

please explain the what is direct material and indirect material and its different between them

Hi.
Direct materils: These material are bulkly needed and regularly needed for that orgnization to have their end product. these materials usually raw materials ....
Indirect materials: these materils are needed with direct materlias for the manufacture or to produce end product.
Ex: If your orgn's is cement Industry.
Direct materials: Silica Sand. etc..
Indirect matrials:BAG. Gypisum.....
Hope you are Understand with these example...
Regards
S B H

Info on Service procurement and Material procurement in Purchasing

hi
we are dealing with a purchase register for services report and a purchase register for material report.
Can anyone explain in detail about material procurement and service procurement in MM and
what are all the documents created/ involved in the flow and explain the relationships between these documents ( between PO & GRN&INVOICE like i,e 1:m or 1:1)?
1. PURCHASING - MATERIAL PROCUREMENT
PO->GRN->INVOICE.
2.PURCHASING - SERVICE PROCUREMENT
PO->_?_-> INVOICE.
And differences between material and service procurement.

Hi,
Material POs.
One PO, Item can have many GRN Items.
One GRN Item can have multiple Invoice items.
This is same for services as well.
In Services, the equivalent of GRN is acceptance of the service entry sheets.
Thanks,
Krishnan

What is direct PO and indirect PO?

Dear Gurus,
What is direct PO and indirect PO?
Thanks in advance..

Hello,
Direct materials are used directly in the production process and thus have influence on the value of the final good. This material is mostly held in stock and needs to be kept in inventory management.
Indirect material, also known as MRO material, could be office supplies or machine parts, for example. In most cases, indirect material is characterized by high-volume and low-dollar transactions
Ordering a direct material means ordering a product that will be received into stock. Account Assignment information is blank at the time of creating purchase order whereas for Indirect PO, Account Assignment is mentioned as appropriate K or F (Cost center, order, WBS etc.)
Hope this helps.
Ashutosh

Getting direct reporting and indirect reporting employee

Hi,
In one of my development, their is a requirement to have a screen of type Tcode PPMDT.
My screen will be having tab strip for direct and indirect employee and on both tabs org structure will be displayed.
I am using function module RH_STRUC_GET to get the org structure details. I need to know the logic of separating direct reporting employee from indirect reporting employee from the data returned from function module.
Thanks
Vishal Kapoor

Hi,
In one of my development, their is a requirement to have a screen of type Tcode PPMDT.
My screen will be having tab strip for direct and indirect employee and on both tabs org structure will be displayed.
I am using function module RH_STRUC_GET to get the org structure details. I need to know the logic of separating direct reporting employee from indirect reporting employee from the data returned from function module.
Thanks
Vishal Kapoor

Direct Quote and Indirect Quote

Hi,
If i m trying to post a transaction in foregin currrency, what difference does it make, if there is direct or indirect exchange rate maintained for that curreny and local currency in OB08 (TCURR)
Thanks
Balla

Hi,
the two methods calculate the rate in two ways (directly & inversely).
In direct quotation, one unit of the foreign currency is converted into equivalent value units of your local currency. whereas in indirect quotation, one unit of your currency is converted to units of foreign currency.

SAP AFS Business Process, Building block, Config?

Hello Guru's,
SAP AFS Business process with Transaction codes and the link for Building Block and config guide for SAP AFS module. Will nayone share your expertise?.
Regards,
PV

Hello Guru's,
SAP AFS Business process with Transaction codes and the link for Building Block and config guide for SAP AFS module. Will nayone share your expertise?.
mail me [email protected]
Regards,
PV
Edited by: PV on Nov 10, 2008 9:49 PM

Direct Procurement and Direct Production

Dear all,
Can you please explain to me what is "Direct Procurement", and "Direct Production" base on the following points:
1 - What is the process about?
2 - How and when business requirement will bump into and using these two processes?
3 - Example
Please don't copy and paste the SAP help portal explanation as I have read the SAP help-portal and am NOT understand
thanks very much
tuffy

Dear Tuffy,
Direct Production:
1.The components for which individual production orders are created in a collective order concept are called as directly
produced component.
2.In my understanding these components are identified with the value 52 set for special procurement key in MRP2 view of the
material master.
3.Direct production cannot be set for the components that have any one of the indicator set for - by product, co-
product,alternative item with usage probablity 0 or alternative item with strategy 2,discontinued material,follow up material,intra
material.
4.This concept atleast helps in understanding the cost breakup than the phantom assembly concept.
5. Example:
You want to produce a pump. The BOM for the pump contains a pressure regulating valve and a spiral casing. You want to
enter these two components in separate production orders, but you do not want them to be posted to stock.
You set the special procurement type to direct production in the material master record for the pressure regulating valve and
the spiral casing, so that production occurs using a collective order.
When you create a production order for the pump, a collective order is automatically created, which contains subordinate
production orders for the pressure regulating valve and the spiral casing.
Direct Procurement:__
1.Direct Procurement is generally used for non-stock items that is defined with item category N or defined using special
procurement key for direct procurement.
2.This is widely used in the case of Make ot order or Engineer to Order production where the stock of such materials are not
inventory managed.
Regards
S Mangalraj

Direct and Indirect

Hi:
can someone tell me whats the difference between direct and Indirect reports in SRM-BW.
whats the functionality of them.
how to figure out them
where to find them, any T-codes, tables will of great help.
it would be great if some one can tell the relation between R/3 PO and a SRM PO
Thanks
kedar

Hi,
If I understood Your question about direct and indirect reporting in SRM-BW.
Direct reporting it is a SAP RemoteCube in BW. RemoteCube is and InfoProvider. This is a special RemoteCube that allows You to define queries with direct access to transaction data in other SAP systems. RemoteCubes are defined on the basis on an InfoSource with flexible updating, and assume the characteriscics and key figures of the InfoSource.
Indirect reporting is like standard BW reporting with master data, transactional data, attributes and hierarchies.
All BI content You may find in transaction RSA6 on SRM side.
There is not many difference between SRM and R/3 PO's. On both side you may create PO from SC, PO with direct or indirect material etc.
Please look into service.sap.com/instguides -> SRM -> Plan-Driven Procurement and Self-Service Procurement
Regards,
Marcin

Direct procurement and Indirect Procurement in SAP AFS

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